One of the most important things advisors can do to build their business is simply ask clients how to serve them better, Randy Ambrosie, president of Toronto-based consulting and research firm Accretive Advisor told the Morningstar Investment Conference today.
“It’s an underutilized tool, but asking clients for feedback on how you’re doing, and input on what you can do better to meet their needs and the needs of their family, creates engagement,” Ambrosie said. “It shows you care about clients and are interested in their opinion. How can that be a bad thing?”
Ambrosie said that the mere act of asking clients for their opinion, which can be done through a client satisfaction survey, is sufficient to make a difference in the relationship and create a higher level of “engagement,” even if they don’t complete the survey.
“Asking for feedback is where all the magic is,” he said.
Ambrosie says his firm’s research shows almost half of clients will complete a survey, and of those, 80% will reveal their identity.
The results of these client surveys also provide a good indication of who the most “engaged” clients are, Ambrosie says. His research has shown that engaged clients are responsible for virtually all business referrals.
He defines engaged clients as those who view their advisor as a “financial quarterback.” These clients are willing to hand over a “larger share of wallet,” and to have you work with other professionals in their life such as lawyers and accountants, as well as spouses and children. They expect your role to go beyond investment advice to total wealth management.
“Understanding who your engaged clients are opens up tremendous opportunities for growth and success in your business,” Ambrosie said. “All of your growth will happen with engaged clients.”
He said the average client base consists of 12% of disgruntled clients, 14% of complacent clients, 56% who are content or passively satisfied clients, and 18% who are engaged clients.
Engaged clients are also the source for almost all referrals, Ambrosie said. But his research shows that although 70% of clients are willing to refer their advisors and 20% actually have referred their advisors to others, only 2% of those referrals are successful. Women provide 2.5 times as many referrals as men because they are better networkers, he added.
The first step for advisors when it comes to improving the success rate for referrals is to ask for client feedback that can identify who would be willing to provide you with referrals, as well as who already has, Ambrosie said.
“Once you know who these people are, it leads to an incredibly cool moment in your relationship with clients,” he said.
The next step is to ask what you do for them or their family that is most valuable. Then “shut up and listen.” They will say what it is, and in this way virtually write their own referral script, Ambrosie said.
The exercise helps clients clarify in their mind how their advisor adds value, and this is likely to be expressed the next time they speak of you to a referral prospect. It will have the power of their emotions behind it, as they have given thought to what they appreciate and the gratitude they feel, Ambrosie said. “You have helped them identify what it is about the relationship that’s valuable, and that’s incredibly powerful.”