Joe DeNoyior and his team at Global Retirement Partners treat the “client experience” as something akin seeing a movie—the mega-size, surround sound, airy and aromatic space with overstuffed leather recliners and (often) a waitstaff has moviegoers more immersed and engaged, and therefore willing to allocate more money.
It’s pleasant, and why should retirement saving be different?
Jason Chepenik, managing partner with Chepenik Financial, feels the same, and boosts enrollment rates by making it fun with his “Taco Bout Retirement Truck.”
He partnered with a local food truck, wrapped it in a colorful design and takes it on the road to multiple employer client locations.
“If you have signed up for the company 401k plan, you get a free taco,” he says.
If you didn’t, you only get rice and beans, because, without retirement savings, he wryly adds, you will be “livin’ la vida broke-a.”
New research backs a client-experience focus, with Cerulli Associates finding advisors are reframing their value proposition in response to competitive pressures and heightened fee awareness.
The Boston-based research firm finds that “intangible upsides” of providing exceptional client experiences (increased trust) also mean better results for the advisor’s practice, primarily in a higher median client size, lower attrition rates, and the ability to move upmarket.
“Practices that focus on the client experience have a 93 percent higher median client size compared to the industry average of $500,000. In addition, client experience-centric practices have lower involuntary attrition.”
On average, they add:
- 34 percent of advisors’ asset outflows are a result of clients passing away, moving to another financial advisor, or transferring assets to a direct/online provider.
- Among experience-centric firms, however, this type of involuntary attrition accounts for 24 percent of asset outflows.
- 65 percent of financial advisors will experience fee compression in the next five years and 42 percent attribute it to the growth of digital advice competitors.
In response, practices are migrating away from measuring their value based on their investment expertise, which can more easily be commoditized.
Instead, they are beginning to think more holistically about the nonfinancial impact they can have on their clients.
“Advisors can harness the power of their client experience to increase retention, reduce attrition, and generate a strong referral system,” Marina Shtyrkov, research analyst at Cerulli, said in a statement. “To do so though, advisors need to restructure their thinking—and their processes.”
Of all advisors surveyed, only 30 percent strongly agree that their practice goes above and beyond to make clients feel special, and that it has a repeatable, consistent client experience.
“Advisors are adopting a combination of technology-driven client segmentation, intergenerational engagement within a team-based model, client appreciation, and holistic perspective to deliver an enhanced client experience,” Shtyrkov concludes. “For now, experience-centric practices are in the minority—but practices that adopt and invest in a client-centric mentality will likely cement their value proposition and engender lasting loyalty from clients.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
