How to turn a down market into client loyalty

The stock market dropped 5% yesterday, wiping out gains for the year. While this is bad for portfolios, it doesn't have to be bad for your client relationships.

Will the market bounce right back, or continue going down? Is this the beginning of the next bear? Who knows.  In terms of the growth of your practice, it may not matter. You do not have to be slowed down by the direction of the market. The fact is the best and most successful advisors add clients in down markets.

I don't mean to suggest that it will be pleasant. Is going through a down market easy? No. Can it be rewarding? Absolutely.  Everyone looks like a genius in an up market. The professionals standout when things are rocky. How do you build and strengthen client relationships when the markets are bad? Here are some suggestions.

1. Review your client portfolios and make sure you are prepared for a market downturn. Confirm that positions and allocations have not gotten out of whack because of market gains over the past couple years. Evaluating how those portfolios might respond if markets or interest rates changed suddenly or significantly, and make any adjustments you think appropriate.
2. Be ready to describe to your clients how you have prepared for the possibility of a market change. If the markets begin moving against you, have a communications plan that includes mass e-mails or letters and the conversations you will have individually in client appointments.
3. If the markets continue their slide, send out a communication to all clients. Let them know you are watching what's going on, and are prepared to make any changes that are appropriate when the time comes. One of the more interesting things I have learned from working with client groups is that they have little understanding of all the work you do on their behalf when they are not in front of you. Let them know. You don't necessarily have to see them more frequently when times are bad but they need to understand that you are always diligently looking out for their best interests.
4. Bring your clients together. If you have put off or neglected an advisory board, or have been considering starting one, now is the time to get it on the schedule. Engage your clients to tell you what they worry about. It may not be what you think. Get there guidance on the best ways of keeping in touch with the markets turned bad again. Whatever their concerns, get them to tell you what kind of communication with most effectively addresses their worries. Would it be letters, individual reviews, or group meetings? Should you be discussing their portfolios, or showing them the impact of a downturn on their financial plans?
5. Act on their advice. When you implement your communication strategy, refer to your advisory board. Let all clients know that there is a group of clients you are actively engaged with to help you understand what kind of response would most effectively address what's on their minds.

Many of the advisors I worked with in 2001 and 2008 were drained and exhausted by those difficult markets. The ones who kept in touch with their clients most effectively were rewarded for all that additional work with larger practices. Engaging your clients when things are bad will make your existing client relationships stronger and attract new ones.

How to design a referral marketing strategy – results from client engagement think tank, part four

In my first three posts on our client engagement think tank, I set the stage for a discussion of a referral marketing plan. What we found in our roundtable discussion with advisors is that many do not target prospects particularly well, don't use the target markets they have defined in their client onboarding process, and they don't have a plan to attract referrals from that target group. So now that these observations are in the open, how do you write a plan to systematically attract referrals? Here are a few basic principles:

1. Do an exceptional job – this may seem obvious, but many advisors I speak to want to know how to get referrals and do not question how the quality of their work may be part of the cause for not receiving more. Rather than ask "Why don't my clients prefer?" Asked "What can I do better?"
2. Get client feedback – In order to find out how good a job you're doing, and what you could do better, have a systematic way of obtaining feedback from your clients. Whether through surveys or advisory boards, have a structured way to ask questions like How my doing? What am I really good at? What unique value do I bring to the relationship?
3. Define your target market – Many advisors do not do enough work in defining who exactly their best target prospects are. Even many of the articles I have read on target markets only offer the shallowest and most superficial advice. It is not enough to define the target market by profession, a faith community, or an age range. And don't even get me started on investable assets. You need to go beyond the obvious and develop a more subtle and nuanced description of the people you can service most effectively. One of the advisors I work with initially told me his target market was "women." To be effective, you need to have unique skills and services that connect with a group. Therefore, that group needs to be less than 52% of the population. Ultimately, we arrived at a description that included "women who have just recently or are about to take control of their family finances for the first time in their lives." These are not the "suddenly single" or the cases of "sudden wealth." Many of these women are still married, and the family net worth has not changed. One example is a woman whose husband was recently diagnosed with Alzheimer's disease. The family and assets have not changed, but she was facing the fact that she was about to be in charge. It is a group of people with similar needs, shared concerns, in need of similar services.
4. Research the needs of your target audience – Now that you have determined who your target market is, consider what they might need from you do not currently provide. Perform a "gap analysis" on your practice versus the ideal practice for that target audience. Go back to your clients who are in that target audience and get their opinion on your research. Ask questions like "if I wanted to work with other people just like you, what services would I add that would make me the ideal advisor?" Bring them the results of your gap analysis, and ask "do you think I should add services like these?"
5. Design your communication strategy – Once you have tailored your practice to your target market, design a strategy for communicating your area of specialty and your specialized services. Let your clients know specifically what kind of new client you are focusing on, and what special skills you bring to the table to work with them. Learn how to describe what makes you unique for that target audience so that you can clearly articulate it to the people you meet. Let people know that you worked with your best clients to tailor your practice to that target group.

Clearly position yourself with your clients, your prospects, and the public. Come to own that particular spot on people's brains, and when someone expresses a need for that kind of advisor they will naturally think of you

Results From Client Engagement Think Tank, Part 1

A few weeks ago, I facilitated an industry think tank on client engagement, hosted by Julie Littlechild, in conjunction with FPA Business Solutions 2011 in Boston.  Our objective was to dig into the conclusions of Littlechild's most recent survey Anatomy Of The Referral and to hear about those experiences from the advisors point of view (the study was based on a survey of investors).

The study revealed critical insights into the process of enhancing client loyalty and attracting referrals. It provided statistics behind many concepts that we had suspected. But, there are limitations on polling data. We wanted to dig down into the results with real-time active conversation.

The study revealed that what drives client engagement are having the right clients, the right conversations, and asking the right questions. Some of what we wanted to know included:

• Do practices that segmented its client base incorporate that market segmentation into its client on boarding process?
• How broad were planning conversations with clients, what kind of leadership to the advisors exhibit with clients, and was there a transition during those conversations to a discussion of referrals?
• How do advisors solicit feedback and do they involve their clients in the strategic direction of their practices?
• Do they attract referrals consistently and do they have a referral marketing strategy to get them?

The results of the conversation were unexpected. There was also consensus on some surprising things. What we gleaned from the meeting was a clear direction on issues that needed further consideration.

In this series of posts, I will discuss a few of these surprising results:

• The disconnects between target markets and client on boarding processes.
• The way we target prospects needs reconsideration and updating.
• Referrals continue to be the most important source of new clients, and no one has a strategy for attracting them.
• Looking forward, what might be included in the design of referral marketing strategy.

The rest of this series will examine each of these concepts in more detail. Click here for Part 2.