Every industry must recognize the wants and needs of its potential customer base. The financial services industry is no different. In a recent study by The Oechsli Institute, affluent investors shared how they were thinking about their financial affairs. Part of the study, published in 2010, centered on what was rated as "very important" by this group of investors.
Here's that list:
1. Provide clear and timely communication
2. Resolve problems quickly and to my satisfaction
3. Be focused on overseeing my family's financial affairs, not marketing his/her practice
4. Meet my investment performance expectations
5. Possess a comprehensive breadth and depth of industry knowledge
6. Always have my family's best interests behind every financial recommendation
7. Fully disclose all fees
8. Keep me informed of any events that might impact my family's finances
9. Deliver high-level personal service
10. Care more about me than just my investments
11. Fully understand my family's goals and needs
12. Help me create and execute a formal financial plan
13. Develop and communicate a financial recovery strategy for my family
14. Coordinate all of my family's investment decisions
15. Help me organize and keep up-to-date all my important financial documents
16. Use outside experts to help with other financial areas
As you look at the list above, there are some important themes to recognize. First, the focus should be on the total picture, not primarily on the investment portfolio. Only two of the 16 characteristics have anything to do with investments. The conversation about investments is not the driving force behind what the affluent investor is looking for.
Second, communication is key to a successful relationship. This is no surprise, since clear communication is the foundation of any successful relationship. Being "on the same page" is a very important consideration when entertaining the idea of hiring a financial planner.
Third, coordination/organization of the family's affairs is a high priority. Several of the characteristics in the list deal with properly understanding the total picture for the family.
Finally, affluent investors are looking for an advisor who can recognize issues and solve problems in a timely fashion.
Another part of the study was entitled "Top Reasons Clients Leave Adviser," and it detailed the reasons why the relationship between the financial advisor and a client breaks down.
Here is that list:
• Repeated mistakes by advisor and/or team
• Too focused on marketing, not enough on family's financial affairs
• Poor communication
• Does not trust the stability of firm
• Lack of transparency with fees
• Investment performance not meeting expectations
This list is interesting in that it incorporates some old, and some new, issues. As you can see, investment performance is typically not the driving force behind the breakdown of the relationship between the financial planner and his/her client. Poor communication and the inability to maintain the client at the center of the relationship usually are at the top of the lists.
Two of the points are reflective of more recent fears driven by the headlines of our times. First, we are living in the post-Bernie Madoff era. Investors are demanding more and more fully-disclosed reporting of investment fees. Second, as a result of the recent financial meltdown and the impact on some of the major brokerage houses, many individuals need more assurances that the organization and the people that they are dealing with are trustworthy. No longer is it good enough just to have a name that has been in the industry for many decades.
Consider a conversation I had with a client. We were talking about his experience with my firm and how it compared to his friends' experiences with their financial planners. My client had been under the impression that since his friends had financial planners, they were "all set," but when he drilled down a little deeper he learned otherwise.
Some of his friends indicated that their current planner had been "all over them" when they first brought the money over. Now that they'd been with their planners for several years, they found that the relationship, or "the communication level," had changed. His friends were actually looking for new financial planners, not because of poor performance per se, but because they felt they were no longer important to the financial planner.
I have heard it many times in my 25 years—it is not the investment performance that drives people away, it is the lack of attention they are given.
About Mark Singer
Mark Singer is a CERTIFIED FINANCIAL PLANNER™ professional and the author of The Changing Landscape of Retirement–What You Don't Know Could Hurt You. He has been The Retirement Guide to thousands of investors for close to 25 years and is the creator of the Retirement Roadmap and the Financial Organizer System, both of which contribute to a solution to investors' greatest concerns–properly coordinating their financial affairs. These systems have become a primary resource for the people who have worked with Mark over the years. You can download the first chapter of Mark's new book for free by Liking it on Facebook.