Investors primarily use the services of financial advisors in order to protect and increase their personal net worth. Because of that, advisors concentrate on investment performance and growth options in their dealings with most clients.
But when investors consider the long-term value of their advisor relationship, they don’t always first consider their return on investment.
Instead, investors often first consider how, when and why they hear from their advisor.
Spectrem does frequent research on the relationship between investors and advisors in order to provide advisors with the highest level of knowledge about the people they work with. In all of our research, when we ask about why investors would consider changing advisors, the topic of proper communication is tops on the list.
In our study Effective Communication Techniques: Attracting and Retaining Current and Next-Generation Clients, investors are asked to name reasons they would fire their advisor. More than 65 percent said “not returning phone calls in a timely manner” and that was the most popular answer to the question.
When asked to define “trust”, almost 70 percent of investors defined it as an advisor being proactive in making contact and providing new and constant information about investments.
While there are exceptions to this rule, investors want to hear from their advisors. They don’t necessarily want the perfunctory “just checking in” phone call, but they want frequent updates on their accounts and investments, and they want to know their advisor has given thought to their individual needs and preferences.
And guess what? Investors don’t care how you contact them, as long as you make contact. They would gladly “talk’’ via social media, and many want to follow their advisor on Twitter and be friends on Facebook. An increasing percentage of investors want to communicate via text, and still others consider video-chatting as a communication choice.
Investors do have a definition of “timely communication”. Although the definition differs for every investor, for the most part, advisors are not likely to be criticized for making contact too often (unless all the advisor is doing is attempting to sell products).
Investors are also very specific about the time frame for receiving return communication. If an investor places a phone call to their advisor or sends an email, they definitely expect a timely response and will bristle if the response is not timely enough. Advisors need to know which of their clients has the highest expectations in terms of response time.
Spectrem’s Effective Communicationstudy also considers advisor newsletters and blogs and finds out they are read by investors. There are still people who enjoy reading the printed word, and these forms of communication can delve into a topic with more depth, a feature some investors enjoy.
The bottom line is that advisors need to consider their communication habits frequently and make every effort to meet their clients’ demands in this area. It is easy to simply ask or even poll your client base to find out what is considered proper communication, and act accordingly.
It would be unfortunate to lose a client simply because you did not place a phone call or email when one was expected.