Earning client loyalty in a volatile industry

October 04, 2017 by Devin Rivera

A family celebrates their improved finances thanks to a financial advisor.

About the author

Devin Rivera

Account executive

Devin started with Advicent in the support department, working with existing partners to help them leverage our tools. Now on the Advicent sales team, he works to help advisors find the solutions that best suit their needs. Devin believes that, in any aspect of life, a well-made plan provides freedom. He is here to enable advisors to help their clients achieve financial freedom.

"Loyalty bought with money is overcome by money.” - Seneca the Younger

The financial services industry is one of the most competitive, rapidly changing industries in the world. Independent financial advisors; national and international firms; and fully automated start-ups are all competing for the attention and loyalty of the same client base. Additionally, they are not only competing with firms that have similar offerings but also with companies that offer entirely separate services.

A consumer might be getting her “financial advice” from an insurance agent, portfolio manager, accountant, financial planner, online investment platform, or best-selling author/financial guru. There are several ways to win someone’s business, but keeping that business is much more difficult. The only way to foster genuine loyalty from your clients is by earning it.

Vying for customer loyalty

In response to the rise of robo-advice, many financial advisors have been playing a dangerous game — trying to compete solely on price versus returns. If the numbers favor you, this strategy might win a client today, but they will walk out the door as soon as someone makes a better offer. Next year, you will find yourself dropping your rates — again. Earning a client’s loyalty goes beyond the numbers game. It comes from first understanding what their money means to them and then establishing your role in reaching their goals.

People have nuanced and emotional relationships with money. These relationships are affected by their upbringing, personality, income bracket, and sometimes just circumstance. For many high-net-worth individuals, money is just a means to an end. It is a fuel to pursue certain goals, opportunities, or legacies.

For some, money is a way to “keep score.” These are often the clients who never ask, “How much do I need to save for retirement?” Retirement is a foregone conclusion.

For others, money is the means to find freedom, security, and a stable future for themselves and their families. When you understand your client’s relationship with money, you have the opportunity to deliver service that nobody else is bringing to the table.

Demonstrating value as an advisor

We can look at debt as an example of the complex relationship clients have with money. For U.S. households with credit card debt, the average balance is $16,883. Additionally, the average for households carrying any type of debt (including mortgages) is $137,063. These debts act as a shackle; therefore, it is easy to imagine a person whose debt is holding them back from pursuing their passion, someone who cannot afford to leave the worst job they have ever had, or a young couple slowly giving up on their dream to own a home.

Now imagine that you are the mentor who helps them not only manage their debt but also start taking real steps toward the lives they want. When your client’s victories are your victories, you know that you are doing your job as an advisor. Subsequently, it will take much more than another firm’s fee structure to pull these clients away.

Management, sales, and marketing advice are always loaded with the word “value” and for good reason. Delivering value is the cornerstone of doing business; however, be careful about what images that word brings to mind.

As an advisor, you cannot afford to understand “value” simply by the bottom line. This will drive your clients to think the same way and encourage them always to chase the better deal. Instead, when you hear “value,” picture your client’s life and future. The value you bring is measured on how your advice will affect that future. Win new clients by sharing this vision of the future with them. Keep them by consistently guiding them toward that future.

To learn how NaviPlan illustrates the impact you can have on your clients' financial futures, click here.