December 8, 2023

at that time 5-star reviews everywhereit can be difficult to discern how clients really feel about their financial advisors.

A new study from wealth tech firm Absolute Engagement and the Investment and Wealth Institute shows Measure Customer Sentiment precise could eat into the company’s profits It catches their advisors off guard if a client who seems happy today leaves tomorrow.

The study, published July 13, found that While 92% of wealth management clients currently prefer to stay with their current financial advisor, and 93% say they are satisfied with these relationships, only about half feel confident about their financial situation.

“As an industry, we do a really good job of tracking satisfaction, Net Promoter Score and loyalty,” Absolute Engagement founder and CEO Julie Littlechild said in an interview. Research result.

“The reality is, those scores always look good.”

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Julie Littlechild, founder and CEO of Absolute Engagement.

absolute participation

However, metrics around a client’s confidence in their personal financial situation, which Littlechild calls a “leading indicator,” can reflect something much more important: how a client feels about an advisor’s services, and thus financial peace of mind. Ultimately their overall goal.

The survey polled 1,000 wealth management clients between April 20 and May 1. All clients have at least $500,000 in investable assets, Littlechild said.many people are high net worthsome in the sample reported investable assets between $1 million and $4.9 million, and others reported investable assets of $5 million or more.

read more: For Wealth Managers, This Simple Move Could Be Worth Millions

flight risk
Among these wealthy customers, some “satisfaction gaps” emerged in the data. Some 82% of those said feeling financially secure was “very important,” but only 52% strongly agreed that they felt financially secure. Likewise, while 75% rated financial security as “very important”. of customers say it is important to feel in control when reaching their financial goals, yet only 51% strongly agree that they feel in control. While 74% of customers say it’s important to have confidence in reaching their financial goals, only 53% actually believe they can do it.

Overall, 31 percent had only low-to-moderate confidence in their financial situation.

“The message to the leadership team is that lack of confidence is a risk,” Littlechild said, adding that data showed a correlation between low confidence and lower customer loyalty.

This may also explain why only 35% of respondents said they would take the extra step of referring new clients to their advisors. Littlechild says that in her experience, even that number seems high—typically less than 5% of advisor clients who actually make referrals.

Referrals have long been the lifeblood of the industry, The vast majority of advisors still get most of their new business through referrals.Wealthy clients who provide referrals can Valuable source of organic growth.

read more: Godfather, feed the tiger, order food: How RIAs are winning over ultra-high-net-worth clients

Advisers and firms can use the findings as a wake-up call to embrace communications that move from mere market commentary to more future-oriented questions and benign explorations that reveal each client’s personal dreams and fears about money, said Littlechild. .

“Even as There has been uncertainty in the market, but it has been bouncing back“Sometimes there’s a disconnect with the client,” Littlechild said.

Despite market volatility and Inflation puts extra stress on many householdstheir financial anxiety often stems from other problems.

Littlechild said that while the wealth status of the respondents varied slightly, some of their biggest concerns were rising health care and long-term care costs — “despite being rich”. Market volatility as well as personal and family health and making sure children are making good financial decisions are also important.

For 43 percent of clients surveyed, the top benefit of working with an advisor was “gaining a clear vision for what they want in retirement,” according to the release. Yet only about half of clients say their advisor helps them plan for retirement and the future in non-financial ways, such as considering post-employment travel, health or personal goals.

peeled onion
“We just need to acknowledge the importance of that and then provide the tools for advisors,” Littlechild said of the company. “Whether it’s the soft skills to have better conversations, or the tools to really spark those emotions, I think that’s where the business is really going.”

absolute participation Launch your own fintech product Marchthe absolute engagement engine, helps advisors deliver personalized engagement to clients at scale.

For Patrick “Pat” Swift, wealth advisor and vice president of wealth planning at Amplus Wealth Advisors, individual advisors wield a great deal of power to shape favorable on their customer relationships. Amplius is a registered investment advisor with the Dynasty Financial Partners network, Headquartered in Blue Bell, Pennsylvanialocated in the Philadelphia metropolitan area.

“Probably the most important tool or character trait for any good advisor is good empathy,” Swift said. “Like, real empathy. Instead of, ‘I’m going to pretend to listen to your goals … so I can find a way to plug into our service schema.’”

kid agrees Empathetic listening is key.

read more: Anne Lester on why financial advisors should open a ‘window of empathy’ for younger clients

“The starting point is to have a more open conversation, to peel the onion and understand why. ‘Tell me more. Why do you feel the way you do? What has to happen (to you) to feel differently?’ These are Simple questions, but I think they unearth a lot of opportunities for engagement.”

According to Swift, listening to customers’ needs first gives him the opportunity to tailor the conversation, Show how he adds professional value It’s about their situation. Then, importantly, he cements that bond by delivering on his promises.

Swift says he’s read online about surveys that reveal the real reason customers leave: “It’s almost always the little thing. It’s, ‘I didn’t get a timely response to my email. I can never be reached. advisor. I feel like they never have time for me. I’m just a number.”