I t's high time to recognize the hard work of today's financial advisors over the past couple of years in rebuilding the bridges that were so badly damaged, if not destroyed, by our financial tsunami. The bridges I'm referring to are those bridges of trust and professional respect that are so critical in the advisor/client relationship.

Our most recent research has uncovered a number of positive trends. First, for three consecutive years financial advisors have earned the number-one ranking for affluent trust. Pre-crisis, CPAs have always enjoyed the top ranking and tended to take it for granted. However, the landscape has changed, and apparently today's affluent investors are annoyed that their CPAs haven't been much help in guiding them through these troubled waters.

We have also been able to identify specific criteria that the affluent consider very important in a working relationship with a financial advisor. Our most recent data, compiled during the first quarter of 2011, illustrates 10 areas considered important to clients where advisors have made progress:

  • Receiving clear and timely communication.
  • Getting problems resolved quickly and to their satisfaction.
  • Receiving high-level personal service.
  • Investment performance is meeting expectations.
  • Possessing a clear understanding of the family's goals and needs.
  • Focusing on overseeing the family's financial affairs.
  • Creating and executing an up-to-date formal financial plan.
  • Organizing and keeping current all important financial documents.
  • Communication relating to any event that might impact the family's finances.
  • Using outside experts to help with other financial areas.

As the landscape of the financial services industry continues to change, the improvement of the advisor-client relationship appears to be mirroring the improvement in the S&P 500. Everyone is tired of all the doom and gloom, but they are guarded and working hard at remaining optimistic.

Yet financial advisors must be careful not to let this current state of optimism lead to complacency. Yes, affluent investors are more satisfied, as evidenced by their current advisor meeting their expectations; overall rating of areas of importance (including the 10 listed above) improved from percentages in the low 50s to 74.6. This represents solid progress and the year-to-year trend line is encouraging, but if we're honest, this rating is average at best.

Nearly three-quarters of our guardedly optimistic affluent investors have a significant portion of their investable assets away from their primary advisor. When it comes to making major decisions, word-of-mouth influence continues to be the method used by today's affluent, and its dominance is increasing. (Sixty-three percent of today's affluent investors selected their financial advisor based on a personal introduction from a family member, friend, colleague, or another professional.) And herein lie both the opportunity and the challenge for financial advisors who are interested in capitalizing on this goodwill. The following are a handful of tactics to consider:

  • Upgrade client relationships, consolidating all assets and introducing financial solutions you heretofore didn't provide.
  • Upgrade your service model; personal service and personal communication are statistically linked to greater client loyalty. When absent, they open the door to your competitors. An average rating is probably not good enough.
  • Get personal with your top clients, centers-of-influence, and referral alliance partners.
  • Don't mistake satisfaction for loyalty; the majority of today's affluent, even if satisfied, will entertain a second opinion if they encounter a clearly superior alternative. You want to make certain your affluent clients are loyal.
  • Commit to bringing in eight new affluent relationships over the balance of 2011 (rainmakers bring in 15 per year) by stimulating positive word-of-mouth influence among your affluent clients, centers-of-influence, and referral alliance partners.

Yes, there is still work to be done amid this guarded optimism, but opportunity awaits those financial advisors who are able to shake free of any complacency and are willing to roll up their sleeves.


Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients. oechsli.com.