Dallas: “What does your research say is the #1 reason for an affluent prospect to select one financial advisor over another?” asked Tony during the Q & A session following my keynote. This is a question that every advisor wants answered with real-time data. The answer:
A strong recommendation from someone they trust.
This factoid might appear simplistic at first glance, but it’s actually quite complex. How so? Because much is required of today’s financial advisor in order to earn such distinction.
This is why we do so much research as the foundation for all of our programs and we mix it into nearly every article, blog post or twitter update. This research has become a big part of The Oechsli Institute as a company and why we’ve been so fortunate in being able to help advisors attract, serve and develop loyal affluent clients in these challenging times.
In this issue of Practice Management I thought it might be helpful to give you an update on our 2011 research. So far this year, we’ve completed three separate research projects:
- Affluent Investors: how the affluent select advisors and what type of service they expect
- Financial Advisors: what separates elite advisors from the pack?
- Administrative Assistants: how this relationship works best and what constitutes a high performing assistant
These studies weren’t conducted in isolation. Our goal was to triangulate these studies in an effort to better understand the entire advisor affluent client cycle; from finding affluent clients, to serving them, to developing loyalty that allows penetration of their Centers of Influence.
The following are excerpts from our research reports that showcase a few of our many findings. We hope you find it useful.
2011 Affluent Investor Research—Soon To Be Released
Our objective in this study was to uncover changes in the affluent client / advisor relationship. In many ways, the affluent investor’s feeling towards financial professionals is taking a more positive cast. Of the 16 factors that are considered important to today’s affluent investors, progress has been made on all fronts. However, the overall rating is a 74.6 percent, which is far from making the Dean’s list in any university. Financial advisors should be working feverishly to make the Dean’s list, or at least have a B+ average. We also uncovered:
- Although it should go without saying, one of the most important factors today’s affluent investor uses in selecting a financial advisor is trust. They must feel as though the advisor will act in their best interest. The quality of the actual proposal a financial advisor presents continues to rate as much less significant.
- Personal introductions remain the most effective method of acquiring new affluent clients by a wide margin, while public seminars, cold calling, and direct mail continue to be highly ineffective. This appears to be a continuing trend as very few affluent investors discovered their current financial advisor through those mediums.
- Small intimate social events continue to rank as the event of choice by affluent investors. For the second year in a row, they rank #1 for both attendance and willingness to bring a guest.
2011 Financial Advisor Research
As always, our goal is to identify best practices for financial advisors to model, along with the most common performance gaps that financial advisors can work to correct. We found many, very notable differences between the actions of elite advisors and those of the general population. And as we all know, the quickest way to become an elite advisor is to mirror the elite advisors’ actions. Here is a sampling of what we found:
- Job satisfaction continues to be on the rise for the general population of financial advisors with 44.6 percent responding that they were “very satisfied” with their careers, up from 39.8 percent in 2010.
- Just 1.5 percent of advisors are Rainmakers. This is down from 7 percent pre-crisis, in an environment where the affluent are looking for “go-to” advisors.
- Not surprisingly, elite advisors rate their affluent sales skills higher (8.27 out of 10) than the general population of advisors (6.63).
- Over the past three years, on an annual basis, 90 percent of financial advisors have acquired fewer than four $1 million new clients, with 40 percent to 45 percent not bringing in a single new client at this level.
- Elite advisors hold more events, hold more intimate client (social) events, and bring in more new clients by incorporating these events as part of their marketing strategy.
2011 Administrative Assistant Research
We recognize that it is extremely difficult, if not impossible, to attract, serve, and develop loyal affluent clients without excellent support. This has created a tremendous opportunity for financial advisors and teams who are willing to invest the time, energy, and resources into developing best-in-class support personnel. Our research showed big gaps between perceptions of advisors and assistants—these gaps are at the heart of a major communication issue.
- Attention to Detail was rated at 95 percent in terms of importance by advisors and only 74 percent of their support personal rated their performance in this area as excellent. Advisors took an even dimmer view as they rated only 61 percent of their assistants as excelling in this critical category.
- Positive Mental Attitude was rated at 93 percent in level of importance and 82 percent of support personnel considered their attitude to be excellent. Whereas only 69 percent of advisors viewed their assistants to have a stellar attitude.
- Training is known to be essential to both advisors and support personnel, however only 22 percent of personal assistants were trained by their financial advisor and 40 percent considered their training as “ad-hoc” at best.
The interrelatedness of these research projects continues to amaze us, even as we anticipated the connection. The Affluent want a “go-to” advisor to oversee their family’s financial affairs, yet, they don’t know where to find this person. Financial advisors are working hard to market their services to affluent investors, yet, many don’t understand how to market their services to today’s affluent and also lack the sales skills. Ritz Carlton service delivered with Fed-Ex efficiency is at the heart of the relationship management and relationship marketing process–which requires indispensible support personnel. Although we see work to be done, there is a tremendous opportunity for financial advisors.
We will continue to send you updates in hope that our research will help you in your journey of ongoing improvement. If you have any ideas for research projects, please send them our way. We’re always open to suggestions.
If you would like a FREE PDF excerpt of either of these reports, please visit our download center. Enjoy!
Also, if you haven’t already, join The Oechsli Institute’s Group on LinkedIn!
Once again, we want to thank all of you who have e-mailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic suggestions or special requests, please contact Rich Santos, publisher of Registered Rep. and Trusts & Estates magazines, at [email protected].
