As competition hots up between advisers and other financial institutions, it is more important than ever to establish a long-term relationship with a client rather than than simply sell them a product
The issue of where the next client is coming from is a very serious one for most advisers at the moment.
In the broadest possible terms, advisers are in competition with high street banks and building societies, insurance companies, solicitors and accountants, and even some of the fund management groups themselves.
The way I see it, it is not so much competition among advisers that is relevant but rather recognising that advisers are in the competition for money market.
You only have to consider the accumulated effects of the adverts in the financial press, TV, radio, poster campaigns and the odd rain-forest of direct mail to know that the battle is on for the wallets ' if not the hearts and minds ' of the great British investor.
I have always been a great advocate of client relationship management. The good news for most advisers is that most of the larger institutions seem to believe this is squeezing the last drop of financial blood out of a saver's wallet.
Most of the financial propositions put forward are fairly coarse, very much along the lines of: 'This is something we think is a good idea, so, here's the compliant information on it, here's the application form ' now give us your money.'
This may work for a while and it may work in terms of playing the numbers game but something is almost certain to go wrong eventually ' either with the product or the level of service ' which will lose you the client.
For a big organisation, you may not know about it for a long time. Even worse, if you are playing the numbers game, you won't care.
This is where one of the unique selling propositions of being an adviser comes into play ' we know our clients in more detail and more intimately in a financial sense than almost any other financial institution. We should use the benefits of this relationship with them to our own advantage, not just in the financial sense, but in developing a long-term meaningful relationship with them.
Put simply, as advisers we can deal with any bank or building society, insurance company or investment group. So why would a client want to go anywhere else?
A few years ago I came across the acquisition ' development ' retention model of client relationship management, as seen in the diagram above.
The basic idea is that, if there are lots of people out there with the potential to invest and who need advice, the question is how you get them to come to you rather than anybody else? The first thing you have to do is get your strategy and proposal right. It might be worth considering how some of the more successful adviser firms have done this.
Hargreaves Lansdown has built a dynasty on the use of shareholder lists to become the foremost distributor of financial products in the UK on an independent basis. Bear in mind, this is a company that was started 20 years ago from, allegedly, Stephen Lansdown's bedroom.
Chase de Vere's strategy was to advertise guides and acquire prospects. Latterly, Willis Owen had the bright idea of using the national press service and, while discounting was in fashion, it served them very well. The point is that once you have got a client to enquire, you need to do something with them.
Ideally, you'd like to get them to buy something from you. This is easier said than done, especially in the current climate when financial products are just not working ' the turbulent stock market has stilted the Isa market, means that maturing high income bonds are not working and is even putting people off saving in their pension funds.
Ironically, there has never been a time like now to give them the face-to-face advice they need to steer them through the jungle. So why not give it to them?
Once they have bought, you need to reinforce the relationship with them. And it is here, I think, that most of us let our clients down.
Once they have told you their life history and financial circumstances, it should not take much to help engage with them at an emotional level and give them what they really want. And here we are talking about going beyond just the provision of financial services into other areas of their life.
At this stage, if you are wondering what I am talking about, then you will probably never get it. This is not a problem, as long as you are not surprised when a client, whom you think has a long-standing relationship with you, is whipped away from under your nose.
The ultimate aim is for clients to become an advocate of your company. This means they just will not go anywhere else, do anything without checking with you, believe you are the best adviser on Earth and a financial guru, and will be only too pleased to refer you on to their friends.
That is when you know you have really made it. You will have found a sustainable business model for the future and succession planning in terms of clients will never be a problem for you ever again.
Graham Hooper is marketing director at Holden Meehan.
The first stage in building a successful client relationship is getting your strategy and proposal right. For example:
• Hargreaves Lansdown has built its reputation on the distribution of shareholder lists to become the foremost distributor of financial products on an independent basis
• Chase de Vere's strategy was to advertise guides and acquire prospects
• Willis Owen used the national press service
Source: Holden Meehan
Targeting intermediary market
Represents £8trn in assets
Simplify and modernise
Retirement Planner Forum 2019