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Building strong personal relationships with your clients and consistently exceeding their expectations for direct, personal service – these traditionally were the best ways to generate referrals. But what if that’s no longer enough?
Last week I gave the keynote speech at a major marketing conference in Houston. I had lunch with Dr. Lee Frederiksen, who shared the results of a survey his firm had recently completed, asking consumers of professional services about their buying habits.
The survey included 500 professional services firms and 20 online marketing experts and queried on business development. The startling trend the data revealed was this: Relationship is out; reputation is in. It isn’t about who likes you anymore; it’s who recognizes you as the obvious expert – knowing what you do, why you do it well, and why it might be important to them.
What’s the difference between relationship and reputation? Relationship relies on the one-to-one. I know you, I like you and I want to continue to do business with you and refer you to others. Reputation is about what people think of you that don’t know you. How do third parties talk about you? How much are you “known” in the community, or on the national stage? How well can you convince someone that you are high quality when they may only read about you online? Reputation allows someone to form an opinion about you without even knowing you.
Consider how many financial advisors would say their client satisfaction is very high, but their overall referral rate is reasonably low. Perhaps you’re one of them. That can be a common concern among advisors, especially those who have strong relationships with existing clients but worry about the multi-generational impact when the assets pass to the next generation, or who worry about the research showing a widowed or divorced woman will often move assets to a new advisor. Research from PMC, the consulting arm of Envestnet, showing investors are more likely to change advisors at retirement.
If relationship is the rule, then why do even well-liked advisors struggle to gain new assets – or even to keep the ones they have in these different scenarios? Clearly, there are many cases where relationship alone is not enough.
Of course, financial advisors should not neglect relationships. A personal touch is vital for keeping current clients happy. But if you want to expand your practice and find referrals, locate new prospects and keep transitioning assets, then develop a parallel emphasis on reputation.