Creative, persona-based client segmentation is just the first step for advisors to remain competitive
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Advisory practices may be used to determining their success by comparing their performance and AUM with those of other wealth-management firms. But just as awareness of investment fees is pressuring advisors to lower their own, clients are likely evaluating their firms using an entirely different yardstick.
“As consumers, investors are inclined to compare their wealth management experiences … against consumer goods and technology behemoths,” Cerulli Associates said in its latest issue of The Cerulli Edge – US Advisor Edition.
According to Cerulli, customers have become used to the seamless digital interfaces and feedback-driven individualized content that clients get from the likes of Facebook, Amazon, and Netflix. Because of that, advisors must focus on intentionally and consistently creating a desirable client experience. To that end, the firm offered a breakdown of an effective client experience strategy.
The first step was to go beyond traditional client segmentation metrics. Rather than A-B-C tiering, the report noted that experience-centric practices use comprehensive client data to build personas that identify niches within their book of business. These could incorporate clients’ life stages, their professional industry or function, or even common attributes such as areas of residence, interests, and family status. With pre-defined personas on hand, advisors can more easily draw a connection between the client’s perspective and the approach they prefer in terms of solutions set, communications style, and appreciation events.
The next piece, intergenerational engagement, is essential in order to stem involuntary attrition from asset outflows when clients pass away. “Integrating next-generation advisors can help retain these assets,” Cerulli said, highlighting the importance of hierarchy teams in forming next-generation client relationships. A team approach also allows better opportunities for clients to access advisors with different specialty areas, backgrounds, and skills.
Recognition and appreciation events were also identified as a key pillar of customer experience. Among experience-centric practices, 27% are said to host social events on a quarterly basis, as opposed to just 8% of their peers. Experience-centric firms, however, were less likely to host educational or social client events annually. “In lieu of hosting large-scale annual functions, experience-centric practices focus on smaller, more personalized client events that occur more frequently,” the report said.
An extension of the recognition and appreciation element is extending clients’ access to advice, particularly in times of crisis, emergency, or significant transitions. According to Cerulli, such gestures create a sense of on-demand support even when it isn’t always feasible.
Finally, adopting a holistic perspective that includes the client’s goals, values, and behaviours allows advisors to create a more personalized experience. A survey of advisors revealed that they expect to offer targeted planning services that address specific client needs to 22% of their clientele by 2020. With that in mind, Cerulli recommended that advisory firms’ strategic partners consider how planning solutions reflect the breadth and depth of advisor and client needs.
“Modularized or ‘light’ planning tools make it easier for advisors to incorporate financial planning into conversations with more clients, including those who have less complex financial situations or are not interested in all the pieces of a comprehensive plan,” Cerulli noted.
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