A new study looks into the potential benefits of cultivating more advanced ‘know your client’ behaviours
The Financial Planning Association (FPA), the largest membership association for CFP professionals in the US, has released the results of a new “know your client” benchmark survey it developed with Capital Preferences and T. Rowe Price.
The study aimed to identify behaviours and techniques that financial-planning professionals can and should employ to know their clients. The behaviours range from those how financial planners understand client goals and manage family dynamics, to how they apply their understanding of clients to create better experiences.
“This study clearly re-defines what it means to 'know your client' and how understanding their behaviors is highly correlated with solidifying strong, lasting client relationships built on a foundation of understanding and trust,” said 2018 FPA President Frank Paré, CFP.
According to the study, financial planners who exhibit leading “know your client” behaviours gain deep and personal fulfillment from 60% more of their client relationships. Such planners also see 56% higher client willingness to recommend, as well as 72% higher net client growth rate.
Identifying gaps between what clients say and what they do can also yield benefits. Planners who actively do this — and work with clients to constructively resolve those gaps — report triple the growth rate of those who do not (30% vs. 11%). They also saw double the referral rates (18% vs. 9%) as well as more fulfilling relationships (75% vs. 60%).
Higher-performing planners also spent more time on family matters, directly engaging their primary clients’ parents and adult children. They were 40% more likely to discuss aging-related lifestyle transitions, such as legacy/wealth transfers, and cognitive decline with clients and their families.
Another important point for planners is to focus on a specific client audients. The study found that those who do so tend to be more proficient in “know your client” behaviours and see stronger outcomes. In other words, it seems that planners who go deeper with a single client type can use that understanding to attract similar clients.
"The results of the 'Know Your Client' study support our view that advisors who focus on deepening relationships with multiple family members can increase client loyalty," said Jean Dunn, vice president, Client Loyalty Insights, T. Rowe Price.
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