All too often in financial advice firms, there's a balancing act between maintaining successful client relationships while growing the business and managing staff
So what's the best way for financial advice practices to maintain exceptional relationships with their clients, deliver outstanding advice, and at the same time free up senior advisers' time to focus on growth opportunities?
Trust is at the heart of the relationship between advisers and their clients. Clients must have a core belief that their adviser is focused on delivering sound advice that will assist to protect and grow their wealth. Without that, the relationship will flounder.
"That's the part of the relationship that's absolutely sacrosanct," says Craig Griffin, Head of Sales and Performance at Macquarie Banking and Financial Services.
Advice firms differ from other businesses in that the owners of the business must be able to manage the practice, and at the same time be technically skilled at delivering advice to garner clients' respect.
"The credibility, trust and respect senior managers have comes from their ability to both lead the business and provide advice to clients," explains Griffin.
With this in mind, transferring client relationships from principals to other members of the firm to free up time to build relationships with potential new clients has to be skilfully managed so that existing relationships with clients remain robust.
"The ideal approach is to change the nature of the client relationship so that the principal of the advice firm remains in the trusted adviser role, but the advice component of the relationship is performed by other members of the practice and trust is transferred," suggests Griffin.
To maintain client trust, there needs to be a compelling reason for the advice component of the relationship to be successfully transferred from the principal to other members of the firm.
One way to do this is to ensure the practice develops advisers with specialist skill sets, so that clients receive the benefit of dealing with an adviser who has genuine insights about an area of practice, for instance high net worth client needs or a particular industry.
"The principal's role then becomes one where they are focused on ensuring the client is satisfied with the level of service they are receiving," Griffin adds.
For instance, initial meetings with a client might involve both the principal and team of specialist advisers who can assist the client across the full spectrum of their requirements.
Future meetings may involve only the advisers who can address the client's specific need. To maintain client trust, the principal would contact the client following the meeting with the specialists to ensure the client is satisfied with the level of service and the advice received.
"So you're effectively giving the client access to the ideal people to manage their unique needs, leaving the principal more free time to focus on growing the business. The adviser is accountable for the relationship and advice and the principal is still involved in client satisfaction and the relationship with the practice," says Griffin.
Taking this approach also allows the business to offer better quality advice, taking on board client feedback to help make the relationship more productive. Because there is a separation between the client service and advice components of the relationship, the principal may have an opportunity to find out whether the client is satisfied with the quality of the advice they are receiving and help find referrals.
Principals can directly ask clients about their experience with the firm, giving them the opportunity to raise, and ultimately resolve, any issues. This reduces the risk that a client will become dormant because they are dissatisfied with an aspect of the relationship, but don't have an avenue through which to express this.
Griffin suggests principals use a tool to gauge how happy clients are with the quality of the advice they receive: simply ask them to rate on a scale of one to 10 how likely they would be to recommend the practice to their network.
This information can be used in two ways. If the score is low, the principal can delve into why with the client and use this information to coach advisers so they can offer better advice.
They can also probe more deeply when clients name a high score and, if appropriate, ask for referrals, helping them to meet their obligation to bring more business into the firm.
This way of managing an advice business changes the role of the principal. Instead of the business owner being fully focused on running the enterprise and dealing with clients, they instead spend up to 40 per cent of their time coaching the advisers within the business on the values and ethics of the firm, to help them maintain excellent relationships with clients.
"The principal then needs to consider how they can best find the right people within the firm whom they can coach about things such as what integrity looks like in the business," he says.
So what's the client's role in all this? Griffin stresses that it's essential to have an open and honest conversation with clients when they first engage with the firm about the scope of the relationship. This includes detailing how they will interact with the principal, and also the specialist services with which they are likely to engage.
The idea is to build a client engagement model right from the outset that meets the needs of the client and gives them access to the specialist advice they require, ensures client relationships are properly monitored and managed, and also helps ensure the ongoing sustainability of the firm.