"When you provide an outstanding experience and services that succeed in clients' eyes, and those clients use your services repeatedly, they will become deeply invested in your practice's success."

The Outside-In Approach

By John Bowen

The best way I know to build a successful financial advisory firm is to "wow" your clients, providing them with an experience that impresses them and builds their trust from the very first meeting and never fails to delight them every step of the way.

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To deliver this level of world-class service, you have to manage your practice as a business, building and continually refining the processes that support this high-quality client experience. This means offering precisely the type and number of services your clients need, delivering these services in a highly efficient manner, and building in mechanisms for continually improving the client experience.

At the same time, you must benchmark your results against what really counts—free cash flows. Advisors often mistakenly focus on their gross revenue rather than their net income. Gross revenue, however, can mean little in terms of producing profitability or building equity in your firm. Instead, aim for a reliably recurring revenue stream with a predictable bottom-line net profit. Remember, it's what you take home that counts.

There are six primary steps for ensuring the type of client experience that will result in the dependable revenue stream you are looking for.

1. Evaluate service from your clients' perspective. Every decision you make must be informed by one thing: What is important to your clients. We most often hear from clients that what they want above all else is a trusted advisor who can simplify their financial lives, help them make smart decisions about their money, and assist them in achieving their financial goals and dreams.

With this in mind, successful advisors will look at how well their service meets the expectations and needs of their clients. Research conducted by my firm, CEG Worldwide, has revealed significant differences in the products offered by the most successful advisors compared to less successful ones. For example, as the income of advisors increases, they become less likely to offer mutual funds. While over three-quarters (78.2 percent) of advisors earning less than $75,000 use funds, just 56.1 percent of those earning over $150,000 do so. The reason: Funds tend not to be sophisticated products for affluent clients, provide little or no individual tax control, and often carry high fees.

To serve your clients better and move into the higher income brackets, you need to offer the kinds of products and services that affluent clients can get from those who traditionally serve that market, especially the boutique private banking operations of the wirehouses. Such options might include hedge funds and separate accounts. The crucial thing is to design your product offerings around what your clients truly want and need.

When evaluating any new service or product for its suitability to your clientele, ask yourself:

• Am I considering adding this service simply because other advisors offer it, or because it will add real value to my clients' financial lives?
• Will this offering add to my firm's ability to attract and retain affluent clients?
• Will this offering increase my net income and generally support my financial success?

2. Offer clients the appropriate number of choices. Far too many advisory firms focus on a single service offering, such as retirement planning, estate planning, investment management, or executive benefits. But our research tells us that investors, especially affluent ones, are looking for much more. While the majority of firms (65 percent) offer only one service, clients are actually much more satisfied when they are provided more services.

A study done by Prince & Associates of super-affluent ($5+ million) clients illustrates how dramatically client satisfaction increases as they are offered additional services. Just 15 percent of these super-affluent clients were offered three or more services, yet these few investors reported an extremely high level of satisfaction. If your goal is to expand your client relationships and improve their overall experience with your firm, you will need to offer multiple services.

Advisors who offer only one service also miss out on referrals and could lose clients to more comprehensive competitors. The Prince study found a direct link between the number of services offered by advisors and the number of referrals they receive from clients. The research showed that nearly half (49 percent) of clients offered at least three services provided two or more referrals. Of clients offered just one service, only 17 percent provided two or more referrals.

The lifetime value of a highly satisfied client goes way beyond his or her capitalized revenue stream, so the impact of a missed referral can be huge. A reduction by more than half of referrals will have a significant impact on the growth rate of your business.

3. Create a modular production system. When consistency is missing, your clients don't know what to expect. Your goal should be to deliver the same quality services, time and time again. No matter who clients (or prospects) are or whom they talk to in your firm, each should have the same experience. This consistency gives you two advantages:

• The spotlight shines on everyone, not just you. If your business is focused entirely around you, every client expects to see only you, leaving you with no way to leverage your time or staff. By creating systems that guarantee a consistent experience to every client, every time, they will be more willing to meet with anyone in your firm.
• Clients will be confident in referring new business to you, because they know that their friends or associates will also be treated the same.

To ensure this consistency, take a building block approach to your investment and consulting processes. Each service should be built in a discrete module that can be added or rearranged. When you find individualized solutions that work, create templates to turn them into discrete, repeatable procedures. Document every process and make the documentation easily accessible to everyone in your firm.

4. Provide fingertip access to all information. It is no longer acceptable to tell people that you'll look it up. It simply isn't of value to clients to receive their quarterly statements three weeks after the quarter ends. You need to be able to provide current information on the day of your quarterly meeting. This means that with today's volatile market, you have to be able to access all of your investment information online.

In addition, everyone in your practice should be able to access relevant information about clients and the individual steps of your processes at any time. Put all portfolio management software, client files, and contact information online so that it can be easily obtained by appropriate internal users and outsourced providers.

5. Create effective feedback loops. Most of us set ourselves up for disappointment by selling from the "inside out." That is, we look at the world through our own eyes and from our own point of view. We would be better served if we flipped this equation around to "outside in," so that we view the world through our clients' eyes.

By focusing on what your clients really want and using that information to help shape your firm's systems and employees' awareness, you'll create a client-driven practice. Because you will be doing business your clients' way, you'll have a real competitive edge. To collect this kind of feedback from your clients, you'll need an established means to gather it quickly, easily, and on a regular basis. To accomplish this, I recommend that all advisors do a formal survey of their clients every year. In addition, when your clients use customized services, your practice can discover much more about clients' preferences than it could ever learn through traditional market research. Create a feedback loop to capture that information.

6. Make it difficult for clients to leave. When you provide an outstanding experience and services that succeed in clients' eyes, and those clients use your services repeatedly, they will become deeply invested in your practice's processes and success. You'll end up with an advisor's dream—a group of clients who become your marketing apostles. Your clients will feel tremendous loyalty and increase your market share through referrals. And it will be hard for these clients to leave. If you've delighted them at every possible opportunity, it will never even occur to them to seek another advisor.