FPA Practice Management Center Blog

How many times have you met with a client and then not asked for a referral, or held off from calling a high-net-worth prospect in your pipeline? What stopped you from taking action? If you’re honest with yourself, you know the probable answer—fear; fear that whatever action you might take could result in some type of negative outcome. However, have you ever really calculated the true cost of giving into that fear?

To answer that, let’s first define fear using an analysis of it.

Fear can be defined as both a noun and a verb: (noun) an unpleasant emotion caused by the belief that someone or something is dangerous, likely to cause pain, or a threat; or (verb) to be afraid of (someone or something) as likely to be dangerous, painful or threatening.

One of the best definitions I found for the word uses the acronym F.E.A.R—False, Evidence, Appearing, Real.

It’s very possible that much of the fear we experience is perceived, and over time, past experiences can cause undue stress to you (and in turn, to your clients) because you might be holding onto fears that hold you back from exploring potential opportunities.

Calculating the Cost of Fear

We rarely calculate the cost of a failure. Sure, we might know what the revenue implications could have been had we onboarded a certain prospect, but adding up failures again and again is not a common practice. It is important to discuss the possible financial, emotional and physical costs of fear and its plausible consequences for you and your advisory practice.

The Financial Cost

One way to look at the financial cost of fear is to consider the cost of not asking for a referral.  When asking a client for a referral, a number of negative outcomes exist: You simply may not get the referral, the referred individual might not meet your ideal client profile, or he or she might not desire to meet with you. Regardless, it would be safe to say that if you were to hone your skills at routinely asking for referrals, eventually you would receive additional business.

Referrals are just one example of the possible activities many advisers hesitate to consistently work on for fear of failure. Networking and cold calling are others.

If you are honest with yourself, you will see that many of your fears could be costing you potential income.

The Emotional Cost

If you are operating your business with a constant state of fear as your reaction to most of what you do, it is nearly impossible to enjoy what you do. Of course it is not uncommon for financial advisers to feel the effects of particular fears during uncertain markets, but the bottom line is that you should find yourself seeking ways to always find the silver lining.

The Physical Cost

Often times, living in a constant state of anxiety or fear can take a toll on the body as well. The body is naturally designed to react to fear by sending out the necessary hormones to give you the energy for “flight” or the strength to “fight.” If every 100-point swing of the Dow makes you break out into a cold sweat, sooner rather than later it will lead to various physical or psychological maladies.

Living Beyond Fear

Now that you hopefully understand the impact fear can have, it’s important to ask yourself, “Why would I want to run my business this way”? Face your fears, find a realistic way to conquer them, implement those methods and evaluate the outcomes often.

Daniel C. Finley
President
Advisor Solutions
St. Paul, Minn.

For financial advisers, the long-term sustainability of business success hinges on the ability to attract and retain profitable client relationships. For those advisory firms committed to growth, the need to acquire additional assets under management and attract high-net-worth families as clients is constant.

Often times, in the wake of a focus on growth, client onboarding becomes an afterthought rather than a relationship-building opportunity, as the adviser and his or her team may turn to the next potential client rather than work on creating a lasting relationship with new clients. As the saying goes, you never get a second chance to make a first impression, so neglecting this important step can be costly in terms of client retention and the potential for referrals.

When clients are onboarded successfully as part of a well-defined process, the results are predictable:

• Client trust is stronger
• Client engagement is higher
• The long-term client-adviser bond is far richer
• The client understands the value of the partnership
• Clients are more likely to become advocates of the adviser and the advisory firm

To establish the best processes for onboarding new clients relative to your practice (every practice is unique, so there are no one-size fits all solutions), here are five strategies that our research on top-performing financial advisory practices have revealed are helpful:

1. Set Expectations Before Onboarding Begins

When you meet with a potential client (and again in an initial e-mail after the relationship has been formalized), lay out how the onboarding process works and what documents and materials are needed to transfer accounts, create a financial plan and start the relationship.

2. Collaborate in Building the Relationship

Clients will have a great deal of confidence if they know more about what to expect in terms of your process for working with them. There is no “best practice” in terms of how often and via what communications channels interactions between advisers and clients should take place; in fact, by collaboratively creating a schedule and deciding on the best methods for communication early on in the process, you and the client can begin an equal partnership on the best possible footing. Also, share with the client the role team members play in your practice and introduce them to the team members they will be interacting with when they call, email or come into the office

3. Engage on Social Media

If you’re on social media—and if you aren’t, consider why not—ask them if they’d like to connect with you on Facebook, LinkedIn, Twitter and whatever other platforms you might be on. Connecting with clients in these ways can provide valuable information about their lives, including job changes, promotions, new grandchildren, etc. and provides an addition channel for you to communicate.

4. Create a Formal Process for Onboarding Clients

When putting together this process, think about how you onboard clients now and about the way you would optimally like to welcome new clients to your practice. Consider the role you want the client to play in the process (see No. 2 above). Write down all the steps and which team members will be involved, then circulate it among your team for feedback before formalizing it and entering it into your CRM as a process. If this is something you already have in place, consider ways to make appropriate changes and improvements.

5. Connect with Clients’ Other Advisers

To act as a comprehensive wealth adviser, you need to know and be in active touch with your clients’ other trusted advisers, including CPAs, attorneys, insurance agents, etc. As part of the onboarding process, gather these names and contact information and establish contact with those professionals as early as possible in the onboarding process.

A Final Word

The client onboarding process, when navigated successfully, creates an opportunity to cement the adviser-client relationship at an early stage. By establishing processes, reaching out to trusted advisers and keeping clients in the loop about how you manage their relationship, you’re more likely to retain those clients and pave the way for potential referrals in the future.

If you’re interested in learning more about how to rework your client onboarding process, download “9 Client Onboarding Strategies for Top-Performing Financial Advisors” here.

Ray Sclafani
CEO and Founder
ClientWise LLC
Mount Kisco, NY