The Job You Do

Retirement Advisory Comes of Age

Mining the competitive advantage of the customer experience

by Mitchell H. Caplan

Mr. Caplan is CEO of Jefferson National, now operating as Nationwide’s advisory solutions business. Visit

The advice industry is facing tremendous change, from the influx of new technologies, to the impact of Washington and the DOL fiduciary ruling, but one priority remains constant: knowing what matters most to clients.

For attracting, retaining and nurturing satisfied clients, the “customer experience” is a key competitive advantage, according to this year’s Advisor Authority study of more than 1,600 Registered Investment Advisors (RIAs), fee-based advisors and individual investors nationwide.

Likewise, customer experience is fundamental for the growth, health and profitability of your practice. It is the foundation of a mutually beneficial partnership. One that allows you and your clients to reach the most important financial goals, by helping your clients build more wealth, and helping your practice grow more assets under management.

As competition increases and pricing pressure grows, customer experience can distinguish you and your firm from other advisors. In a special report that takes a 360-degree view, we uncover why customer experience matters to advisors, what’s most important to investors, and the keys to unlock client acquisition, satisfaction and retention.

And most important for the Customer Experience to work: Clients must come first. Provide clients with holistic unbiased guided advice that can solve for what they want, what they need – and what is making them anxious in their financial lives. Putting clients first is not just a regulatory requirement, it’s a business necessity that is increasing in importance.

Building the Advisor/Investor Relationship

If customer experience is the DNA of the advisor/investor relationship, what is the single most important attribute to make that relationship work? The answer is clear: Trust must come first.

Advisors (44%), including the High AUM (34%) and the High Earning (33%) all rate trustworthiness as the most important attribute of the advisor/investor relationship by a wide margin. The same is true of investors (35%), including the HNW (34%) and the UHNW (34%). In this industry, it’s important to develop and cultivate a culture of trust, and to work on earning your clients’ trust every day. In the end, trust isn’t given, it’s earned.

And communication is key, according to advisors and investors. Advisors (11%), including the High AUM (16%) and the High Earning (15%), all rate good communication as the second most important attribute of the advisor/investor relationship. But while investors (16%) rate trust worthiness second, its importance declines to third for the HNW (15%) and declines to fifth for the UHNW (7%).

In fact, when it comes to the business of managing their finances, investors want results – and look for the track-record to prove it. So while advisors rate a proven track-record a distant fourth (8%) for building a strong advisor/investor relationship, investors say track a proven record ties with being a good communicator for second (16%). Proven track-record rates even higher among the High Net Worth (23%), and the Ultra HNW (21%) investors. And take note: The Ultra HNW are twice as likely as other investors to expect their advisor to add value.

Creating a Successful Customer Experience

Customer experience can be defined as the way clients interact with you and your firm across all touchpoints—whether visiting your website, entering your client portal to view and manage their accounts, answering your emails, calling your office, or coming in for an annual meeting.

So what is most important to ensure your customer experience is a success?
When advisors name the top three factors that create a successful customer experience, they place a premium on one-on-one relationships (44%), while quality communication is rated second (39%). Advisors put clients first by focusing on products and services that are high-value (24%) and transparent (22%). This client-first mentality pulls through as advisors also cite the importance of improving their clients’ financial literacy (22%) among the top five factors.

When investors are asked to identify the main reason they have an advisor, the number-one factor by a wide margin is to feel more confident in their financial future

When investors name the top three factors that contribute to a successful customer experience, they rate quality of communication first (36%) and a personal one-on-one relationship a close second (35%). And note that to create a more successful customer experience for affluent investors, a personal one-on-one relationship takes priority, especially for the HNW (41%) and the Ultra HNW (36%).

To contribute to the success of the customer experience, investors are clear that products and investment strategies should be transparent (28%), high-value (26%), low-cost (26%), and should offer more choice (20%). And when it comes to products and services, the HNW also say that a broad choice (30%) is especially important.

And while technology is a way of life today, investors say it is no replacement for the human touch when creating a successful customer experience. This becomes abundantly clear when comparing investors’ higher marks for one-on-one relationships (35%) and quality communication (36%), with their lower marks for the digital client experience (12%) and integration of robo-advisors (6%). And in the age of instantaneous digital communications, investors and advisors still say that face-to-face is their preferred method of communication.

Attracting Clients

When investors are asked to identify the main reason they have an advisor, the number-one factor by a wide margin is to feel more confident in their financial future (30%). So what matters most to clients when selecting an advisor? The priorities are consistently clear year-over-year: Experience, holistic planning, and a fee-based fiduciary standard matter most.

In both 2017 and 2016, the number-one factor by a wide margin is advisor experience/years of experience (46% each year). Personalized advice for a holistic financial picture is second (26% each year), while serving clients using a fee-based fiduciary standard is a close third, at 25% in 2017 and 24% in 2016. While there are many other factors, they quickly decline in importance.

Although it’s clear that experience is important to earn a client’s confidence – and earn their business – there are opportunities, even for younger advisors. If you don’t have the experience, it’s important to leverage the experience of others. This means building the right partnerships, and engaging the right experts. In fact, HNW and Ultra HNW investors say it’s important for advisor to maintain partnerships with CPAs, Trust Attorneys and Estate Planners, to provide more holistic advice and create a more successful customer experience. Clearly, the importance of partnerships never stops – even for the most seasoned and experienced advisors.

The Opportunity is Huge

More than 9 in 10 RIAs and fee-based advisors – including the most successful – say that the customer experience is an important part of their value proposition. The top reasons are to improve client retention, distinguish their firm from their competitors, and to attract prospective clients. And when asked if the customer experience will become more important for attracting and retaining clients in the next twelve months, more than 8 in 10 advisors agree.

As our results show, investors who work with an advisor are far more optimistic about their financial outlook for 2017 (59%) than those who do not (40%) – and year-over-year their optimism has increased considerably. Clearly, investors can benefit from your services – and the opportunity is huge. Two in five investors (42%) do not have a financial advisor. Even among the most affluent, slightly more than one-third of the HNW (37%) and Ultra HNW (37%) do not have an advisor.

So now is the right time to create your firm’s unique customer experience. Invest the time to earn client’s trust and build one-on-one relationships. Focus on communication, holistic planning, and an unbiased fiduciary standard. Show clients that you understand their needs, that you know their problems better than they do, and that you have the right transparent, low-cost solutions they expect.

To attract, retain and nurture satisfied clients – and to unlock the growth, health and profitability of your practice – customer experience can be your competitive advantage. ◊