Relationships with clients

by admin on 6 July 2008

In this article, Phil Billingham of Perception Support considers the relationship a client has with an advisory form and the role paraplanners play.perception.PNG


In this article we are going to look at the core of a Professional Services company – the relationship with it’s clients.

And  the first thing to look at is – What is the difference between a Customer rather than a Clients?

I believe we are back to the word ‘Relationship’. Clients have a relationship with you. The clue is that they keep dealing with you. They buy through you more than once.

Relationships live or die through contact. Appropriate contact drives all our relationships, in both our personal lives and in business.

It’s that word again. Appropriate. What a weasel word. It can mean anything, and I know we just hate it when the FSA uses it.

It gets worse. You are not the judge of whether your level of relationship is appropriate or not. The client is the one who decides what is appropriate. And that will vary across the board, and over time. But you are the one who has to set up systems to deliver this contact, and then to manage it. How unfair is that? Actually, very unfair, but we need to build that unfairness into our planning.

So our clients are customers who think they are clients? Whilst sounding a bit odd, it’s as close as we can get.

What we do know is that ultimately, the value of an IFA business is a function of it’s client base, not it’s customer base. So our role is to obtain customers, convert them to clients, and use them to add value to our business.

Why is it always so simple when I put it like that?

Meanwhile, back in the real world, life is a little more complicated. The key area I want to look at I this article is the issue of managing our relationship with clients.  I believe it is the skill of managing clients through a process.

Let’s take a step back for now. Why do clients deal with us?

In general, we come to deal with clients when their lives change. Think about it. When do people want to speak to you?

  • At retirement?
  • Changing Jobs
  • Divorce
  • Birth of Children
  • Selling a business

The list can go on, but all these events have two things in common.

  1. The first is that they happen very rarely to individuals, perhaps only once.
  2. The second is that they are massive changes in their lives.

The net result of these two factors is that these are times of great stress for clients. It’s all new. They are no longer in full control. They need help.  But, more specifically, they need a map. They need someone to guide them, someone who has been there before, and guided other people through a similar process.  In other words, they need you, your firm and your help.

So when I speak of Managing clients through a process, I mean the role of setting out the process, and your respective roles in the process.   Actually, it goes deeper than that. It means showing them that every step is connected, that there is a plan, and that by following the plan, their problems will be addressed and that they will be able to sleep at night.  Given we can’t show them what the performance will be of their new Investments, or how their family will be taken care of, how can we re-assure them?

As ever, it is the little things. It’s going through a structured process. I cannot over-emphasise how re-assuring clients feel when it is clear that you know what the issues are, that you have been down this road before, and that there is a ‘Map’ that can guide them towards a sensible solution.

We can miss this stress, this sense of dislocation and fear. Clients do not like to show it directly. Instead they express their stress elsewhere. They question why you need data. They become overly focussed on charges. They try to ‘Micro Manage’ and get too involved in the fund selection process. If we are not careful, we can end up trying to manage the symptoms, and miss the cause, which is fear and uncertainty. We can end up in conflict with our clients, by reacting to the symptoms of their fear, and not addressing those fears directly.

This risk can be minimised by setting out a path. Some tips would be:

  • Always write out with an agenda, and set out what is required from them at each meeting
  • Explain verbally what the process is, and follow this up in writing
  • Properly position yourself and the firm, with emphasis on your expertise and experience in the relevant area, and what resources will be brought to bear.
  • Explain the role of each stage, especially the data gathering stage – fact-finding.
  • Keep in Pro-active contact with them as things are being put in place. And No, it’s simply not acceptable that you say ‘and here is my number, call if you have a query’. That places way too much pressure on them. They are paying you to manage this, you must do so.

Can I please emphasise this point, as it is a critical one. If you do not actively contact the client, but place all the pressure on them to call you, they will often just not do so. This will lead to unhappy clients and pure customers who simply next do business with someone else.

The role of the Paraplanner here is very important. In the really professional firms, they are used to educate and guide the clients through a process. And clients appreciate the difference. Perhaps they cannot quite articulate it, but deep down they do.

The last point to mention about all this stress and fear is that we miss it because the process is so familiar to us. We’ve been here before. “Of course we can transfer your pensions to one pot, and generate a 5% income whilst retaining control. We simply use balanced portfolio within a USP, whilst watching out for age 75 because of the ASP issue”.

See? It’s easy. And so it is. But only to us. After 20 years of doing it, and with software and administrative help. But it does not look easy to the client. It looks hard. We need to re-assure them more.

And in case I didn’t make myself clear, can I state in black and white, here and now that the process is not for our benefit, not for the firms benefit, or for the FSA or for Compliance, it is for the clients benefit.

Perhaps here it is worth discussing the old standard ‘Start with the end in mind’.

In this case, it means that we start our relationship with customers with the aim of converting customers to clients.  But we all do that, you cry. Well, “To a point Lord Copper”. If that were true, I would never see the classic complaint file that has lots of ‘Admin’ contact at the point of transaction, 3 or 5 years of silence, and the next thing on the file is a complaint. The sad thing is that almost all complaint files look the same. It points to the underlying cause, which is a breakdown in the relationship.

So the evidence is that if you have a sound relationship process in place, one result will be a lower level of complaints.

To summarise.

  • We turn Customers into Clients by deliberately setting up a relationship building process.
  • That process must explicitly recognise the stresses and fears that our customers and clients feel, and be designed to lessen those stresses.
  • Paraplanners are, or should be, at the heart of this process

Phil Billingham ACII CFP Chartered Financial Planner

A version of this article first appeared in ‘Customer’ magazine in February 2008.Perception Support are Practice Management consultants to the Financial Planning profession.  They work with firms to improve their business processes and models, and this increases profitability and capital value.


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