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First Comes Trust, Then Growth

What’s the biggest competitive advantage that is essential for advisors to attract and retain satisfied clients? The customer experience is that key competitive advantage, according to the third annual Advisor Authority study of more than 1,600 registered investment advisors (RIAs), fee-based advisors and individual investors nationwide.

And for the greatest success, trust must come first. Trust is the single most important attribute to make the advisor/investor relationship work, according to this study on the customer experience. Advisors rate trustworthiness No. 1 by a wide margin, as do investors.

Creating a successful customer experience built on a culture of trust is also fundamental for the growth and health of a profitable practice. More than nine in 10 RIAs and fee-based advisors — including those who earn more and manage more assets under management (AUM) — say that the customer experience is vital to their value proposition. More than eight in 10 agree customer experience will become even more important for helping them attract and retain clients in the next 12 months.

As competition increases and pricing pressure grows, a successful customer experience built on a culture of trust can help you distinguish your firm and stay relevant to your clients. Start with these actionable insights from advisors and investors.

Communication Is Key

Although trust comes first, both advisors and investors say that good communication is the second most important attribute of the advisor/investor relationship. Likewise, when asked to name the factors that contribute to a successful customer experience, both advisors and investors say that quality of communication tops the list. As the study shows, quality communication includes effectively listening to investors’ concerns and showing that you understand their needs by recommending solutions that are in their best interest.

Track Record Matters

When it comes to the business of managing their finances, investors want results — and they look for the track record to prove it. Investors say a proven track record ties with good communication as the No. 2 factor in the advisor/investor relationship. And take note: High-net-worth and ultra-high-net-worth investors said a proven track record is far more important than good communication.

One-on-one Relationships Drive Success

When asked what creates a successful customer experience, one-on-one relationships are rated the No. 1 factor by advisors and a very close second by investors. As the study shows, to build strong relationships with clients, you must make the entire process more interactive. This means working closely with clients to understand their concerns, providing a guided experience that educates them and working together to identify the right solution. High-net-worth and ultra-high-net-worth investors say a personal one-on-one relationship is the No. 1 factor for a more successful customer experience.

Data Enhances Understanding

To create a successful customer experience, analyzing data to better understand clients’ expectations and behavior is important to advisors and investors alike. The most successful advisors — those who earn more and manage more AUM — are almost twice as likely to adopt artificial intelligence and data analytics to better understand and better serve their clients.

Nothing Can Replace Face-to-Face

Technology may be a way of life, but investors said it is no replacement for the human touch. In the age of instantaneous digital communications, both investors and advisors give high marks for one-on-one relationships and quality communication to create a successful customer experience. And they still say that face-to-face is their preferred method of communication.

Transparent, High Value, Low Cost, More Choices

Investors said that to contribute to a successful customer experience, advisors can put clients first by focusing on products and services that are high-value and transparent while offering lower cost and more choices. When it comes to products and services, those with high net worth said that a broad choice is especially important.

Experience, Holistic Planning and Fiduciary Standard

Year-over-year, three items stand out when investors are asked to name the factors that lead them to choose one advisor over another.  By a wide margin, investors say the No. 1 factor in choosing an advisor is years of experience, while personalized advice for a holistic financial plan is second and maintaining a fiduciary standard is a close third. Other factors quickly decline in importance.

If you’re new to the industry, team up with more seasoned advisors to create a successful customer experience. Build partnerships with accountants, trust attorneys and estate planners to provide more holistic advice — especially when serving high-net-worth and ultra-high-net-worth clients.

Add Value and Drive Growth

Investors who work with an advisor are far more optimistic about their financial outlook than those who do not — and year-over-year, their optimism has increased. Yet, two in five investors (42 percent) do not have a financial advisor. Even among the most affluent, slightly more than one-third of those with high net worth (37 percent) and ultra-high net worth (37 percent) do not have an advisor. The opportunity is huge.

To attract new clients, and to nurture and retain your current clients, invest in creating a unique customer experience, cultivate a culture of trust and work on it every day — because trust isn’t given, it’s earned.

A customer experience built on trust adds tremendous value. It shows your clients that you understand their concerns, recognize their needs and can provide solutions in their best interest. It also creates a competitive advantage that is fundamental for the growth, health and profitability of your practice. When trust comes first, growth will follow.


Mitchell H. Caplan is CEO of Jefferson National, now operating as Nationwide’s advisory solutions business. Mitchell may be contacted at [email protected] .

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