In PracticeMay 15, 2014

Investors Value Family Referrals and Frequent Contact

Investors tend to be more satisfied with the performance of their financial adviser when they’ve been introduced through a family referral, says new research from Spectrem Group.

Reported by John Manganaro

Regular adviser contact also leads to higher levels of client satisfaction and loyalty, according to “How Financial Advisors Can Increase Satisfaction and Loyalty,” a new perspectives paper from the financial research firm. Advisers and clients can chat about everything from college tuition and mortgage debt to the latest financial news, Spectrem says, so long as they’re communicating regularly.

Investors who found their adviser via referral from a friend or family member expressed higher levels of satisfaction—80% were satisfied or very satisfied—than those who used other methods to find an adviser, such as independent research (69%) or by consulting a general advertisement (59%).

Spectrem’s research shows an adviser can generally increase satisfaction by making contact with clients on a regular basis, weekly or even daily. It may be a time crunch for a busy adviser, but Spectrem says the data is clear that such communication is necessary to build a bond of trust between adviser and client. Frequent communication also leads to a better understanding of the client’s unique goals for retirement and other important areas.

Researchers say it’s equally vital to create a specific, written financial plan with clients. It should then be revisited and adjusted at least semi-annually, the research says.

One of the less frequent types of guidance provided by advisers is how to leverage tax-advantaged financial strategies, though clients who do receive such advice respond with the highest levels of satisfaction, Spectrem says. The more an investor is willing to rely upon a financial adviser when making an investment decision, the more satisfied that individual becomes.

Attorneys, doctors and other professionals are more loyal to advisers than senior corporate executives and independent business owners, Spectrem says.

“It’s well known that family and friend referrals are key to new business, but our perspective report shows that they’re also a determinant in the client’s level of satisfaction with their adviser,” explains George Walper, Jr., president of Spectrem Group. “For existing clients, advisers can improve satisfaction and loyalty with more client contact tailored to their particular financial interests and concerns.”

More information on how to obtain a full copy of the Spectrem study is available here.