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Practice Management

Managing your client's experience goes beyond customer service or care.

This Practice Management article is intended for financial advisors only (registered representatives of broker dealers or associated persons of Registered Investment Advisors).

One morning, I pulled out of my driveway and discovered that I had a flat tire. I had changed a flat once when I was in college, and I vowed then that in the future I would make enough money to be able to afford to have someone do it for me. I sat in the car for a moment, thinking about what to do. I called my husband, a totally fruitless thing to do, since he was in Florida and I was in Texas.

Then I remembered that I have a button in my car marked SOS. The car company invited me to push it anytime I have a problem. I pushed it. A warm, concerned gentleman answered and asked immediately if I was all right. I explained my problem. He told me that he knew where I was and that someone would be with me within the hour. He confirmed my phone number and said the company would check back to be sure that someone had arrived to change the tire.

Thirty minutes later, a service man arrived, changed the tire, and made sure everything was okay with the car. He didn’t charge me. If fact, he wouldn't even take a tip. As he was leaving, there was a call to confirm that the tire had been changed and that I was happy. Happy? I almost wished for another flat just to see if I had the same experience.

Managing Client Experience
Later, I began to think about relationship management and managing client expectations. When I pushed that button in my car, I fully expected that company to solve my problem. I wasn't disappointed. But this wasn’t about managing my expectations or my relationship with the car company—it was about managing the client experience.

Most of you probably have client relationship-management software, which lets you track your client data and information. It may trigger you to make calls or be more proactive in your service to clients. It may help you create a client diary to chronicle your services. Client-experience management is different; it's about purposefully managing each touch point a client has with you, your staff, and your firm. This holistic concept is beyond customer service or care.

Lior Arussy, founder and owner of Strativity Group, is widely credited with coining the term "client experience management" a good 15 years ago. Arussy, who calls himself a corporate marriage counselor, maintains that in most companies there is a serious gap between intention and execution. That's because intention is not a preplanned activity, just a frame of mind.

Arussy suggests that if you are worried about client retention, satisfaction, and acquisition, you are exhibiting classical commoditization behavior. On that basis, everybody does essentially the same work and charges essentially the same price. So ask yourself, "Are we really so great that people would prefer us over someone else?" If you don’t have a solid answer to that, read on.

Do you ever have prospects challenge your fees? Did anybody ever ask for a discount? If so, your prospect did not see the connection between your services and your charges. That's a classic value disconnect. In such a situation, you have two choices: You can give a client something of value like a discount (or even free service), or you can demonstrate your value so they make the connection. This is where client-experience management is so powerful. Arussy's process divides clients into three satisfaction groups:

  • Detractors: People dissatisfied with their experience
  • Naturals: Neither satisfied nor dissatisfied, but certainly not "wowed" by their experience
  • Promoters: People who are absolutely loyal

The basic principle of client experience management is to move detractors to naturals and naturals to promoters. In 2009, Strativity conducted a survey of consumers attempting to determine the value of customer experience, particularly in volatile economic times. The results were startling. Strativity asked 2,000 promoters three questions:

  • If the client experience remains the same, I expect to do business with this business for another ______ years.
  • If the client experience exceeds my expectations, I will spend more (by ______ %) with the company.
  • Because of my experience with the business, I will pay ______ more than the competition charges.

According to Strativity, promoters would stay at least 10 years receiving the same client experience. But they would be willing to spend an additional 25%, or pay 5% to 10% more than the competition to receive a client experience that exceeded their expectations.

Don't Give It Away
There are two important takeaways: We need to stop giving things away for free, and we need to carefully plan the client experience so that it is the same—the first time, every time.

Consider the practice of giving things away, which is pretty much the same as giving a discount. My business partner Harold Evensky (also my husband!) and I opened a small branch office in Texas, where I teach. We realized right away that this is a different market than we have in the Miami area, so we began to strategize how we might make an approach to people and how we might charge fees. We had one meeting with a particularly nice couple whom we would really like having as clients. At the end of the meeting, my partner said, "I'll tell you what. We'll do this plan for free. We want to get going here and demonstrate our value to you. Then you can decide whether you want to work with us or not."

The couple declined. In reflecting on it, I realized that we were silently indicating that our work wasn't worth anything and, ultimately, the prospects agreed with us.

How would you feel if you needed surgery and the doctor said, "Look, I like you, so I am going to do this one for free?" Would you be suspicious? I would.

Standardize the Experience
How can planners break down the client experience and planning so that it exceeds expectations? First, you need to know each touch point and the protocol you have in place around your interactions. For example, begin with your first phone conversation or meeting. If someone calls in, who is the first person to speak with him? Do you have a process that makes him feel welcomed? Do you have a knowledgeable and warm receptionist, or is the call passed to others?

Next, consider how meetings are handled. Do you confirm by phone the day before? Do you provide a list of materials you would like clients to bring along to your meeting? Are you specific about what will happen at that meeting so that their expectations are met?

One area in which many advisors fall short is the post-meeting follow-up. Do you send a letter reviewing the meeting and outlining items that need their attention before the next meeting? Do you provide a value letter, a narrative of your efforts on a quarterly or annual basis, so that the client understands exactly how you have been working on their behalf, especially on issues not related directly to their portfolio?

For example: We discussed the funding of your kid's college education, investigated 529 plan alternatives, and decided on X, with a first-year contribution of $X. When your mom was worried about the market, our chief investment officer had a chat with her and she said she was sleeping much better. You asked our thoughts about investing with your brother-in-law, and after we reviewed the material you'd received and looked at the impact on your long-term plans, you decided not to invest. You get the idea.

Finally, take a long look at how you communicate with your clients. Is there anything unique in this process? For example, you might consider giving your client a unique e-mail address through your network, reserved solely for communication with him or her. You might use a secure Internet lockbox to place copies of clients' quarterly reports to avoid putting them in the mail. A lockbox also allows clients to upload copies of personal documents such as wills, trusts, or insurance policies. In Florida, we encourage clients to keep a picture file of their home furnishings in case there is significant damage from a hurricane.

No matter how you work with your clients, make sure that your touch is well planned, consistent, and elegant—and, most important, that it always exceeds their expectations.

Deena Katz, CFP, is a Financial Planning columnist and an associate professor of personal financial at Texas Tech University. She also is the chairwoman of Evensky & Katz, an advisory firm in Coral Gables, Florida.


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