Oechsli Institute has published a study which suggests that asking for referrals does not go down well with affluent clients.
Advisors might get a majority of their clients through references but asking for an introduction might not be the correct approach in today’s world. An online survey of more than 400 investors, all with over $500,000 in investable assets, reveals that only one in three affluent clients indicated they would provide referrals (including names and numbers) to their advisors. The study was done by Oechsli Institute, a training firm which caters to financial advisors in US.
Although the study was conducted in US, the findings are of great relevance to Indian advisors. The study gives interesting insights into the way advisors should approach affluent clients, their psychology and expectations.
The research shows that in today’s world affluent clients are not acquired by traditional marketing techniques like cold calling or seminars. Such techniques may in fact, be harmful for the advisor’s reputation.
The research paper says that most affluent clients got their financial advisors through word-of-mouth-influence. Thus, everything boils down to trust. Trust is established by getting to know a person on a personal level. “When these clients get to know their advisor personally—meeting their spouse, sharing a meal with them, or interacting with their team—they have a deeper understanding of his or her character,” states the research paper.
The research found that developing personal relationship with both spouses of an affluent family increases client loyalty and increases their willingness to provide personal introductions to their friends and colleagues.
Interestingly, the study found that while 84% of respondents said that their financial advisor is their primary advisor, only 30% of them have entrusted them with three-quarters or more of their investible assets.
Get social
Further, 70% advisors have purely business relationship with their affluent clients. This is an opportunity for advisors to broaden their current relationship. The paper suggests that advisors should keep a portion of their interactions social in nature.
Choosing a financial advisor
The most important part of selecting a financial advisor was his/her reputation. The quality of promotional material like brochures and websites had no impact on client’s decision making process.
