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The Fatal Flaw in Many Client Communication Strategies

By Thomas Coyle August 24, 2017

What qualities count most in rendering financial advice to individual and high-net-worth clients? Most financial advisors say it’s a combination of competency, trustworthiness, prudence and tact. But they also agree these vital characteristics count for a lot less without effective communications — especially in the face of margin compression from low-cost investments and tech-charged competitors.

After all, unless you let clients know you’re systematically and thoughtfully on the job, they’ll be hard-pressed to know you’re not just winging it for occasional meetings.

To dispel this doubt it helps to be as consistent as possible with your client-centered communications, says Patrick Renn of the Renn Wealth Management Group in Atlanta. To this end, Renn puts each of his clients on a communications “roadmap” to help him track his messaging throughout the year.

The roadmap “consists of 12 monthly calls, four asset allocation reviews and two face-to-face reviews,” says Renn, who manages about $50 million. The monthly calls — the frontline of Renn’s communications — have pre-determined talking points “that are seasonal in nature so that our calls tend to be content-rich and highly productive.”

This high-frequency approach is supported by recent research. A study led by Yuanshan Cheng at Winthrop University in Rock Hill, S.C., suggests clients were “more satisfied when they received higher frequencies” of messages, including “investment-related educational communications, greeting cards, personal notes, and scheduled meetings.”

Melissa Sotudeh

The same study finds different types of communication achieve different results. For instance, “investment-related educational communications” are more effective for retaining clients, while “non-investment-related educational communications” garnered more referrals, Cheng and his associates write in “The Value of Communication in the Client-Planner Relationship.”

When it comes to non-investment-related communications — the stuff that makes people send referrals — Cheng’s research indicates greeting cards and personal notes work better than white papers and blog posts.

The study also harshly skewers the fad of trying to draw clients in with appeals to their supposed love of golfing, food, wine and the like. “The overuse of interest and hobby communications was found to result in lower levels of satisfaction, trust, and commitment,” Cheng’s report says.

Advisor Larry Ginsburg is big on client-specific communications, though he also sends out “drip-system items about the financial markets and other topics.”

Comparatively though, “personal messages are perceived more favorably by clients,” adds Oakland, Calif.-based Ginsburg, who manages about $200 million in his own RIA and through a brokerage relationship with Cetera Advisor Networks.

Halpern Financial in Ashburn, Va., is another strong proponent of personal-touch communications. Its advisors “reach out to clients in more personal ways, from handwritten notes after an initial prospect meeting to small gifts to celebrate a newborn or other momentous life events,” says Melissa Sotudeh, a Rockville, Md.-based advisor and principal with the firm.

But Halpern’s FAs aren’t left to juggle communications on their own. Uniquely for a firm with about $290 million under management, Halpern Financial employs a full-time “in-house writer who handles all of our internal and external communications,” says Sotudeh.

“It is great to have someone who is able to put on her marketing hat to analyze the ROI of various opportunities and who has the writing ability to follow through,” Sotudeh says of Halpern Financial’s communications chief Carla LaFleur.

“From what I have seen of different marketing consultants, either you pay for a marketing strategy or you pay for content,” adds Sotudeh. “It gets very expensive to hire a consultant to create a plan and implement it, especially in a way that is truly customized.”

Bottom line, says Sotudeh, “rather than the advisor stretching him- or herself thin, our approach at Halpern Financial allows the portfolio manager to manage the portfolio, the advisor to advise clients, and the writer to tell the firm’s story.”

Meanwhile SK Wealth Management is taking a new approach to client communications in hopes of making it more convenient for clients.

“We used to send out quarterly newsletters which had investment commentary, financial planning information, and client case studies so our clients could understand all the different facets of our operation,” says Jason Archambault, managing member of the Providence, R.I.-based firm, which manages $233 million. “We recently changed to podcasts: short 15-minute ones that deal with a relevant interview — emotional biases in investing was the recent one — commentary, and how we help our clients.”

In addition to hand-written birthday cards and other special-occasion notes, SK Wealth Management advisors send “other communications as necessary, typically when market volatility requires comment from us,” adds Archambault. “Otherwise, we try not to bombard our clients so when they do see a communication from us, they know that it’s warranted and important.”