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Truly Knowing Your Clients Pays Massive Dividends … Here’s How

By Alex Padalka October 4, 2018

It pays, quite literally, for financial advisors to really get to know their clients, their goals and their families. Those who do get better referrals and grow their client base faster than average, according to a new report from the Financial Planning Association.

Clients of advisors who engage in what FPA calls “know your client” behaviors are 56% more willing to recommend them, which in turn leads to a 72% higher net client growth rate for advisors, according to FPA’s survey — conducted in partnership with Capital Preferences and T. Rowe Price — of 311 client-facing financial advisors and planners, 126 of which came from the U.S.

FPA defines “know your client” behaviors as ones in which advisors try to understand client goals, manage family dynamics and use their insight to strive for a better client experience. The ones that are highly proficient at such behaviors, for example, are 40% more likely to talk to their clients as well as their clients’ families about age-related transitions and cognitive decline, FPA writes.

Such advisors also experience 60% more satisfaction from the relationships with their clients, according to the survey.

But deeper engagement translates to some other quantifiable benefits, FPA says.

For example, advisors who seek to pinpoint the discrepancies between what clients say and what their behaviors indicate, and who try to resolve such misalignment, have triple the client growth rate than those who don’t, the survey found.

Meanwhile, such advisors have 18% referral rates, compared to 9% for those who don’t engage as deeply, according to the report.