…understanding what your clients may not be telling you

This article is the fourth in our series of Business Health insight pieces drawn from the most recent analysis of our CATScan Client Satisfaction Survey data.

The CATScan dataset now contains feedback from over 45,000 Australian clients, all of whom are using the services of a financial adviser. As such, these findings are unique in the Australian advice marketplace and exclusive to Business Health. We hope you find them of interest and value as you build out your plans for 2021 and beyond.

Does age really matter?

The latest snapshot of our CATScan Client Satisfaction Survey database reveals that in the average Australian advisory practice, 55% of clients are now aged 60 years and over and 48% are already retired or are no longer gainfully employed. While this may represent successful penetration of what has been the traditional target market for most advisers, this got us thinking… from a business perspective, what does this mean for the practice?

Of course the answer to this question is different for each business. As you ponder the age spread of your clients and the impact this may have on your firm, implementing the following strategic initiatives might help as you refine your ideal client profile and most appropriate value proposition and delivery platforms.
1. Critically evaluate your solutions suite

Most of your baby boomer clients probably look and act very differently now to when they first engaged with you. And while they may have first sought help with superannuation, wealth accumulation and protection, they now have a very different set of needs that need to be addressed.

  • How important is aged care, Centrelink, philanthropy and estate planning to your older clients?
  • Do you have access to products that adequately address not only your boomer client’s needs, but also their environmental, ethical and social beliefs and philosophies?
  • Is your pricing model and structure aligned to the value you deliver and your client’s attitude and appetite for ongoing advice fees?

While your discovery and review processes will give you an insight into many of these issues, the only real source of truth lies with your clients – to find out how they are feeling about their changing financial circumstances, you need to ask them.

Only then can you make informed decisions around the depth and breadth of services your business will provide and how they will be delivered. For example, you may elect to upskill either yourself or other advisers in your practice or perhaps recruit new advisers who have the complementary skills you need. Alternatively, you may choose to establish professional referral relationships with external third-party experts who specialise in complex niche advice areas.

To add further weight to the importance of this review, we found it intriguing that:

  • 34% of current advised clients do not have an up-to-date will.%
  • Clients now rate the “range of services” their adviser offers as the third lowest of the nine key performance areas covered.*
  • 67% of practice owners have indicated that they do not intend to expand their current range of services.#

It remains to be seen how this fits with the changing advice needs of many aging clients.


2. Review the way you engage with your clients

Will a “one-size-fits-all” engagement model continue to deliver success in our changing world or do you need to consider tailoring your approach to better match the preferences of your key client segments?

Is your communication written with the age of the recipient in mind? To most older clients, properly constructed sentences, punctuation, spelling and grammar are still important and this applies regardless of the communication vehicle. And please don’t assume older clients are not tech-savvy. Many are just as comfortable with online blogs, posts, vlogs and video conference calls as they are with letters, emails and face-to-face meetings. However, just because your communication may be delivered across multiple mediums, the importance of matching your message to the audience remains absolutely critical.

Depending upon their personal position and external events happening in both the investment markets and the world at large, your older clients may also need to hear from you more regularly. Never underestimate the power of just picking up the phone and providing reassurance. Knowing that you are closely monitoring their situation and that you “have their back” makes an enormous difference to older clients.

Unless you plan on taking your business 100% remote, as your client base ages you will also need to be mindful of how, where and when you conduct your in-person meetings. How well does your office cater for your older clients who might have difficulty negotiating stairs? Does your office furniture and decor make spending time in your office an enjoyable experience for all? Is public transport nearby and if parking is not convenient, can valet parking be organised?

As you schedule your appointments also keep in mind that your older clients normally appreciate spending more time establishing &/or deepening the relationship before getting down to the “nuts and bolts” of financial planning while time can be of the essence for generation X and Y professionals with young families. Similarly, while your employed and self-employed clients will prefer a breakfast or evening time slot, a mid-morning/afternoon meeting time will most likely appeal more to retirees.
3. Grow your next generation of “A” clients

Even after acting on all of the points raised above, in many ways the reality remains that a rapidly aging client base represents a diminishing business asset. While there are always exceptions to the rule, generally speaking advisory firms with an overly large proportion of older clients have static or declining revenue streams, less market appeal resulting in reduced capital value.

One of the keys to addressing this issue is of course to bring a new generation of “A” clients into the firm. While time and space do not allow for an in depth discussion on how to attract GenXer’s and millennials, the lowest hanging fruit and most obvious place to start is with the adult children of your existing older baby boomer clients.

However, while you have a strong and trusted relationship with their parents and a proven track record of delivering positive outcomes, unfortunately it is our experience that these children don’t know much, if anything at all, about their parents’ financial adviser. In fact, most of the research we come across suggests that upon the death of one of their parents, they intend to move the assets away from the adviser – their perception (rightly or wrongly) is that this adviser isn’t known to them and probably isn’t a good fit.

If you would like to help protect the legacy your existing clients will leave behind, it is never too early to start building a relationship with the next generation who will inherit the wealth you helped create. At the very least start collecting as much detail as possible on the children of your “A” class clients and ensure this is stored on your CRM system. You can then develop an ongoing communication program aimed at slowly educating these people on the value you deliver. This must be an education (not sales) campaign and the ultimate aim is to be top of mind if and when they need quality, professional financial advice.

Finally, if you do truly believe that your clients are the most valuable assets of your business, surely it makes sense to recognise their key attributes and distinguishing features. If you would like to find out how the satisfaction levels of your clients varies across the different age groups, or indeed compares to the marketplace at large, let us know!

For your consideration.