Too many advisors focus on bringing in new clients and forget that it is the current clients who provide the foundation for the business. Once a prospect becomes a client, the real work begins. It’s really not that difficult to keep your existing clients happy, and it has nothing to do with beating benchmarks. A top advisor has already built a foundation for trust, and now they just need to deliver—they need to surround their clients with what I call structural alpha.
Structural alpha is the value we create in our clients’ lives from our advice on better ways to structure, organize, and plan for their family needs and goals. It is a systematic, methodical approach that enables you and your team to be indispensable in the eyes of your clients. You aren’t just a finance resource; you are a total problem-solving resource. That’s structural alpha.
When we use the term alpha in the marketplace, we mean performance above and beyond a benchmark. Structural alpha is similar in that it means you have a structure in place that allows you to systematically provide service over and above what is expected.
Structural alpha has three main components:
- Treat your clients like family and stay in regular contact with them. My clients are an extension of my family. Many advisors see their role simply as providing investment products. This is a very short-sighted strategy. Why should any client remain with you if all you are doing is providing a service that thousands of other advisors can provide? Instead, if you want to retain clients for decades, communicate with them as effectively as possible, and treat them like family. There are several strategies we use to make sure we are collecting and maintaining pertinent information. However, it really comes down to having a genuine interest in our clients. When you talk to clients, really listen to what they are saying. Are they planning a trip? Are they adopting a new dog? Are they putting an addition on their house or downsizing? Is one of their children graduating from college? Listen to how things are going in their lives and be ready to offer solutions if called for. You will also want to get to know your clients’ families, because those families will one day inherit the estate—and you’d like the assets to stay with you and your team rather than be moved to another advisor.
- Become a fountain of knowledge. Clients will obviously look to you for investment advice, but if you want them to stay with you long term, as well as increase the assets you have under management, you need to build trust in a more holistic way. You want to provide that alpha level of service that sets you apart from other advisors. It’s difficult but essential. Beyond your area of expertise, get involved in your community. Professionals willing to serve as board members for local charities, schools, and companies are often the most successful in the community. Being involved with these professionals will expand an advisor’s universe of names to recommend if a client is looking for a new CPA, real estate agent, primary doctor, or tutor for their child. Advisors will also be more credible if they can say, “Here are a couple of names for you to check out. But this is who I use, and I’ve been really happy.”
- Have a program to educate the clients and their families. And do all of it in a methodical, systematic manner. Wealthy clients aren’t looking for an advisor who will simply put their assets into a standard portfolio and forget about it. They are looking for a partner in growing and protecting their wealth. One of the best ways to build a solid partnership with clients is to provide a variety of channels to educate them and their families. Every advisor has brochures and websites to recommend to their clients, but an elite advisor needs to do more. There are a number of ways to establish this kind of thought leadership for your clients. One of the most valuable strategies is to provide ongoing updates regarding their investments and interests. Clients want to know that you are monitoring their investments, and they want to know why you make the decisions you do. One of the best ways to keep clients on your side is to send them the research you are using. I will send them my firm’s research but also updates from third-party firms. If your firm publishes research about healthcare, and you have clients in the healthcare field or in healthcare stocks, distribute that report to them with a quick email summary.