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When an advice business ceases to receive trail commissions it does not mean that they must stop receiving recurring income, and start relying on constantly winning new clients on a transactional basis. One of the most valuable components of advice businesses is the fact that they can generate recurring income from long-term relationships with their clients. It’s just that in a fee-based business, this recurring revenue may not be as ‘passive’ as it was in a commission-based business.

A key question on the lips of many advisers is “How do I deliver valuable ongoing services to my clients, so that they’ll happily continue to pay my fees, year after year?” There are many components that go toward a valuable ongoing service, and this article will focus on what is arguably the most important component, and perhaps the most poorly-delivered aspect of an ongoing advice relationship, the Client Review meeting.

The research statistics from Business Health in their Catscan surveys, after surveying 25,000 clients in Australia, showed that they continually rate the review service delivered by their advisers as by far the worst performing area from the perspective of client satisfaction. This is despite the fact that over 80% of the advisers in the same survey stated that they had a regular and documented review process in place. Clearly, the fact that you have a process to deliver a review is not enough.

I know many advisers who have difficulty in getting their long-term clients to actively participate in their reviews – citing difficulty in booking them in for a meeting. This is particularly disturbing in light of the Fee Disclosure obligations and possible opt-in requirements of the FoFA legislation. If a client does not participate in their reviews and engage with their adviser, will they cease to see value in, and therefore terminate, the ongoing relationship?

We wrote a paper on this issue for our clients, and have extracted an excerpt here. When we discussed this issue in our webinars on Evolving Advice Practices, one of the highest rated concepts was the fact that we’re championing the cause to eradicate the term “Client Review Meeting” in exchange for a more engaging nomenclature like “Strategic Update Meetings”.

Many advisers approach the “Client Review Meeting” with the aim of reviewing the client’s portfolio, and discuss how their funds have performed against the markets and their relevant benchmarks. This type of review completely misses the fact that there have likely been a number of significant events occur in the client’s life since you last met, and it is likely that their goals and vision for their future have altered – not just through the environment that you are aware of, but circumstances that may have wildly altered their priorities.

Sure, they want to know what has been happening to their money, but more likely than not they see a review of the economy, legislation and markets as what they pay you for. If a review is just about the dollars and cents, they could just as easily be e-mailed a nice colourful graph.

But if it is treated as a “Strategic Update”, and the meeting is all about the client – restoring perspective, discussing their current circumstances and any possible life changes that could be coming their way, they will see it differently. The Strategic Update Meeting is an opportunity to get to know your clients on a deeper level – to explore their family tree and what has occurred (and is likely to occur) in the lives of those most important to them. Only then can you revise their goals and objectives, and recognise components of their financial plan and affairs that might need adjusting.

Use it as a chance to celebrate, re-evaluate and update. Gain a better understanding of what drives them, and where they are headed.

Consider your outlook when driving your car – the amount of focus looking forward at what is approaching is far greater than that spent looking behind you at what has gone past. So too, the time spent in the meeting discussing the future, and what actions can be taken in the present, should be greater than that spent discussing historical returns.

Conducting the interview – it’s all about them

The best meetings work from an agenda, and we suggest working to a structure like the following:

1. Begin with a chance to reconnect. Discuss what has happened in their lives since the last review. Have they celebrated a milestone or achieved one of their stated objectives that was in their previous financial plan? Also get them to add upfront anything else they feel is missing from the agenda.

2. Review and update their circumstances. Do they see their goals as being the same, or do they need updating? Has something happened that affects their cash flow? Maybe they have had a pay rise, changed jobs, have a new baby. Whatever it is, it will be important to them – so it is important to you!

3. Get an update on their family – drawing a family tree will make sure that no important person in their life is missed out. There may be changes in the lives of their parents or children which could have an impact on their financial situation – do they need to look at putting the folks’ into care, has a child developed an illness or had a serious accident, and if there are new grandchildren who would look after them if, albeit an awful thought, something happens to their parents?

4. Don’t forget the importance of their insurance portfolio. A full risk audit will show where the gaps are and ensure the most appropriate policies are in place.

5. In looking back, include details on the client’s overall portfolio since the last review, such as details on under and over performing strategies. But statistics alone are meaningless unless they have context. For some, that is seeing how their portfolio has performed in relation to achieving their long term goals. For others, it is how it has performed in comparison to others. A picture is worth a thousand words (and a million numbers), so show them a graph of how they are tracking. Over time you can use this graph to show their current location in comparison to previous years, and in particular how their situation has improved since they first came to see you.

6. Depending on how much has changed, you may decide on the spot that the current strategy is still relevant, or you may find the need to document an SOA or ROA after they leave the meeting. Either way, summarise any changes you suggest, or re-cap on the strategies that you will continue to employ to continue toward reaching their objectives. Essentially, a ‘where to from here’ discussion.

7. Absolutely crucial is to re-visit the service package they are on, and the fees they are paying you. Be diligent in ensuring that the level of service they have had for the past year will be appropriate for the next year, and adjust if necessary. Signing their service agreement renewal at the meeting will make management of any opt-in provisions painless for both you and the client, and if signed within twelve months of their previous agreement, will negate the need to provide them with a Fee Disclosure Statement.

Deliver on your service promises

Have you considered how you will manage your review calendar to ensure that you do, in fact, deliver on your service promises? It is particularly important that you are able to easily manage and track what the client has been promised in return for their ongoing fees, and how to measure the delivery on those promises, as well as the disclosure dates for your Fee Disclosure Statements. Without an effective process, you might find it overly onerous to both comply with disclosure regulations and, most importantly, keep your clients happy!

When you re-engage your clients with effective Strategic Update Meetings, they will look forward to your discussions, and actively participate in your service. You will also find they are more likely to gain better outcomes, as you are empowered to ensure their financial plan stays up-to-date…and this usually results in the clients actively referring more clients to you.

Make a habit to regularly review your reviews. Revisit your process with staff periodically. And don’t forget to ask your clients what they think – this can be done via a simply constructed e-mail or online survey. After all, your clients know what makes them happy, and know if you are providing it!

Sue and Lana together