The best advisors are not frustrated by or anxious about compliance. Instead they elevate compliance from a table stakes requirement to a game-changing opportunity to grow their practice.
For these advisors, meeting client care standards is a game changer. Read on for four often-overlooked ways your financial advisors can turn old ways of thinking into a growth engine for their practice.
The 4 Revenue Generators
Compliance regulations can differ from one jurisdiction or company to the next—but, generally speaking, all compliance rules cover a few important principles of client care: record retention, advisor disclosure, client privacy and demonstrating a needs-based approach to selling.
1. Turn records into revenue
Compliance requires that an audit trail of client records, financial needs analyses, and many other key documents be preserved. Until recently, this meant a lot of paper got filed in a lot of cabinets. And a lot of advisors hoped they’d be able to find it again when the need arose.
Technology has turned that old ‘hold-and-hope’ strategy on its head. Instead of locking documents away, advisors can now recognize the strategic value of the data in those records and harvest it to make better decisions for their clients.
Advisor-specific CRM’s and integrated FNA tools enable advisors to automatically attach documents to relevant client records, where they can easily be found when needed. That doesn’t just make compliance easier, it makes access and analysis of data possible in real time.
Achieving compliance on an on-going basis without even thinking about it, is only a by-product of this new capability. The real benefit is the opportunity to turn all that client data into actionable wisdom—to review needs and life events in different client segments, to uncover opportunities for proactive service that will deepen relationships and increase the lifetime value of clients. The data can reveal opportunities to create great client experiences by uncovering upcoming needs your advisors can address at the most appropriate times.
2. Disclosure drives revenue
On-going and growing client relationships are based on the value clients feel they are receiving. And that makes disclosure an unlikely but powerful relationship building tool.
Many advisors see the need to disclose insurer relationships and fees as a potential risk—moments when a client may push back if they feel costs aren’t in line with the value they receive. However, the reverse is usually true. Disclosure discussions are a great opportunity for your advisors to demonstrate the value of the work they do for their clients, and how that relates to the fees paid. In most cases, your advisors will be setting an anchor for their clients—cementing a belief that they deliver more than clients expect.
These discussions confirm and reinforce the advisor’s value proposition. And their transparency will remove any anxiety clients may have felt about their integrity and where their allegiances lie. That makes disclosure much more than just a regulatory requirement—it’s a fundamental method of building client trust. It increases confidence and makes clients more likely to adopt advisor recommendations in the future.
3. Protect client privacy & enhance the relationship
At a time when phishing scams and data breaches are making headlines on a regular basis, what could be more important than clients’ personal, financial and health information? Consumer anxiety about the safety of their data is high, and is a critical factor in the decision-making process when it comes to choosing who they will work with.
The best advisors are able to not just safeguard their clients’ data, but turn that process into a competitive advantage. They develop policies and procedures in their practices for how they handle client data. They find the right technologies—for CRM, Accounting, Email or any aspect of their workflow—to ensure that data is completely secure.
Then they map out strategies and systems for communicating to clients and prospects, sharing how they safeguard what matters most. They demonstrate how important clients’ privacy and data security is to them, and how it is a foundation of all the processes in their practice.
Top advisors go beyond even that level of messaging. Recognizing what a hot button issue data privacy is for most consumers, they develop and deliver seminars on how to protect your family’s personal data, they craft articles, tailor blog posts, and bring in experts to offer advice to clients.
By making data security a core value of the business, these advisors turn it into a differentiator that matters to prospects. Becoming a champion of client data privacy sets them apart from their competitors, turning more prospects into clients and deepening client relationships.
4. Less is more: A needs-based system for increasing revenue with less effort (including time and cost)
The days of pushing product are long gone. Relationships are built on uncovering needs and presenting solutions that meet client goals. That process is not just a compliance requirement, it’s the foundation of building a practice that will grow at higher than normal rates over the remainder of an advisor’s career.
Consider that, on average, advisors sell 1.2 products to each client. That indicates that after an initial sale, most advisors are leaving other client needs unmet. The scale of the problem is vast. Consider that, according to one Celent study, the difference between the amount of life insurance coverage in force and the amount that should be in force in North America is 19 trillion dollars Clearly, the full scope of client needs are not being met. It’s not enough for advisors to just uncover needs when a prospect first becomes a client.
Top advisors make continuous discovery a key part of their process for advancing relationships with their most important clients every quarter. They conduct annual reviews, monthly on-line or phone check-ins and maintain regular two-way communication through email and sharing content of interest with each client. And at each touch point, they seek to reaffirm existing needs and uncover new ones using powerful FNA software to ensure all needs are uncovered in the most efficient manner.
This ongoing discovery process is the engine that powers a fast-growing practice. It enables advisors to identify more needs, and cross-sell more solutions. It very quickly turns that 1.2 product average into 2, then 3 and so on. And, as we all know, it takes a lot less effort, time and cost to grow an existing relationship, than to find a new client.
Multiplied by the number of clients in an advisor’s top A and B segments, this represents significant and consistent acceleration of the business. Not bad for being a by-product of frustrating, anxiety-producing compliance activity.
More client confidence. Higher prospect conversion. Increased chances clients will accept advisor recommendations. Increased lifetime value of a client. Increased sales per client. Taken together, what would the revenue increases associated with those benefits mean for the health and growth of your advisors’ practices?
Compliance is more than just a regulatory headache. When it is re-framed as a revenue generator rather than a cost center, advisors are able to alter the growth curve of their business. They stop worrying about audits and all those old paper hassles. Instead they revel in the value they deliver to their clients, the great client experiences they can create, and the impact that has on their practice.