As comprehensive financial planning has become more widely adopted, many financial advisors have felt pressure to find new ways to differentiate themselves by demonstrating their unique value to clients. And while providing fee-only advice or highlighting service as a fiduciary may have once been a fair differentiator, these services are now often considered table stakes, necessitating financial advisors to find more creative solutions that show current and prospective clients that they provide more value than other advisors. However, as more advisors continue to increase the services they offer to enhance their value propositions, the new challenge has become balancing the many services offered to clients (who sometimes don’t really need all of the services offered) with enough time and capacity to show up for clients who truly need help with a particular problem.
In our 103rd episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss the challenges of finding an optimal balance between proactively providing value and the consistency of simply being available to respond to clients when they come to their advisor for assistance.
Some advisors increase their value propositions by offering a ‘proactive sledgehammer’ of value by inundating clients with all the things they can do for them to emphasize that they not only have them top of mind, but also that they keep them top of mind all year round. Some advisors implement client service calendars that dedicate certain times of the year to tax planning, insurance reviews, or quarterly meetings, and fill the gaps with newsletters, client appreciation events, and regular firm updates. Others use frequent emails to stay in regular contact, sending reminders or helpful information relevant to their clients. Though these can be good approaches to increase touch points and create value for clients, balancing the frequency of these touch points (and the scope of what clients are offered) with the real value that clients actually need and expect is most important. Because while some clients may appreciate and need more frequent communication, others just want to know that the advisor is there when they need them. And while frequent communication may be important with many clients, it is often the most critical in the early stages of a client relationship, when advisors are just learning about their client’s needs and building trust with the client. However, as the relationship matures, clients may build enough trust in their advisor that they no longer expect (or want!) frequent communication, satisfied in knowing that if any financial issues arise, the advisor will be there to help them.
Ultimately, the key point is that while most clients will appreciate many of their advisor’s valuable services and proactive communication, finding the optimal balance between offering too much and simply being available when needed will depend on each unique client. This begins with understanding their needs (and communication preferences!) and gaining their trust. And building trust early on not only helps advisors develop more meaningful relationships with clients, but also helps them save time as they won’t need to spend as much time offering solutions that they know won’t really matter to the client. Which means the advisor will end out with more time to focus on providing better – and more relevant – service with the capacity to be available when a client truly needs it!
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