PLANADVISER - January/February 2019 - 15

Client Trust Pays Unexpected Dividends
Advisers now often measure their value beyond investment savvy
CERULLI Associates' new report " U.S.
Advisor Metrics 2018: Reinventing
the Client Experience " strives to give
readers a more granular understanding
of the " intangible upsides of providing
an exceptional client experience. "
According to Cerulli researchers,
a big benefit for advisers in devoting
more time and attention to managing
client perceptions is a substantial
increase in their clients' reported trust.
" A great client experience also
manifests measurable advantages
for the adviser's practice,
including a
higher median client size, lower attrition
rates and the ability to move
upmarket, " Cerulli wrote.
The Cerulli research found that
practices focusing on the client experience
have a 93% larger median client
compared with the industry average
of over $500,000. In addition, clientexperience-centric
practices
lower
involuntary attrition.
" On average, 34% of advisers' asset
outflows are a result of clients passing
away, moving to another financial
adviser or transferring assets to a
direct/online provider, " the report
says. " Among experience-centric firms,
however, this type of involuntary attrition
accounts for 24% of asset outflows. "
Marina Shtyrkov, research analyst
at Cerulli, notes that 65% of financial
advisers expect to experience fee
compression in the next five years,
and 42% attribute this pressure to the
growth of digital advice competitors.
" In response to this competitive
pressure and recognition of heightened
investor fee awareness, practices are
migrating away from measuring their
value based on their investment expertise,
which can more easily be commoditized, "
Shtyrkov says. " Instead, they are
beginning to think more holistically
about the nonfinancial impact they can
have on their clients. "
According to Cerulli, advisers
can harness the power of their client
experience to increase retention,
Military Families Gain From
Working With Advisers
As of the second quarter of 2018,
military families working with an adviser
had $262,710 in retirement and savings
accounts, compared with $82,710 for
military families without an adviser.
Source: First Command Financial
In the Dark
Twenty-two percent of retirement plan
participants are unsure how their assets
are allocated.
Source: Legg Mason
planadviser.com January-February 2019 | 13
have
Fearing Market Risk
Nearly half (48%) of Americans believe they
are exposed to greater market risk today
than before the 2008 financial crisis.
Source: Natixis Investment Managers
reduce attrition and generate a strong
referral system.
" To do so, though, advisers need to
restructure their thinking-and their
processes, " Shtyrkov recommends. " Of
all advisers surveyed by Cerulli, only
30% strongly agree that their practice
goes above and beyond to make clients
feel special and that it has a repeatTALKING
POINTS
able, consistent client experience. "
How are adviser practices trying to
be more client-centric? Cerulli suggests
advisers are more broadly adopting
a combination of factors-such as
technology-driven client segmentation
and intergenerational engagement and
perspective-to
enhance the
experience. -John Manganaro
client
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PLANADVISER - January/February 2019

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