Improving Financial Advisors Client Interest Understanding & Action


Why Financial Advisors Need to Better Understand and Act on their Client’s Interests

Clients are changing and so are their needs. For financial advisors and advisory firms, this means rethinking how you segment and communicate with your clients and prospects.

Segmenting clients by assets and/or demographics can be a useful tool, writes April Rudin (LinkedIn/Twitter) in her Forbes article, Over-Segmenting in Financial Services is So Over, but advisors need to be careful not to over-segment and make false assumptions based on demographics.

Needs-Based Client Segmentation

A different approach to segmenting clients is suggested in a recent report by Boston Consulting Group (BCG), entitled When Clients Take the Lead. Defining market segments based on client needs may be more effective and BCG offers three different groups that are not consistently well-served by wealth management firms:

  • Simple-Needs clients overlap the definition of what we often refer to as the mass affluent, but also includes clients with investable assets up to $3M whose advice needs are simple (relatively speaking).
  • Decumulation clients are retirees who are no longer growing their assets, but using them to live their best lives during their retirement years.
  • New Ultras are clients and prospects with over $100M in assets, but are less relevant to our discussion here because, while there is a surge in this segment globally, they still represent a relatively small number of individuals compared to the other groups.

BCG’s segmentation is built around these unique clusters of actual client needs, rather than assumptions based on their age and quantity of investable assets.

Effective Client Segmentation Relies on Data

Underlying this new needs-based segmentation of clients and prospects is the one thing that is increasingly essential to success in the digital age: data. You need large amounts of data and the ability to make sense of that data and translate it into actionable insights in order to serve clients based on needs, rather than account balances.

Advisors and wealth management firms typically already have large amounts of valuable data – but making sense of it can be a challenge. In his article, entitled Why Every Wealth Management Firm Needs a Chief Data Officer, Craig Iskowitz (LinkedIn/Twitter) does a good job of summarizing the historical evolution of data into actionable insights and dashboards in the wealthtech space.

Industry tech platforms are moving in this direction, but Iskowitz sees the need for a senior leader in each firm, the Chief Data Officer (CDO), to weave all these threads together into a business strategy and practice management methodology within each firm:

“The CDO leads the utilization and governance of data across an organization. As CDO, you’re an executive that understands strategy as well as how to use data to drive a business in the desired direction. The best CDOs are then able to justify that direction to investors and stakeholders.” ~ Craig Iskowitz

CDOs would also lead the effort to consolidate and share data across the firm or enterprise. According to Sarah Thomas, Account Director at ASG Group. “Companies that don’t share information between departments and individuals are less productive.”

The goal of a data driven wealth advisory organization is to not only to compile, interpret and act on past data, but to build operational business systems that are constantly fed with data. In other words, to paraphrase BCG, wealth advisory firms need to act like tech companies.

“Advanced technologies will enable RMs [Relationship Managers] to deliver bespoke experiences at scale. With access to rich profile data, they will be able to tailor conversations to the individual. Behavioral analytics will reveal which clients have a passion for tech trends or other topics, which like to access information over their mobile devices — and what frequency of contact they desire. Digital tools will automate everything from portfolio construction to outreach and will permit end-to-end self-service for clients who prefer it. The potential is huge. Better digital intelligence can improve prospecting, upselling, and retention, allowing RMs to deliver the right message at the right moment.”

Start Building Your Actionable Data Today

If you’re not a Chief Data Officer and all of this sounds a bit overwhelming, don’t fret. There are turnkey marketing solutions available today that can help you collect data from clients about their needs and interests while helping you stay top of mind and add value.

ReachStack offers one such solution. We enable advisors to easily scale advisor-client interactions from 4 times a year to 100x a year, by helping advisors deliver up to 20 personalized, sharable client interactions each month in only 5 minutes a day. Our “do-it-for-me” solution results in 70 percent advisor adoption vs. 10 percent adoption for most “do-it-yourself” advisor marketing tools.

The added bonus with ReachStack is not only are you increasing communications and relevance with existing clients, but advisors and firms are also able to start building a data store of actual client needs and interests which offer a range of actionable insights that can be used to personalize communications.

For more information please book a demo or contact us or 1-877-977-8225.

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