For Financial Advisors, trusted communicator is job one

By: D. Bruce Johnston, President, DBJ Associates 

Brokers and advisors are the most trusted sources for providing accurate information on investments, followed by friends or family, according to the 2010 Edelman Trust Barometer. CEOs landed dead last as least trusted.

Highlights from the survey include:

• Financial performance now scores at the bottom as a trust factor.
• Transparency and honest practices took the number one spot
• Most trusted financial institutions: Local banks were number one, followed by mutual funds and insurance companies

With all of this good news, trusted advisors may still not feel like cheering – especially when confronted with constrained marketing budgets.

“Even though resources are scarce, advisors with a story to tell can still create news,” Advisolocity’s John Drachman said recently. “From free interactive press releases, to white papers and webinars, there are many cost-effective ways to engage customers and prospects that do not cost that much.” The present moment may represent a historical opportunity for advisors.” He added, “Five short years ago their trustworthiness hovered near the bottom of The Barometer.”

What should you do now? Here are Five Things FAs and Advisors should be doing to benefit from this shift in sentiment:

First, they are evaluating their current communications strategy – With so many sources of communication available to your clients today it is imperative that you evaluate and leverage as many as you can.  FINRAs recent clarification around the rules governing social media provides a completely new opportunity to leverage. Don’t let your own lack of expertise in this area prevent you from leveraging these valuable resources – seek professional guidance and input.

Second, evaluate your “customer engagement strategy” – This used to be referred to as customer service but in the new world of communication it’s about “engagement”.  Today’s customers view frequent and honest communication as the most important factor by which they judge financial services firms.  How does your current engagement strategy match up?

Third, evaluate the resources and strategy you have allocated to your marketing programs and branding campaigns – Industry estimates show the number of clients receiving comprehensive financial planning will increase by 20-25% over the next year or two.  What are your strategies for establishing and promoting your brand?  How much time are you devoting to client acquisition and retention? 

Fourth, evaluate your resource allocation to the “Emerging Markets” – I’m referring to the next generation of investors, those between the ages of 25 and 34. This is an often ignored demographic for a variety of reasons but 75% of this group say FAs and Advisors are who they first turn to for financial advice.  This may be that “once-in-a-career” opportunity to make significant inroads into this group assuring future growth for your firm.

Fifth, evaluate what differentiates you from your competition – are you using all the tools at your disposal?  Successful FAs and Advisors will leverage both traditional and on-line communication applications.  To enhance “customer engagement” they will leverage market commentary and portfolio manager market overviews in building their financial planning practice. Have you clearly articulated the advantage working with you brings to your clients in terms of achieving lifestyle and financial goals?

Future success and growth of your business will come from a combination of increased interest among investors in fee-based financial planning models, and how well FAs and Advisors position themselves to take advantage of this once-in-a-career opportunity.  Those assessing their business model as outlined above will certainly stand a better chance of success than those adhering to the status quo.