The Administrator’s Role in Improving the Client Experience

Amelia Young, CFADecember 2012

2

Agenda

• How people make decisions

• What you can do about it

Understanding the mental shortcuts our brains employ to make complex decisions can help you develop a better client experience

95% of decisions are made subconsciously

Myopia (people are short-sighted)

Examples from your day-to-day:• 60-year olds who lost 10% of their portfolio vs. 40-year olds who lost 20%• Surge in business activity during RSP season. • People panicking to create wills right before taking a trip without their kids

Today Year 1

$50

$100

Which would you choose…?

Status Quo Bias (people are creatures of habit)

• Neglecting automated monthly contributions to RSPs

• Avoiding decisions (eg. picking an advisor, naming beneficiaries)

Anchoring (people see what they expect to see)What is the relationship between a roulette wheel and the number of countries in Africa…?

…nothing – unless they happen to appear right next to each other.

Affect Heuristic (people use their gut)

Low Risk/ High Reward =

High Risk/ Low Reward

=

Regardless of investment performance, clients will be more satisfied with your practice if the interactions they have with you evoke feelings of

happiness

Review

Subconscious Driver Definition

Affect Heuristic(People go with their gut)

Being drawn to people/situations that evoke an emotional response

Myopia(People are short-sighted)

Having a distorted view of trade-offs between current vs future events

Status Quo Bias(People are creatures of habit)

Being entrenched in familiar/habitual behaviours

Anchoring(People see what they expect to see)

Framing things based on subconscious benchmarks that are not relevant

It’s not just clients who suffer from these biases!

• 78% of Advisors said it’s very important to “communicate concepts in a way that is easy for the client to understand”

• 95% of Advisors said they “Always or Frequently” use vocabulary that is “appropriate to the client’s level of investment knowledge”

Administrator Influence

Use insights about subconscious drivers to design a more effective client experience.

Growing AUM

Keep existing assets

Competitive Investment

performance

Good service

Grow those assets

Investment Returns

Increased contributions

Secure new clients

Lead Generation

Closing

What can you do about it?

Service

• Manage anchor points• Be proactive

• Set expectations

• Communicate standards - repeat

• Help the Advisor track compliance with the standards

• Help clients minimize stress and keep perspective with lots of communication• Keep notes • Develop a plan • Follow-up up on client “to dos”• Make it easy

Increased Contributions

• Be the “Weight Watchers” for their financial discipline• Monitor who has PACs and develop action plans to initiate them

• Remind the Advisor when clients without PACs are in the office (or if amounts haven’t been updated)

• Always have forms available for signing (pre-filled)• Follow up on contact info changes • Get new money in before it’s spent

• Positive reinforcement – make it fun!• Prizes/contests for completing PACs• Rewards for savings milestones

Closing Business

• People care about how much you care about them!

• Offer great hospitality (eg. choice of meeting place, refreshments, prepare the room)

• Seek out personal details and prompt the Advisor

• Where are you coming from/going to? Are you in a hurry today?

• Family developments (eg. kids’ achievements)

• Volunteer pursuits

• Personalize materials (eg. presentation cover with client’s name on it even if contents is generic)

• Fight inertia by diligently following up on leads

• 60% of consumers have looked for an Advisor in the past 5 years

• Only 30% of sales are closed in the first meeting. 24% take 3 or more!

• 65% of people evaluate more than one advisor when making a selection

Parting Thoughts

• People’s behaviour is generally quite rational• Accept it• Influence what you can

• Every practice is different – embrace the difference and tailor these tactics to:• Advisor’s style• Client priorities• The team and your role in it

• Manage your own biases by:• Testing• Documenting• Revising• Repeating