Advisors continue to struggle with organic growth. In fact, recent research revealed that organic growth for advisory firms averaged 5.7% in 2023, not the 10-15% growth most firms expect. We also know that the biggest source of business growth is referrals. Advisors who aren’t getting referrals are doing something wrong. They’re not delivering the quality of advice clients really want. Wanna grow? Identify advice quality gaps to help clients make good decisions. It’s easier than you think.

Key takeaways:

• Most clients say advisors fall short when it comes to key advice attributes.
• The biggest gap is comprehensive advice. Only half of clients say they receive it.
• To grow, advisors need to focus on “helping clients make good decisions.”
• To improve quality of advice, advisors need to know where they stand today.
• Advisor coaching platforms provide the data advisors need to identify service gaps, revamp processes, improve advice and increase referrals.

During a recent episode of The Breakthrough Advisor podcast, industry veteran and founder of Practice Intel, Tom Rieman, CWPA,® and Simplicity InsurMark Virtual CMO Jack Martin discussed the state of advice in the financial services industry. The two also shared steps advisors can take to serve clients better, ignite organic growth and reduce attrition. 

There’s a big gap between how well advisors think they’re doing and what clients actually think

Many advisors think things are going great in their businesses when they’re really not. If they were, they would be getting more referrals and attrition wouldn’t be an issue. In truth, most clients say advisors fall short, especially when it comes to some key advice attributes.  

What do clients value most in a financial advisor?

The three key attributes clients value most in an advisor include: advice in their best interest, understanding them and delivering comprehensive advice. These insights were revealed during Tom Reiman’s tenure as Head of Wealth Solutions at J.D. Power, where he performed deep consumer research about what consumers really value. 

Are advisors doing a good job at providing quality advice?

Not exactly. According to the J.D. Power research, “The biggest gaps were related to delivering comprehensive advice, with only about half of clients saying their advisor delivered it. Less than half understood the fees they were paying. A third or more couldn’t say with certainty their advisor had their best interest in mind or understood them,” Rieman says.

To grow, advisors need to focus on ‘helping clients make good decisions’

The financial services industry has embedded itself in a legacy sales culture that’s hard to shake. That’s why consumers often equate financial advisors to salespeople. Rieman believes that perception is based on the process advisors use for client engagement, which doesn’t prioritize the quality advice clients really want.

What constitutes quality advice in an advisor-client relationship?

“A lot of people are running with this human-centric advice moniker, which is valid. But advice is simply helping people make good decisions. If you’re running with a process focused on helping people make good decisions that align with their values, goals and aspirations, good things will happen,” Rieman says. 

What distinguishes the advice process from the sales process?

The sales process is focused on getting people to act on a recommendation. If an advisor is prescribing what the client should do, that makes it a sales process. This is different than the advice process, which is collaborative, co-creative and empowers clients to make good decisions.

If you’re an advisor whose mindset is still entrenched in the legacy sales culture, you’ll need to reframe your thinking and processes if you want to grow.

To ramp up quality of advice, advisors need to understand where they stand today—Show me the data!

If half of clients with financial plans say they’re not receiving comprehensive advice, that shows there is a huge disconnect between what advisors perceive and clients believe. It also means that at least half of advisors don’t really know where they stand with clients and what gaps exist in the services they provide.

How can advisors improve quality of advice?

In order to improve quality of advice, advisors need to analyze their businesses to identify those service gaps and pinpoint areas for improvement. Fortunately. there are some great advisor coaching platforms out there that can provide the data and ongoing guidance advisors need to provide clients with better, quality advice. 

How can advisors get the right data to improve quality of advice?

Based on his research at J.D. Power, Rieman and his team at Practice Intel developed a platform that does just that. As he explains, “Data does a wonderful thing. We create unique data sets at the practice level through ongoing client research, tracking sentiment over time. We bring institutional consumer research down to the practice level. We know it leads to the most important analytics to drive growth.”

Practice Intel’s platform measures advocacy, organic growth, total wallet share and experience quality through its Relationship Quality Index Score and Profile. “The higher the number, the stronger and more resilient the client relationship. That translates into quality of cash flow and earnings, leading to higher multiples in an exit or liquidity event,” Rieman says.

When you prioritize quality advice, more clients will refer you—We can help!

This is evidenced in the data shown by Practice Intel’s clients but it also makes logical sense. We’ll talk more about the referral conundrum in a follow-up blog but clients are more likely to refer advisors who do right by them. That means delivering on those key advice attributes: advice in their best interest, understanding them and delivering comprehensive advice.

And Simplicity InsurMark is here to help! Whether you want to learn more about fintech platforms like Practice Intel or are looking for insight and resources to grow your advisory practice, let’s talk. To schedule a discovery call, you can contact us at (800) 752-0207 or connect with us online.

As an ADO – Advisor Development Organization™, Simplicity InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.