Episode 38 Transcript – Kevin Quigg

Participants:
Steve Wershing
Julie Littlechild
Kevin Quigg

Julie Littlechild:
Welcome to another episode of Becoming Referable, the podcast that helps you be the kind of advisor people can’t stop talking about. I’m Julie Littlechild, and on this week’s show Steve and I speak with Kevin Quigg. Now, Kevin is the chief strategist for Exponential ETFs and he’s also a driving force behind the first financial advisor’s report from the American Customers Satisfaction Index. We talked to Kevin about the connection between customer satisfaction and investment performance, which was a really fascinating conversation. But then we did a deep dive into the financial advisor research. We asked him about the new research, asked him about the trends that he’s seeing related to customer satisfaction with advisors, and then we looked at what all of that means for your business going forward. He told us which elements of client service are really table stakes for clients and which aspects of the client experience really set one advisor apart from another. And with that, let’s get straight to our conversation with Kevin.

Julie Littlechild:
Kevin, welcome. So happy to have you here today.

Steve Wershing:
Yeah, welcome Kevin.

Kevin Quigg:
Thank you both for having me. Pleasure to be here.

Julie Littlechild:
Originally when we were looking at talking to you, we wanted to make sure we talked about the results of this new study that has come out that looks at advisors and client satisfaction. But maybe before we just jump right into that we could start with a quick introduction to you, to your role at Exponential ETFs and I’d love it if you could also maybe connect the dots between all of that and this American Customer Satisfaction Index that we’re going to be talking about.

Kevin Quigg:
Sounds good. My background, I’ve been in finance for about 25 years. The last 18 I suppose in the ETF industry. Exponential ETFs, as the name obviously implies, is the exchange traded fund provider. Really myself and my business partner, Phil Bock, come from large institutions that have been in the ETF business for quite some time. I’ve had the opportunity to work with the financial advisors and the people that they serve. Really our goal with Exponential is to create an organization that’s more reflective, to your point, Julie, of customer satisfaction. An organization where we don’t just have the investment solutions, but we also back it up with some of the information education material that we really feel people enjoy. And as technology has overtaken the marketplace we’re able to provide.

With respect to ACSI, the American Customer Satisfaction Index, we actually have been partnered with them for about two and a half years. We are really the investment management arm for the American Customer Satisfaction Index. That organization was founded in the early nineties out of the University of Michigan by our firm’s founder, Claes Fornell. Really our passion is customer satisfaction. I think you hit upon it. Life is a people business. In finance we sort of tend to dwell on the numbers and the statistics and the things that are more readily available. But at the end of the day, particularly for financial advisors, they’re both artists as well as scientists. They need to understand the financial marketplace, but more importantly understand what makes their client satisfied. Because that, at the end of the day, is what leads to more business above and beyond returns and performance, which I think is surprising to some but not to others. We at ACSI and Exponential ETFs have really focused our time and effort in understanding what drives satisfaction, what makes people happy, what makes people more likely to buy a good or service from someone.

Julie Littlechild:
I think what’s so fascinating to me is being able to draw this connection between customer satisfaction and things like investment performance within an advisory business growth. Satisfaction is obviously something that people would say, “Of course, that’s a goal. Of course that’s what I want to achieve.” But the reality is sometimes we need to look at the direct correlation between that and the business. I was really interested to learn about how you guys use customer satisfaction as an investment metric. Can you tell us a little bit more about how that works and what the outcomes are?

Kevin Quigg:
Absolutely. I think you hit upon the main point. I think it’s intuitive to most people that obviously if your customers are satisfied relative to their other choices, that leads to a better business result. Amazon is probably the chief company that has been satisfaction driven. And rather than focusing again on those traditional financial metrics, they focus more on customer satisfaction. Now where the challenge lies is in quantifying that because the benefit of most traditional financial information is it’s readily available because it’s backwards looking. Priced earnings or how many goods or services you’ve sold or things like that, those all look backwards. Satisfaction, the reason that we find it to be a real effective measure of future financial performance, is because it’s forward looking. Rather than capture what people have done or what has happened in the past, what we try and do as an organization is really try and capture the current sentiments of consumers and really better understand. Obviously it’s a fairly complex process that delves into a lot of different areas. But what we want to find out is who are the companies that they’re most satisfied with because again, statistically speaking they themselves are more likely to use that company in the future.

This is really where I think it ties into your podcast. They’re also more likely to refer others to that business or service in the future. Again, as we start to enter the digital age and everybody has access to Twitter and Facebook and all these other forms of social media, how well or poorly you satisfy your customers goes viral. It has the means of getting into the marketplace in a way, frankly, that it hasn’t ever before. Where satisfaction traditionally, particularly the way that we quantify it, has been a leading indicator of financial results, it’s only gaining more power as social media becomes more prevalent in the world. I think we’ve seen that this week with Facebook has a data breach. Traditionally that would have been reported in the paper that afternoon. Might have had an effect on the markets over the ensuing days and weeks. But really it’s gone viral and it becomes immediate. Customer satisfaction and again, that data breach is a really fancy way of saying they breached their consumer confidence. They breached their customer satisfaction. All of a sudden, they went from a business where we provide a pretty good service for our customers so our main challenge is bringing in new customers, to one where all of a sudden, retaining existing customers because of poor satisfaction has become something that’s a real issue for them.

Julie Littlechild:
That’s really interesting. It’s almost like social media’s like a fuel. It’s created … It’s made it all the more powerful, which is a fascinating concept generally for advisors, I think.

Kevin Quigg:
Well, and I think it’s a double edged sword. You’re right. It can work both where unfortunately we’ve all experienced this, negative experiences tend to be magnified greater than positive experiences. Maybe as humans we’re geared that way. But to your point, you’re right. Technology has infiltrated our world and everybody has a platform to let their feelings and thoughts and how satisfied they are be known. And everybody has the means to socialize what they’re feeling about their advisor very quickly. Oftentimes, it happened with Wells Fargo a couple of years ago where the organization, not the financial advisor organization, nothing to do with the people that were managing assets for their clients, but the bank itself had a disruptive event where they were found having done some things that were less than above board. And that had an impact, frankly, on the advisor marketplace, on those folks that were using Wells Fargo.

Now really the way around that would be through customer satisfaction because at the end of the day whether you’re at Wells Fargo or Merrill Lynch or Raymond James or LPL or any other of the financial advisors, your relationship with your clients, how well or poorly you satisfy their needs is really what’s going to lead to your long-term results. I think our study backs that up pretty well.

Steve Wershing:
Kevin, if I could tease apart a couple of things. Are you using customer satisfaction as one of the criteria for what you put in the portfolio within the ETF? I’m hearing both things that sound like that as well as satisfaction with advisors.

Kevin Quigg:
Our ACSI customer satisfaction ETF ranks our companies based upon the proprietary data that we gather on their customer satisfaction with those organizations. We weight based upon satisfaction. Those companies whose customers have let us know that their relative degree of satisfaction is higher than their competitor’s, those companies get more highly weighted. The inverse is true obviously. Companies and industries who rank lower get lesser weighting within our products.

Steve Wershing:
And relevant to the social media mention that we were making before. It’s obviously more relevant because now individual consumers have a much broader platform to project their good or bad experiences on through social media. Do you find that that also translates into a higher turnover in the portfolio because thanks to social media public sentiment about customer satisfaction can change faster?

Kevin Quigg:
Yeah. It’s a good question. The way we look at satisfaction tends to be a little deeper. There’s a concept known as elasticity. Essentially it is how easy is it to move from one provider to another. And that obviously affects industries. Whereas you have lunch everyday and it’s pretty easy to change where you go to lunch everyday, you buy a car on average once every three years. A negative event happening at Ford Motor Company, for example, is going to be more muted for lack of a better term than Chipotle having a health scare because again, literally, the next day Chipotle’s consumers can enact on that customer satisfaction experience. Whereas buyers of Ford Motor cars, you’re not going to see that until in the distant future.

We do have obviously several factors of customer satisfaction. They essentially revolve around three things. Number one is customer expectations. Number two is customer experience. And number three is perceived value. If you think about it, when you go to McDonald’s versus Morton’s Steakhouse, if you get a hamburger at each place your expectation for that McDonald’s burger versus the Morton’s burger is going to be substantially less because you probably paid a fifth as much for it. That’s going to … satisfaction is a relative phenomenon. If you go someplace where the expectation is much higher, they have to raise that bar in order for you to have a good experience with them. That bar is not quite as high for something that is more low cost.

Again, there’s lots of phenomena like that within the marketplace. But what we try and do is on the one hand measure overall customer satisfaction understanding that we don’t just get our information from social media because, again, that tends to be the loudest and proudest people behind goods and services. We want to get really the thoughts and opinions of the entire American public. Oftentimes, and you saw that with Bank of America, you saw that with Chipotle, you’ve seen that with several companies, the initial impact on social media and the initial impact in the media wasn’t quite as strong on the stock because, again, those industries had varying levels of elasticity. But also if you are a Wells Fargo client to their financial advisory service, any sort of problem or challenge they had within their mortgage services or their traditional banking services didn’t touch you. While you may have heard about it and it may have had a negative impact on your overall view of that company, it didn’t have near the impact it did on someone directly affected. And we want to make sure that in looking at Wells Fargo as a large organization for example we have a good view on how that’s going to impact them, not just immediately, but over the long term.

Julie Littlechild:
It’s so interesting. I have another couple of questions just on the work that you’re doing there. But as you’re talking, I can hear how all of this is so relevant also for advisors thinking about their business. I think the same issues apply. Expectations, value, experience. That’s three great categories for advisors to be thinking about. One of the things that I’ve noticed in financial advisory data is that value ratings tend to be much lower. If you literally look at value relative to fees paid, for example, very hard to get a high rating on that relative to, say, satisfaction. Is value a more aspirational, higher standard to set in some ways?

Kevin Quigg:
It is. And it’s also obviously very relative to the absolute cost of the item. Again if you’re going to a private bank, for example, as a financial advisor and they tend to have a high pricing structure. Because of the reputation of private banks and the perception anyway of the suites of services they provide, your expectation going into that is going to be a bit higher. Now, with that being said, your expectation from a cost perspective is probably also higher. And the inverse is true. If you go to a discount brokerage firm where you’re really paying just for the facilitation of trading, your expectation is going to be a lot lower than if you’re paying someone to provide financial advice.

And you’re absolutely right, Julie, in that financial advisors, all of these things that we measure are very relevant to them particularly because unlike Chipotle or Ford where at the end of the day you have the burrito and you have the car, financial services is an industry of perception. In a lot of ways what we and they sell is intelligence in vaporware and there’s not a physical thing you can look at. So really how well you engage with your prospects and clients, the experience you give them, how well you communicate, how well you message things that are coming up in the future, and how well you listen really have a greater impact in this industry than it does in other industries because once you buy that Lincoln Mercury, you drive it off the lot and it’s kind of not the problem anymore.

When you work with a client of financial services, the entire experience is dynamic. Their children will get older and eventually approach college. They will get older and eventually approach retirement. They will eventually get older and start to transition their wealth to their children and the next generation. All of these things as a financial advisor are experiences that you need to plan for. They’re things that if you want to perpetuate your business into the future, you not just need to look at what’s going on today, but you need to have a real understanding of your clients and their financial situations and their personal situations and really make their experience reflective of that not just the base level experience that they would get from a discount broker for example.

Steve Wershing:
Let me ask a question about that. I also take issue with characterizing that as vaporware. They are selling an intangible, but vaporware is where you’re selling something that doesn’t actually exist. I think it’s a little bit more real than you may think. But I also think it’s not just being in tune with your clients’ financial planning needs but also something that, maybe you can comment on, to what extent we should be focusing on the delivery of that. It’s not just what needs your clients have from a planning or investment standpoint, but also what they’re looking for in terms of how they interact with you and that being actually in a lot of cases just as important as the advice that you’re delivering to them. What are you thoughts about that?

Kevin Quigg:
Oh, I would wholeheartedly agree. By vaporware I just meant something not physically tangible. And to your point, I would argue that in many ways because of technology, the nuts and bolts and the selecting securities and the building portfolios and the managing taxes, et cetera, et cetera, those have in a lot of ways become commoditized particularly again as technology has allowed more people to easily ingrain that in their business. To your point, the experience, how well you position things, how well you explain things, essentially that relationship with your client, I would argue that’s more important than the nuts and bolts. Again, our research has shown people aren’t nearly as performance sensitive as we in the industry would like to think they are. I think the reason, by the way, we would like to think they are is because that’s something we have a perceived control over. They’re much more sensitive to your point to those soft skills, to how well or poorly you give them information, how well or poorly you make them feel involved in their own financial future. That is the line of demarcation between advisors who have success and those who are less successful is almost entirely on how well or poorly they manage their client relationships. By the way, particularly in bad times.

Steve Wershing:
Yeah. I’m sorry. I didn’t mean to…

Kevin Quigg:
No, no. I was just going to say over the past five years, it’s been a heaven of sorts in the financial services industry.

Steve Wershing:
A cake walk.

Kevin Quigg:
Because the thing that you, again, you have the most perceived control over has done well. That bleeds into your clients. Your clients may or may not know that the S&P’s been up 25%, but they do know that they’ve been up 26% or what have you and that gives the perception of their financial advisor doing a good job. That sort of false confidence in a lot of ways that advisors build up through performance really masks a lot of the deficiencies in those other areas that we talked about.

Successful advisors do well when the market’s going down, not the inverse. It’s easy to be successful in an up market. Go ahead. Sorry Steve.

Steve Wershing:
No, I’ll reinforce what you were just saying about what people really appreciate. I’m right now in the thick of client advisory board season. We’ve been asking a lot of advisory boards of all the things that your advisor does and how they do them for you, what do you find most valuable? They say things like, “They have a great Rolodex. They can refer me to people that will solve my other needs.” And, “They return my phone calls really fast.” Those kinds of things. Sometimes we’ll do an exercise where we’ll lay that. We say, “Okay, here’s $100 in fees that your advisor charges you. How would you apportion all of those things out against this $100 hypothetical fee?” I have to actually remind them, “How about investment management? Where would you rate that?” They don’t come up with… As soon as I bring it up they’re like, “Oh, that’s the most important.” But it’s not what they mention when they’re asked to list those things unprompted.

The other interesting thing is that everybody says investment performance is key, maybe most important. But then I ask, “How many people in the room, put up your hand if you’ve evaluated the last quarterly performance of your advisor compared to any other advisor?” And of course, nobody raises their hand. The only thing that they evaluate it against is the benchmark that the advisor themselves provide as a way of comparison. I’m totally in agreement with you that it’s all of those non-tangible, those service oriented things that really are the root of satisfaction as opposed to any of the objective, measurable things that we tend to think about as most important in the advisory relationship.

Julie Littlechild:
Maybe I can just use that to get us talking about the study. Kevin, tell us about the report first of all that was released. I assume this is something that we can just link to. Tell me if I’m wrong on that. And maybe some of the key findings.

Kevin Quigg:
Yeah, it is something that you can just link to. It’s on theacsi.org is the website or ExponentialETFs.com. But, yeah, really what we were hoping to do is we’ve observed this phenomena in all industries that satisfaction leads to a better result with respect to your clients. We wanted to take that from a consistency standpoint and apply it to the financial services industry. Asking the same questions we would someone regarding their car purchase or their mortgage purchase or their dining purchase, and obviously modifying it somewhat for this industry but what are those things that they value?

Satisfaction is a vague term. What we’re looking for is the type of satisfaction that leads to future behavior. That leads to you either working with your advisor more or not working with your advisor and looking for a new one or referring someone, et cetera, et cetera. Really what we found was, and I think it’s fairly common sensical in some ways, but those things that are institutionalized, the ease of opening an account, the website for the firm, how easy you can pay your bills, those are across the board excellent. Everybody does those well because, again, they come from the home office and they’re things that tie into opening accounts and their bottom line. Those things are all universally excellent.

Where we see separation, which is really what was interesting to me, is really on more what Steve mentioned, those people skills, those personalized skills. How frequently do you contact your advisor? What is your communication experience like? And then how mobile is that relationship? Again, we in financial services don’t work in a vacuum, so the same technology that’s taking place in the world where people are moving from desktop to laptop to phone to et cetera, that’s taking place in our industry too. The opportunity we found for advisors to grow their business, to get more referrals, to be more successful lies in that experience. As in how well or poorly are you communicating to your clients? What is the schedule? What are you asking them? What types of information do you have? How open is your relationship? That’s a big one. How open is your relationship because often times and I know we’ll talk about this in a bit, but advisors like to call to get confirmation they’re doing a good job. They don’t like to call nearly as much when things are a little more rough. And that’s actually the exact time you should be calling.

What we found in the study was there’s an opportunity for advisors that focus on number one in integrating technology into their business. But more importantly, that have an interest in understanding their clients as they go through their life changes. Those are the ones that are getting referrals and being successful.

Julie Littlechild:
You said just before you talked about that, the type of satisfaction that leads to certain behaviors. By that do you mean what you just said, the difference between satisfaction with the things everybody’s satisfied versus where you see a spread? Or was there something else to that comment?

Kevin Quigg:
No, I think that was exactly what it was. Obviously there are some things that are common to everyone. And there’s other things where you can sort of zig or zag. As an advisor how frequently you communicate with your clients and what type of program you have or process you have to ensure that you have ongoing communication, you decide that. Your home office doesn’t decide that. That’s something you decide individually. Those are the types of skills that are separating people. What we find again is those things, and by the way, this isn’t unique to financial services. It happens in most competitive industries. Those things that can be hardwired or institutionalized are almost always good. Whether you are using Netflix or Hulu, your initial engagement is going to be the same. Signing up is going to be the same. All those things are going to be the same. It’s underneath that. It’s in the experience you have once you’re underneath that top layer that really differentiates poor to good to excellent.

Julie Littlechild:
Are you able to measure, and maybe this is a different kind of research, the quality of the interaction? One can imagine two advisors, two clients, both meet four times a year. One feels entirely engaged during that process. The other doesn’t. Adding a fifth review’s not going to help. Right?

Kevin Quigg:
Not at all.

Julie Littlechild:
In fact, it might hurt. How do you tackle the very qualitative essence of some of these things?

Kevin Quigg:
\Yeah, the fifth meeting would be your exit meeting probably.

Julie Littlechild:
Yeah, probably. Great, I hated the first four, so…

Kevin Quigg:
Yeah, to answer your question we try to triangulate that. Again, one person to another it’s very hard to say. On one to ten, what was your experience because people have different reference points. But what we can ask is, “How frequently are you meeting? What is the quality of those interactions?” That is a question that we do ask. What was your expectation with this relationship going into it? How well or poorly did the advisor meet that expectation? Et cetera, et cetera. What we’re trying to do without explicitly asking because again, I think that leads to too much variance between one person and another. We try and ask them, not try to, we do ask them the same set of 27 questions that triangulate their thoughts and views on all the experience with their advisor.

Julie Littlechild:
Okay. You mentioned open. That’s a great word. Were there other words along those lines that really resonated or popped out for you?

Kevin Quigg:
Consistent is the other one. It’s funny. Oftentimes people seek excellence. But excellence tends to have a great variance. Excellence is following by okay is followed by excellent again is followed by not so good. Most people prefer a consistent experience with their advisor because number one it gives them a certainty that their advisor is working on a plan for them because there is a method to their madness. But number two it makes them feel more fully involved within their financial planning experience. Again, you don’t just want to hear from someone when things are going well. You want to hear from them all the time. You also don’t want to have them tell you positive things all the time about your portfolio.

Really the point in a lot of cases for a financial advisor is someone who’s not you. Someone who’s not emotionally attached to your money, emotionally attached to your dreams as you are. You want to have someone who can be your grounding point that says, “All right, I know the market has been the last couple of days, the market has really been bumpy and we’re moving. Rather than act rash, let’s step back. Think about what we’re looking for, for the long term. Let’s talk about our discussion six months ago when the market was racing and how you were irrationally exuberant then. And let’s just level set, make sure we’re on pace.” Again it’s supposed to be a trusted advisor, not a money man. That’s sort of the transition that’s happened going from a broker, someone who facilitates your transactions, to an advisor, someone who’s interested in your personal financial situation, is not just kind of cheap talk. It’s a real thing. The advisors who are taking the time to systematically build a relationship with their clients in a way that encompasses both good times and bad, those are the ones that are going to get referrals. Those are the ones … You remember people that were there for you when things were not so great far more than you remember all the people that slapped you on the back when things were going well.

Steve Wershing:
What you’re saying for all those investment management geeks out there is that it’s more about standard deviation than mean?

Kevin Quigg:
I would say it’s more about-

Julie Littlechild:
Wow, that was the geekiest joke I have ever heard.

Kevin Quigg:
Well, I do have another joke. It’s more about standard deviation. People care more when the market’s going up than they do when it’s going up. Ironically advisors obviously want to tout their performance when the market’s going up and not when it’s going down. But the most success you will have as a financial professional is in being there and being accountable and being responsible and being articulate and being clear when things aren’t going so well.

Kevin Quigg:
By the way, if you look back to the late nineties, there was a surge in the number of people that were in financial services as advisors in that time. Why was that? Because the market was good. The tech boom was taking place. Everyone was doing well. And then when you saw the tech bubble burst in the early 2000’s a lot of people washed out of the industry. They didn’t wash out because they became any worse at stock picking. They were never good in the first place. What happened to them was they began to understand that it’s not just a science. It’s an art and a science. It’s one where you don’t just pick stocks and build portfolios. You work with people to help understand not only what their goals are, but what their risk tolerance is, what their dreams are, what their time frames are, et cetera. It’s a lot of work, frankly. It’s easy to sit at your computer and build portfolios. It’s hard to talk to someone and try and uncover the things that they’re really trying to get behind.

Julie Littlechild:
Maybe we can take it down to the advisor’s business as well. There are great benchmarks like this study and we’ll make sure we link to it in the show notes for everyone. But do you also think it’s important for advisors to ask in a formal way for feedback from their clients?

Kevin Quigg:
I don’t think it’s important. I think it’s crucial. I think it’s one of those things-

Julie Littlechild:
Oh, thank goodness.

Kevin Quigg:
-that will make or break you. Well, the word that you said that oftentimes goes left out is formal. Feedback is just, “Hey, how are you doing?” Having some sort of formal feedback loop that’s constant, that is timely and that asks question is crucial. Again, the reason that it needs to be systematic is if you set it up so that feedback loop is every three or six months, you’re not trying to time the market so your conversations are only around when things are going well. It’s crucial. Having feedback, I would argue, the most important thing to gathering referrals, to building relationships, and to being successful.

Julie Littlechild:
Any quick input. You make an important point. There’s no feedback at all, there’s informal feedback. There’s formal feedback, but it’s a survey once a year. You know what I mean? There’s so many different ways. But what you’re talking about is the continuous loop, which could mean technically getting feedback in different ways, qualitative and quantitative. Any insights for an advisor who doesn’t want to become an expert in client feedback on how they can integrate this into their business?

Kevin Quigg:
Yeah. And I think at the end of the day, by the way, it doesn’t need to be overly mathematic or overly sophisticated. It does need to be a constant. And what it does need to do is be reflective of your clients. If we think about it, this is what building the client experience is all about. It’s understanding your client and how they want to communicate with you. Again, the study shows one of the real disconnects between financial advisors’ clients, and the advisors themselves is the means through which they want to communicate. Again, increasingly people are mobile and they understand that they have the ability through iPad or phone or what have you to engage in a lot of ways. Working not just to build that feedback loop, not just to make sure it’s consistent, but understanding how your client wants to be communicated with.

Some people would prefer to get a phone call and really do that feedback loop in person. Some people want to look you eye to eye. Increasingly and this is, I think, just a dynamic of people, the millennials and others coming of age, they want to do it electronically. They want to have either email or text or something that’s different. The real key is to work within their framework. This is particularly important, I would argue, with respect to maintaining your business and referrals in the future because we’ve never had a time in literally the history of the world like we do now where one generation is used to communicating and working with their advisor in one way, and their children, the people who are going to be your clients of tomorrow communicate and see the world in an entirely different way. If you haven’t done the due diligence to build in a feedback process and a feedback loop that allows you not only to understand your existing clients but your future clients, i.e. their children, you’re setting yourself up for a really difficult conversation in the future.

Julie Littlechild:
Absolutely. One of the things just bringing it back, you mentioned referrals earlier. Steve and I, we get into this conversation all the time, is this disconnect between satisfaction and referrals. We’ll find 80%, 90% of clients might be somewhat or very satisfied and if you’re lucky, 3% to 4% are actually providing referrals. Any thoughts on that disconnect?

Kevin Quigg:
Yeah. I think the important thing is two-fold. Number one where does that disconnect come from? From the client’s perspective it might be fear. “My advisor’s doing well for me, I don’t want to distract them with chasing down other clients. I just want them to keep doing a good job for me.” Part of that is exclusivity. Unlike referring someone to the local library, you may think your advisor has a perception of a finite capacity. Again, as an advisor, I would argue the biggest road block to getting those referrals particularly from satisfied clients is asking. Again, part of that experience and communication is having your clients not just have a good experience with you, but in some ways have an invested interest in your business. They want to see you do well. They want to see you continue to help them meet their goals. And you need to transition it from them being fearful that you’re going to be spread too thin or you’re going to not be able to service them in the way that they’re accustomed to, to having them understand that it’s in their best interest to allow you to take on more clients, build your resources, take advantage of what you have. Et cetera.

Steve Wershing:
Just to dig into that because that’s something that I hear a lot is reluctance … I shouldn’t say reluctance. But concern on the part of clients about an advisor’s growth because that’s exactly the equation they do in their head. The more clients that my advisor has, the less access, the less service I’m going to get from them. Are there more specific suggestions that you can give us about how an advisor can address that so that the clients will feel more empowered to make referrals? So that they’ll get more invested in the advisor’s success and make more referrals?

Kevin Quigg:
No, it’s a great question. The biggest change in the past 20 years in all of our lives is technology. Technology obviously allows for advisors to do more, to be more accessible, et cetera. With that being said, I think the real challenge is getting their clients, to your point, to understand that their business isn’t so small that they can’t take on another client. A lot of times, frankly, if you think about the way the financial services industry worked for a long time, it was the perception of voodoo that helped its growth. As an advisor, in a lot of ways, it wasn’t in your best interest to let your clients know what you were doing because number one technology hadn’t advanced to allow them to see how the sausage was made. And number two because of that there was a perception of magic going on and you didn’t want to let them in. Well, the world has changed.

I would argue, to answer your question directly, Steve. Let the clients understand how your business works. Let them understand all the resources you have. Let them understand how you’re building portfolios, how you’re doing your research, where you’re getting your information. Essentially allow them to see your scale. Allow them to see that. There’s not going to be a sacrifice on their part should they refer you to another client because the world of resources you have at your fingertips allows you to advise money for lots of people without sacrificing the quality to any single one.

Essentially it can be difficult if you have remote clients that are not close by. But clients that are local, and I think most advisors still have a relatively local client base, bring them in. Give them, not an overview of their financial plan, not an overview of how you’re going to pick better stocks for them, give them an overview of your business. How you run. How you’re structured. Who does what. What the responsibilities are. What resources they get because number one they’re going to be surprised, I think, at the number of people that touch their account, which is a very positive thing for them to see. But number two, I think they’re going to be less daunted by you taking on more clients because they’re going to understand that you have the resources to properly manage money for a whole score of people without sacrificing the quality for any one.

Julie Littlechild:
It’s a great idea. I particularly like that you worked voodoo into this, which is wonderful. I know we’re just coming up on time. I could go on all day with you. This is such a great conversation. I would love to make sure that we get to the lessons for individual advisors based on what you’ve seen in the research, based on what you’ve seen in your experience. What are some of the things you think advisors can be doing differently so they’re not only driving deeper satisfaction but obviously driving growth at the same time?

Kevin Quigg:
I would argue the biggest change you can make as an advisor moving forward is don’t view yourself as managing money for a client. View yourself as managing money in perpetuity for a family. By the way, that’s the goal for all long lasting financial advisory businesses is obviously to have multi-generational wealth management embedded within their practice. But that’s not something that happens by accident. That’s something happens by design. You need to make sure that you don’t just have a communications plan or a plan for a client, but rather you have a series of plans for your clients that allow you not just to, again, explain their financial situation, but also better understand their life situation. Ideally, if at all possible, bring in that next generation. Get to know their children particularly as they’re getting through high school and college, et cetera. The worst situation you can find yourself in is, God forbid, one of your clients passes and the first time you meet their children is when you’re trying to maintain their business. That’s just a really tough model to follow through.

I would argue everybody should view themselves almost as a small endowment or family office. You’re just taking an interest in the entirety of the family and making sure that … It’s the 80-20 rule. 80% of your business is going to come from 20% of your clients. Make sure that you have ring-fenced your clients as well as possible because that’s really the long-term way to be successful with any business, but financial services in particular.

Julie Littlechild:
Well, that is awesome. Thank you so much for sharing this. It’s just a really different perspective than we’ve had and appreciate the time you’ve taken today.

Kevin Quigg:
It is my pleasure. Thank you for having me.

Julie Littlechild:
Okay, thanks so much.

Steve Wershing:
Thanks, Kevin.

Julie Littlechild:
Take care.

Steve Wershing:
Hey folks, Steve again. Thanks for joining us on Becoming Referable. If you like what you’ve been hearing, please do us a favor and rate us on iTunes, it really helps. You can get all the links, show notes and other tidbits from these episodes at BecomingReferable.com. You can also get our free report, Three Referral Myths That Limit Your Growth, and connect with our blogs and other resources. Until next time, so long.