At the Financial Planning Association business solutions conference last month, Julie Littlechild, president of Advisor Impact, presented new information based on a survey of investors about the economics of loyalty. In effect, she was showing what turns a client from satisfied-but-passive to actively engaged in the growth of an advisor’s business.   “Client engagement is the outcome of a practice that is structured effectively and a driver of future growth in an advisor’s business,” she says. “Advisors can achieve a balance between a level of service that is both meaningful to their clients and profitable to then, but which encourages clients to be actively engaged in the growth of the advisor’s business.”   Vanguard Financial Advisory Services sponsored the study and notes the results underscores that there is a direct economic correlation between having engaged clients and having a thriving practice.   Littlechild says that of the investors surveyed (some 1,000), 17 percent were disgruntled, 19 percent were complacent, 31 percent were content, and 33 percent were “engaged.” Actually all of those in the disgruntled section had thought about switching advisors.   Obviously, the thrust of any practice is to move clients into the “engaged” category because the economics of loyalty are simply too great to ignore. Keep in mind that the higher up the scale clients move—from disgruntled to complacent to content to engaged—the more services they utilize, including comprehensive financial planning, retirement income planning, tax planning, estate planning, and trust services. Also, it may go without saying that the engaged clients are more loyal clients. They are unlikely to switch advisors.   So, how to get clients into this category? Littlechild offers a few tips:

  1. Gather more and better feedback on what clients value the most in the relationship.
  2. Clearly define and quantify service standards for clients.
  3. Implement a systematic process to review performance in meeting those standards with clients such as an annual report card.
  4. Assess your client review process to actively engage clients.

  Moreover, to leverage the commitment of such engaged clients, Littlechild says that advisors need to help clients spot referral opportunities, clearly define and communicate the characteristics of your ideal client, including any minimum requirements, and assure clients that you treat all in the same manner.   According to Littlechild, clients don’t owe you, the advisor, an engaged relationship. “You create it by establishing and then leveraging, higher levels of commitment.”   To obtain a copy of the study, to be available this month, send an e-mail to

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