Client Advisory Board Drives 15% Referral Increase for Reeves

Client Advisory Board Drives 15% Referral Increase for Reeves

Executive Summary

Reeves Institutional Advisors, a growing RIA firm, sought to improve client satisfaction and organically boost referrals but found traditional surveys inadequate for uncovering actionable insights. To address this, Jonathan Reeves established a Client Advisory Board composed of high-value clients, creating a forum for open communication and collaborative problem-solving. As a direct result, Reeves experienced a 15% year-over-year increase in referrals, leading to an estimated $500,000 in new Assets Under Management (AUM).

The Challenge

Reeves Institutional Advisors, managing approximately $350 million in AUM, recognized that their growth strategy relied heavily on client referrals. While they consistently delivered solid investment performance, averaging a 9% annual return for their clients over the past 5 years, Jonathan Reeves, the firm's founder, believed there was room to improve the client experience and tap into the potential for more organic growth.

The firm had previously relied on annual client satisfaction surveys to gauge client sentiment. While these surveys provided some high-level data, the response rates were often low (around 20%), and the feedback was typically generic, lacking the depth needed to identify specific areas for improvement. For example, a recent survey indicated that while 85% of clients were "satisfied" with the firm's services, only 30% were "highly satisfied" and actively recommending Reeves to others. This left a significant gap in understanding what was preventing clients from becoming enthusiastic advocates for the firm.

Furthermore, the existing referral program, offering a modest gift card to clients who referred new business, yielded limited results. In the previous year, the firm acquired only 8 new clients through referrals, representing approximately $3 million in new AUM. This translated to roughly 0.85% of existing AUM contributing to referral growth, which Reeves deemed insufficient to meet the firm's ambitious growth targets of 10% annually. They recognized that a more proactive and strategic approach was needed to cultivate a culture of advocacy among their clientele. The cost of acquiring new clients through traditional marketing channels averaged $2,500 per client, making referrals a significantly more cost-effective growth strategy. The limited insights from traditional surveys made it difficult to address churn risk, costing the firm an estimated $35,000 per year in lost revenue from clients who left without providing specific reasons.

The Approach

Jonathan Reeves decided to implement a Client Advisory Board to foster a deeper understanding of client needs and improve referral generation. The strategic framework involved several key steps:

1. Selection of Board Members: Reeves carefully selected 10 high-value clients representing a diverse range of demographics, investment goals, and relationship tenures with the firm. He specifically targeted clients who had shown a high level of engagement in the past, such as attending webinars or participating in client events. These clients also managed a significant portion of the firm's overall AUM, with an average portfolio size of $2 million.

2. Defining Board Objectives: Reeves clearly articulated the board's objectives: to provide candid feedback on the firm's services, identify opportunities for improvement, and act as a sounding board for new initiatives. This included providing feedback on the client onboarding process, investment reporting, communication strategies, and fee structure.

3. Establishing a Structured Meeting Format: The board met quarterly via Zoom, allowing for convenient participation from clients across different geographic locations. Each meeting followed a pre-determined agenda, focusing on specific topics and allocating ample time for discussion and brainstorming.

4. Pre-Meeting Feedback Collection: Prior to each meeting, Reeves distributed a Google Form to board members, soliciting feedback on specific areas of interest. This allowed Reeves to gather preliminary insights and tailor the meeting agenda to address the most pressing issues. Questions included: "What is one thing we could do to improve your overall experience with Reeves Institutional Advisors?" and "What are the biggest financial challenges you are facing right now?"

5. Collaborative Brainstorming Sessions: During the meetings, Reeves utilized Miro, a collaborative online whiteboard platform, to facilitate brainstorming sessions. This allowed board members to visually share their ideas, build upon each other's suggestions, and collectively identify solutions to challenges. For example, in one session, the board brainstormed ways to improve the clarity and accessibility of the firm's investment reports, leading to a redesign of the reports that incorporated more visual elements and plain-language explanations.

6. Actionable Insights and Implementation: Following each meeting, Reeves and his team reviewed the feedback and identified actionable insights. They then developed a plan to implement the recommended changes and tracked their progress. This included documenting specific action items, assigning responsibility, and setting deadlines for completion.

7. Recognition and Appreciation: Reeves recognized the valuable contributions of the board members by providing them with exclusive benefits, such as priority access to new investment opportunities, invitations to exclusive events, and personalized financial planning consultations. This fostered a sense of appreciation and strengthened their loyalty to the firm.

Technical Implementation

The Client Advisory Board leveraged several key tools and processes:

• Zoom: Used for quarterly virtual meetings, allowing for screen sharing and real-time interaction. Each meeting was scheduled for 90 minutes, with a dedicated moderator to manage the discussion and ensure that all board members had an opportunity to contribute.
• Google Forms: Used to collect pre-meeting feedback and identify key areas of focus. The forms included both open-ended questions and multiple-choice questions, allowing for a mix of qualitative and quantitative data. Data from Google Forms was analyzed using Google Sheets, allowing for quick identification of recurring themes and trends.
• Miro: Used for collaborative brainstorming and idea generation during meetings. Miro's features allowed board members to create sticky notes, draw diagrams, and vote on ideas, facilitating a dynamic and engaging discussion. The collaborative nature of Miro encouraged participation and helped to generate a wider range of ideas than would have been possible in a traditional meeting setting.
• CRM (Client Relationship Management) System: Reeves integrated feedback from the advisory board into their existing CRM system. This allowed them to track individual client preferences, identify patterns in client feedback, and personalize their communication and service offerings. The CRM system also tracked referral sources, making it possible to measure the impact of the advisory board on referral generation.
• Financial Modeling: The impact of increased referrals on AUM was modeled using a projected growth rate and an average portfolio size of new clients. This model factored in an estimated client retention rate of 95% and an average annual revenue per client of 1% of AUM.

Results & ROI

The implementation of the Client Advisory Board yielded significant positive results:

• Referral Increase: Reeves experienced a 15% year-over-year increase in referrals. The firm acquired 10 new clients through referrals in the following year (compared to 8 the previous year), bringing in approximately $3.5 million in new AUM attributable directly to the advisory board's impact.
• AUM Growth: The increase in referrals contributed to an estimated $500,000 in new AUM. This figure was calculated based on the average portfolio size of new clients acquired through referrals ($350,000) multiplied by the number of new clients (10) and accounting for an average account growth of 5% in the first year.
• Client Satisfaction: Anecdotal evidence and follow-up surveys indicated a significant increase in client satisfaction. The number of clients who rated their satisfaction as "highly satisfied" increased from 30% to 55%.
• Reduced Churn: Client churn decreased by 2%, representing a savings of approximately $7,000 per year in lost revenue. This was attributed to the improved client experience and proactive communication facilitated by the advisory board.
• Improved Service Offerings: The feedback from the board led to several key improvements in the firm's services, including a redesign of the investment reports, enhanced client onboarding process, and more personalized communication strategies.
• Return on Investment (ROI): The estimated ROI of the Client Advisory Board was calculated as follows: $500,000 (new AUM) * 1% (average revenue per client) = $5,000 in new revenue generated by the board. The cost of running the board (including time spent by Reeves and his team, the cost of Zoom and Miro subscriptions, and the value of the benefits provided to board members) was estimated at $2,000. Therefore, the ROI was ($5,000 - $2,000) / $2,000 = 150%.

Key Takeaways

1. Direct Client Feedback is Invaluable: Traditional surveys often lack the depth needed to uncover actionable insights. A Client Advisory Board provides a forum for open and honest feedback, allowing advisors to truly understand client needs and expectations.
2. Strategic Selection is Crucial: Carefully select board members who represent a diverse range of demographics, investment goals, and relationship tenures with the firm. This ensures that the feedback is representative of the broader client base.
3. Collaboration Drives Innovation: Utilize collaborative tools like Miro to facilitate brainstorming sessions and encourage active participation from board members. This can lead to innovative solutions that improve the client experience.
4. Actionable Insights Lead to Tangible Results: Translate the feedback from the board into concrete action items and track progress to ensure that the recommended changes are implemented effectively.
5. Recognition Fosters Loyalty: Recognize the valuable contributions of board members by providing them with exclusive benefits and personalized attention. This strengthens their loyalty to the firm and encourages them to continue providing valuable feedback.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors predict client behavior and personalize their advice to drive retention and growth. Visit our tools to see how we can help your practice.