Client Health Score: Whitfield Achieves 98% 'A' Client Retention

Client Health Score: Whitfield Achieves 98% 'A' Client Retention

Executive Summary

Whitfield Tax, a leading wealth management firm, faced the common challenge of proactively identifying at-risk clients, resulting in reactive retention efforts. By implementing a custom client health score dashboard powered by key performance indicators (KPIs) sourced from various systems, Whitfield gained a clear view of client engagement and risk. This data-driven approach led to a significant improvement in 'A' client retention, reaching 98% and preserving approximately $1.2 million in assets under management (AUM) annually.

The Challenge

Whitfield Tax prides itself on delivering personalized financial planning and tax advisory services to high-net-worth individuals. While client satisfaction was generally high, identifying clients at risk of attrition proved difficult. Historically, the firm relied on lagging indicators, such as canceled meetings or infrequent communication, to trigger retention efforts. This reactive approach meant that opportunities to address concerns and strengthen client relationships were often missed.

Specifically, Whitfield noticed a trend: while overall retention hovered around 90%, the churn rate among their 'A' tier clients – those with over $500,000 in AUM and a history of complex financial needs – was disproportionately high at 5%. This translated to a loss of approximately $2.5 million in AUM annually, directly impacting revenue and profitability.

Further compounding the issue, the lack of a centralized data source made it challenging to get a holistic view of client health. Client interactions were spread across multiple systems: their CRM (Salesforce) held contact information and meeting notes, their portfolio management system (Black Diamond) tracked investment performance, and client feedback was collected sporadically through SurveyMonkey. Manually compiling this information was time-consuming and inefficient, leaving advisors with limited time for proactive client outreach. They estimated that advisors were spending an average of 4 hours per week per advisor manually tracking down this data.

Without a robust, data-driven system, Whitfield was essentially flying blind, unable to proactively identify and address potential issues before they escalated into lost clients and revenue. The firm needed a solution to consolidate data, identify at-risk clients early, and empower advisors to take proactive retention measures. The pain point was clear: reactive strategies were insufficient; a proactive, data-driven approach was crucial for minimizing client attrition and maximizing AUM retention.

The Approach

Whitfield Tax recognized the need for a more proactive and data-driven approach to client retention. Their strategy revolved around creating a client health score dashboard that aggregated data from various sources and provided a real-time snapshot of client engagement and risk.

The core of their approach involved identifying key performance indicators (KPIs) that were strong predictors of client retention. These KPIs fell into four main categories:

• Engagement: Metrics such as the frequency of client meetings, email open rates, attendance at webinars, and participation in client events were tracked. A decline in engagement was considered a warning sign.
• AUM Performance: While absolute performance was important, the focus was on relative performance compared to benchmarks and the client's stated goals. Underperformance or significant deviations from the financial plan triggered a flag.
• Financial Goal Progress: The dashboard tracked progress towards key financial goals, such as retirement savings, college funding, and wealth transfer. Stalled progress or changes in goals were identified as potential risk factors.
• Client Survey Responses: Regular client satisfaction surveys were conducted using SurveyMonkey. Feedback was analyzed for negative sentiment, unmet expectations, and areas for improvement.

These KPIs were assigned weighted scores based on their relative importance in predicting client retention. For example, consistent attendance at meetings might receive a higher weight than email open rates, as it was considered a stronger indicator of engagement. The weighted scores were then aggregated to create a single client health score, ranging from 0 to 100. Clients were then segmented into tiers:

• A: Health Score 80-100 (Low Risk)
• B: Health Score 60-79 (Moderate Risk)
• C: Health Score Below 60 (High Risk)

This segmentation allowed advisors to prioritize their outreach efforts and focus on the clients who were most at risk of attrition. The firm empowered advisors to proactively reach out to "B" and "C" tier clients, offering additional support, addressing concerns, and reinforcing the value of their services. This proactive intervention strategy was critical in preventing potential issues from escalating and preserving client relationships. Whitfield trained its advisors on proactive communication techniques tailored to different client segments and common areas of concern identified by the dashboard.

Technical Implementation

The technical implementation of the client health score dashboard involved integrating data from various systems and automating the calculation of the health score. Whitfield Tax leveraged a combination of existing tools and workflow automation to achieve this.

• Data Integration: The primary data sources were Salesforce (CRM), Black Diamond (Portfolio Management System), and SurveyMonkey (Survey Platform). Data from these systems was integrated into a centralized data warehouse.

• Automation with Zapier: Zapier was used to automate the data transfer between the various systems and the data warehouse. For example, whenever a new survey response was submitted in SurveyMonkey, Zapier automatically extracted the relevant data and updated the client's record in the data warehouse. Similarly, meeting data and AUM performance data was automatically pulled from Salesforce and Black Diamond on a daily basis.

• Health Score Calculation: The client health score was calculated using a weighted scoring model. The weightings were determined based on historical data analysis and the expertise of Whitfield's senior advisors. Here is a simplified example:

  • Meeting Attendance (20%): 10 points for each meeting attended in the last quarter.
  • Email Open Rate (10%): 1 point for each percentage point of open rate.
  • AUM Performance vs. Benchmark (30%): 30 points for exceeding the benchmark, scaled down proportionally for underperformance. A specific formula was implemented considering risk-adjusted return.
  • Financial Goal Progress (20%): Based on % progress to the goal.
  • Survey Satisfaction Score (20%): Based on the Net Promoter Score, rescaled to 20 points.

The client health score was calculated daily and displayed on a user-friendly dashboard. Advisors could easily view the health score for each of their clients, as well as the underlying KPIs that contributed to the score. The dashboard also provided drill-down capabilities, allowing advisors to examine individual KPIs in more detail.

The dashboard was built using a business intelligence tool that allowed for real-time data visualization and reporting. The tool also supported automated alerts, notifying advisors when a client's health score dropped below a certain threshold. This enabled advisors to proactively address potential issues before they escalated.

Results & ROI

The implementation of the client health score dashboard yielded significant improvements in client retention and overall business performance.

• Improved 'A' Client Retention: The retention rate among 'A' tier clients increased from 95% to 98% within the first year of implementation. This translates to a preservation of approximately $1.2 million in AUM annually.
• Reduced Churn Rate: The overall client churn rate decreased by 2%, resulting in a significant reduction in lost revenue.
• Increased Advisor Efficiency: By automating data collection and providing a centralized view of client health, the dashboard freed up advisors' time, allowing them to focus on more strategic client engagement activities. Whitfield estimates a savings of 2 hours per week per advisor, equivalent to approximately $50,000 in annualized salary savings across the firm.
• Enhanced Client Satisfaction: Proactive outreach and personalized support led to increased client satisfaction, as measured by improved survey scores and positive client feedback.
• Increased Revenue Growth: Because the program retained more AUM, the firm saw a boost in annualized fee-based revenue by $14,000.

The client health score dashboard not only improved retention but also provided valuable insights into client behavior and preferences. This data was used to refine marketing strategies, personalize client communications, and improve the overall client experience.

Key Takeaways

1. Proactive Retention is Key: Don't wait for clients to express dissatisfaction. Implement a system to proactively identify and address potential issues.
2. Data Integration is Essential: Break down data silos and create a centralized view of client information. Integrate your CRM, portfolio management system, and survey platform to gain a holistic understanding of client health.
3. Define Meaningful KPIs: Identify KPIs that are strong predictors of client retention and assign weighted scores based on their relative importance. Focus on engagement, performance, goal progress, and client feedback.
4. Empower Advisors with Actionable Insights: Provide advisors with a user-friendly dashboard that displays client health scores and provides actionable insights. Enable them to proactively reach out to at-risk clients and offer support.
5. Track and Measure Results: Continuously monitor the impact of your client health score program on retention, satisfaction, and revenue. Use data to refine your strategies and improve the effectiveness of your retention efforts.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors proactively identify and mitigate client attrition risks. Visit our tools to see how we can help your practice.