Hayes Achieves 95% Client Retention via Next-Gen Engagement
Executive Summary
New Horizons Financial faced the growing threat of asset attrition as wealth transitioned to younger, less engaged heirs. To combat this, Rebecca Hayes, CFP, CDFA, developed the "Future Leaders" program, a comprehensive next-gen engagement strategy incorporating targeted education, investment simulations, and direct communication channels. Within two years of implementation, the program increased client retention to an impressive 95% among participating families, directly retaining $12 million in AUM and solidifying New Horizons Financial’s long-term stability.
The Challenge
New Horizons Financial, a well-established RIA with a focus on retirement planning for high-net-worth individuals, began noticing a concerning trend: a significant portion of their client base, primarily Baby Boomers, were starting to consider wealth transfer and estate planning. While this presented an opportunity, it also highlighted a vulnerability – the younger generation, often Gen X and Millennials inheriting these assets, lacked the same connection and engagement with traditional financial planning methods.
Specifically, New Horizons Financial was experiencing an average annual client attrition rate of 8% due to wealth transfer, representing roughly $5 million in AUM leaving the firm each year. A client survey revealed that heirs felt underserved, lacking a clear understanding of their inherited wealth and feeling intimidated by complex financial jargon. Many younger clients reported feeling more comfortable managing their own investments through online platforms and robo-advisors, further exacerbating the risk of asset flight.
One concrete example illustrates the problem: the Miller family, long-time clients of New Horizons Financial with approximately $3 million in AUM. Upon the passing of Mr. Miller, his daughter, Sarah, inherited a significant portion of the assets. Sarah, a busy entrepreneur in her late 30s, felt overwhelmed by the responsibility and admitted she felt more inclined to move the assets to a low-fee index fund and manage it herself than maintain the relationship with New Horizons Financial. This sentiment was echoed across numerous families, highlighting the urgency for a proactive solution. The firm projected that without addressing this trend, they could lose upwards of $25 million in AUM over the next five years.
The Approach
Rebecca Hayes, a Certified Financial Planner and Certified Divorce Financial Analyst at New Horizons Financial, recognized the need for a proactive and tailored approach to engage the next generation. She spearheaded the creation of the "Future Leaders" program, designed to educate, empower, and build lasting relationships with heirs. The program was built on three core pillars:
- Education and Financial Literacy: Recognizing the lack of financial understanding among younger clients, the program offered a series of tailored educational workshops covering topics such as investment basics, tax planning, estate planning, and retirement strategies. These workshops were designed to be interactive and engaging, using real-world examples and avoiding complex jargon. They were offered both in-person and virtually to accommodate different schedules and preferences. Specifically, workshops utilized scenarios such as "Investing a $50,000 inheritance" and "Understanding your 401(k) options" to make the information relatable and actionable.
- Investment Simulations and Practical Experience: To bridge the gap between theoretical knowledge and practical application, the program incorporated investment simulations using online platforms that mirrored real-world market conditions. This allowed heirs to experiment with different investment strategies, learn about risk management, and gain confidence in their decision-making abilities without risking actual capital. These simulations were often gamified, further increasing engagement and motivation.
- Direct Communication and Personalized Service: The program emphasized building direct relationships between the heirs and the financial advisors. Rebecca implemented regular one-on-one meetings, personalized financial planning sessions, and ongoing communication through email and phone calls. This personalized approach ensured that heirs felt valued, understood, and supported. Furthermore, the program included quarterly market updates tailored to the specific interests and concerns of the younger generation, focusing on topics like ESG investing and impact investing, which resonated strongly with this demographic. The program also actively solicited feedback from participants, allowing for continuous improvement and adaptation to their evolving needs.
Rebecca also implemented a clear and transparent fee structure specifically for the "Future Leaders" program, addressing a common concern among younger clients about hidden fees and costs. The fee structure was tiered based on AUM, with discounts offered for smaller portfolios, making the program accessible to a wider range of heirs.
Technical Implementation
The "Future Leaders" program leveraged existing technology infrastructure and integrated new tools to streamline communication and enhance the client experience.
- Secure Client Portal (eMoney): New Horizons Financial utilized eMoney Advisor as their primary client portal. The portal was customized to provide heirs with secure access to their financial information, including account balances, investment performance, and tax documents. The portal also served as a central repository for educational resources, workshop materials, and investment simulation results. The security protocols implemented within eMoney are SOC 2 compliant, ensuring the confidentiality and integrity of client data.
- Targeted Email Campaigns (Mailchimp): Mailchimp was used to deliver targeted email campaigns to heirs, providing relevant content, workshop invitations, and market updates. Email segmentation was crucial to ensure that the content was tailored to the individual interests and financial goals of each participant. Open rates for these email campaigns were tracked and analyzed to optimize content and timing. A/B testing was conducted to determine the most effective subject lines and call-to-actions, resulting in a 20% increase in email engagement.
- Investment Simulation Platform (Investopedia Simulator): The Investopedia Simulator was used to provide a realistic and engaging investment simulation experience. The platform allowed heirs to create virtual portfolios, trade stocks and bonds, and track their performance over time. The platform's reporting capabilities provided valuable insights into their investment decision-making process.
- Data Analysis and Reporting (Excel & CRM): Client data, including demographic information, engagement metrics, and investment performance, was analyzed using Excel and the firm's CRM system. This data was used to track the progress of the "Future Leaders" program and identify areas for improvement. Key metrics tracked included participation rates, client satisfaction scores, and AUM retention.
The implementation also included the integration of KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures to ensure compliance with regulatory requirements. This involved verifying the identity of all participants and monitoring their transactions for suspicious activity.
Results & ROI
The "Future Leaders" program yielded significant results within two years of implementation:
- Client Retention: Client retention among families participating in the program increased from 92% to 95%. This represents a significant reduction in client attrition and a substantial improvement in long-term client loyalty.
- AUM Retention: The program directly retained $12 million in AUM that would have otherwise been at risk of attrition. This translates to a significant increase in revenue for New Horizons Financial.
- Client Engagement: Engagement with the firm's services increased dramatically among heirs. Workshop attendance rates averaged 75%, and portal usage increased by 150%.
- Referral Rate: The program generated a noticeable increase in referrals from satisfied heirs. Word-of-mouth marketing became a powerful tool for attracting new clients. The referral rate from participants increased by 30% year-over-year.
- ROI Calculation: The initial investment in the "Future Leaders" program was approximately $25,000, including marketing materials, software licenses, and advisor time. The $12 million in retained AUM generated approximately $60,000 in additional revenue (assuming a 0.5% AUM fee). This translates to a return on investment of 240% within two years.
Prior to the program, the average age of a new client was 62. Following the program, the average age of a new client (referred by participants) dropped to 45, demonstrating the program's success in attracting younger clientele.
Key Takeaways
- Proactive engagement is crucial: Don't wait for heirs to seek you out. Develop a proactive strategy to engage them early and often.
- Education is key: Equip the next generation with the financial knowledge and skills they need to make informed decisions.
- Personalization matters: Tailor your services to meet the specific needs and preferences of younger clients.
- Leverage technology: Use technology to streamline communication, enhance engagement, and provide a seamless client experience.
- Measure and adapt: Track your results and make adjustments to your program as needed to ensure its ongoing success.
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