Luminary Achieves 98% AUM Retention with Client Advisory Board

Luminary Achieves 98% AUM Retention with Client Advisory Board

Executive Summary

Luminary Wealth Partners, facing increasing competition and the need to proactively address evolving client needs, sought a solution to improve AUM retention. They implemented a Client Advisory Board program to gather regular feedback and insights from a select group of clients. This initiative fostered stronger relationships, provided actionable insights, and ultimately resulted in a 98% AUM retention rate and the identification of $250,000 in new business opportunities.

The Challenge

Luminary Wealth Partners, a boutique RIA managing over $150 million in assets, recognized that maintaining a high AUM retention rate was critical for sustainable growth. In recent years, they observed a concerning trend: While their client acquisition remained steady, client attrition had crept up from 3% to 5% annually, representing a loss of roughly $7.5 million in AUM each year.

Several factors contributed to this challenge. First, the competitive landscape had intensified. New robo-advisors and larger firms aggressively targeted Luminary's client base with promises of lower fees and advanced technology. Second, client expectations were evolving. They demanded more personalized service, proactive communication, and a deeper understanding of their financial goals beyond simply managing investments. Many clients, particularly those nearing retirement, expressed anxieties about inflation eroding their purchasing power and the uncertainty surrounding healthcare costs.

Furthermore, Luminary’s leadership team, while highly experienced, realized they were operating with limited direct feedback from their core client base. Internal team discussions and annual client reviews provided some insights, but they lacked the depth and candor needed to truly understand client pain points and unmet needs. Specifically, a recent internal survey indicated that 20% of clients felt their financial plans weren't adequately addressing their long-term care concerns, potentially representing a significant vulnerability to client churn. They risked making strategic decisions based on assumptions rather than concrete client feedback. Failure to address this challenge would not only impact AUM retention but also limit Luminary’s ability to attract new clients and differentiate itself in a crowded market. They needed a system to systematically collect, analyze, and act on client feedback to retain and grow their AUM.

The Approach

Sophia Martinez, Luminary’s Head of Client Experience, championed the Client Advisory Board program. Her strategy was built around several key principles:

• Targeted Client Selection: Instead of relying on random sampling, Sophia carefully selected 10 clients representing a diverse cross-section of Luminary’s client base. This included clients with varying asset levels (ranging from $500,000 to $5 million), age groups (pre-retirees, retirees, and high-net-worth families), and financial goals (retirement planning, estate planning, business succession). The goal was to ensure a representative voice and a wide range of perspectives.
• Structured Feedback Collection: Sophia designed a quarterly process for gathering feedback. This included:
  • Online Surveys (SurveyMonkey): Detailed surveys were administered two weeks prior to each in-person meeting, covering topics like satisfaction with investment performance, communication frequency, service quality, and perceived value. The surveys included both quantitative (e.g., Likert scales) and qualitative (open-ended) questions.
  • In-Person Meetings: Quarterly meetings were held in a relaxed, informal setting (typically a high-end restaurant or conference room). The meetings followed a structured agenda focusing on key strategic topics, such as new service offerings, fee structures, technology enhancements, and market commentary. Sophia facilitated the discussions, encouraging open and honest feedback.
  • Individual Follow-Up Calls: After each meeting, Sophia conducted individual follow-up calls with each board member to delve deeper into specific issues and clarify any misunderstandings.
• Data Analysis and Action Planning: Collected data was meticulously analyzed using Airtable, a collaborative database platform. Sophia categorized and prioritized client feedback, identifying recurring themes and potential areas for improvement. A cross-functional team, including representatives from investment management, client service, and marketing, met regularly to develop action plans based on the client insights. These action plans were then communicated back to the Client Advisory Board to demonstrate that their feedback was being heard and acted upon.
• Transparency and Communication: Throughout the process, Sophia emphasized transparency and open communication. Board members were kept informed of the progress made on addressing their concerns and implementing their suggestions. This fostered a sense of ownership and strengthened their connection to Luminary.
• Incentivization: While intrinsic motivation was key (the desire to improve the firm and its services), Luminary also provided a small non-monetary incentive to board members in the form of a thank you gift, a high-end pen set or a gift certificate to a local restaurant. This acknowledged their time commitment and demonstrated appreciation for their contributions.

This strategic framework allowed Luminary to proactively address client needs, enhance its service offerings, and strengthen client relationships.

Technical Implementation

The success of Luminary's Client Advisory Board program depended on a well-defined technical implementation. Key aspects included:

• Survey Design and Administration (SurveyMonkey): Luminary leveraged SurveyMonkey's advanced features to create sophisticated surveys. Each survey consisted of approximately 20 questions, designed to gauge client satisfaction across key areas. They utilized Skip logic to tailor questions based on client responses, ensuring relevance and minimizing survey fatigue. For example, clients who rated investment performance below a certain threshold were automatically presented with follow-up questions asking for specific reasons and suggestions for improvement. Quantitative questions used a 7-point Likert scale for measuring agreement levels. The surveys included questions related to:

  • Investment Performance Attribution: To understand what clients attributed the performance of their portfolio, questions were included regarding market trends, financial planning and advisory.
  • Service Quality: Questions focused on responsiveness, communication clarity, and the overall experience of working with their advisor.
  • Financial Planning: Questions focused on the adequacy of their financial plans in addressing their long-term goals and concerns.
  • Technology and Accessibility: Assessed client satisfaction with Luminary's online portal, mobile app, and other digital tools.

• Data Management and Analysis (Airtable): Airtable served as the central repository for all client feedback data. Sophia created a customized database with multiple tables, including:

  • Survey Responses: Linked directly to SurveyMonkey, automatically importing survey responses into Airtable.
  • Meeting Notes: Detailed notes from each in-person meeting and follow-up call were entered into Airtable.
  • Action Items: Tracked all action items arising from client feedback, including assigned owners, due dates, and status updates.
  • Client Profiles: Integrated with Luminary's CRM system (Redtail), providing a holistic view of each client's history and preferences.
  • Net Promoter Score (NPS) Calculation: Calculated using SurveyMonkey based on the question "On a scale of 0 to 10, how likely are you to recommend Luminary to a friend or colleague?". Scores were automatically imported into Airtable, allowing them to track changes in client sentiment over time.

• Integration with CRM (Redtail): Connecting Airtable to Redtail enabled Luminary to personalize client communication and tailor advice based on the specific feedback received. For instance, if a client expressed concerns about estate planning, the advisor could proactively schedule a meeting to discuss relevant strategies.

• Metrics and Reporting: Key performance indicators (KPIs), such as AUM retention rate, client satisfaction scores, and the number of identified opportunities, were tracked and reported on a quarterly basis. These metrics provided valuable insights into the effectiveness of the Client Advisory Board program and informed future improvements.

• Financial Calculation: The "new opportunities" were calculated by tracking when members of the client advisory board made referrals or when the recommendations given to the board led to new products or financial goals being met.

Results & ROI

The Client Advisory Board program yielded significant positive results for Luminary Wealth Partners:

• AUM Retention Rate: Improved from 95% to 98% within the first year. This represents a significant reduction in client churn and protects a substantial portion of Luminary’s AUM. The decreased loss of 3% on $150 million, represents an AUM savings of $4.5 million dollars.
• Client Satisfaction: NPS score increased from 70 to 85, indicating a substantial improvement in client sentiment and loyalty.
• New Business Opportunities: Identified $250,000 in new business opportunities through client referrals and the implementation of new service offerings based on client feedback. For example, after the Client Advisory Board suggested the need for more education around Social Security maximization, Luminary hosted a workshop that led to 5 new client engagements, averaging $50,000 in AUM each.
• Client Engagement: The program fostered a deeper sense of connection and engagement among board members, leading to increased referrals and positive word-of-mouth marketing.
• Service Innovation: Client feedback directly influenced the development of new service offerings, such as a specialized financial planning program for small business owners and a concierge service for retirees. This allowed Luminary to differentiate itself from competitors and attract new clients.

The cost of implementing the Client Advisory Board program, including survey software subscriptions, meeting expenses, and staff time, was approximately $10,000 annually. This represents a small investment compared to the significant return generated in terms of AUM retention and new business opportunities.

Key Takeaways

For other RIAs and wealth managers considering implementing a Client Advisory Board:

1. Be Selective: Carefully select board members representing a diverse cross-section of your client base to ensure a wide range of perspectives.
2. Structure Feedback: Implement a structured process for collecting feedback, including surveys, in-person meetings, and individual follow-up calls.
3. Act on Insights: Demonstrate that you are listening to client feedback by developing and implementing action plans based on their suggestions.
4. Communicate Transparently: Keep board members informed of the progress made on addressing their concerns and implementing their suggestions.
5. Incentivize Participation: Acknowledge their time commitment and demonstrate appreciation for their contributions through thoughtful, non-monetary incentives.

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