NPS Score Up 25 Points: Client Advisory Board Success Story

NPS Score Up 25 Points: Client Advisory Board Success Story

Executive Summary

Ferguson Estate Planning, a growing RIA managing over $350 million in assets, struggled to consistently gauge client satisfaction and proactively address emerging needs, leading to a stagnant Net Promoter Score (NPS). By establishing a client advisory board facilitated with guidance from Golden Door Asset, Ferguson implemented a structured feedback mechanism. This initiative empowered Ferguson to identify key areas for improvement, resulting in a remarkable 25-point increase in their NPS and a 15% reduction in client complaints within a year.

The Challenge

Ferguson Estate Planning, based in Austin, Texas, serves a diverse clientele ranging from high-net-worth individuals nearing retirement to young professionals building wealth. While Ferguson prided itself on personalized service, it lacked a consistent, structured process for gathering in-depth client feedback. Annual satisfaction surveys yielded limited insights, often focusing on broad satisfaction levels rather than specific pain points.

Specifically, Ferguson faced these critical challenges:

• Stagnant NPS: Despite efforts to improve client service, the firm's NPS remained stubbornly around 35 for the past two years. This indicated a significant percentage of passive or even potentially detracting clients, posing a threat to client retention and referrals.

• Reactive Complaint Handling: Client complaints were typically handled on a case-by-case basis, without identifying underlying systemic issues. For instance, several clients expressed frustration regarding the clarity of quarterly investment performance reports, which required significant advisor time to explain. This resulted in over $5,000 annually spent on extra explanation meetings and a negative perception of transparency.

• Missed Opportunities for Service Enhancement: Without proactive feedback, Ferguson was missing opportunities to tailor its services to evolving client needs. A recent survey revealed that over 40% of clients were interested in exploring alternative investment strategies, such as ESG investing, but Ferguson lacked the internal capacity to effectively assess demand and develop appropriate offerings. This represented a potential loss of $20 million in assets under management that could be directed towards these emerging strategies.

• Inefficient Communication: Ad-hoc communication channels meant that valuable client feedback was often lost or not effectively communicated to the relevant teams within Ferguson. This resulted in delays in addressing client concerns and a perception of inefficiency, potentially impacting client loyalty and overall satisfaction.

The lack of a systematic feedback mechanism hindered Ferguson's ability to proactively identify and address these challenges, ultimately impacting client retention and hindering business growth.

The Approach

Golden Door Asset guided Ferguson Estate Planning through a three-phase approach to establish and leverage a client advisory board:

Phase 1: Board Formation and Structure

• Client Selection: Carefully selected 8-10 clients representing diverse demographics, investment profiles, and relationship tenures with Ferguson. The selection criteria included clients who were actively engaged, willing to provide constructive feedback, and represented the firm's ideal client base.

• Clear Objectives and Guidelines: Defined clear objectives for the advisory board, focusing on gathering feedback on client experience, identifying areas for service improvement, and co-creating solutions. Established clear guidelines for participation, confidentiality, and conflict resolution.

• Incentives and Recognition: Offered modest incentives for participation, such as complimentary financial planning reviews or exclusive access to firm events. Emphasized the value of their contribution in shaping the future of Ferguson's services and enhancing the client experience.

Phase 2: Facilitated Advisory Board Meetings

• Quarterly Meetings via Zoom: Conducted quarterly advisory board meetings via Zoom, ensuring convenient participation and minimizing travel time. Structured the meetings with a clear agenda, focusing on specific topics relevant to client satisfaction and service improvement.

• Open Dialogue and Active Listening: Facilitated open dialogue, encouraging participants to share their honest feedback and perspectives. Practiced active listening, demonstrating empathy and understanding of client concerns.

• Structured Discussion Framework: Employed a structured discussion framework, utilizing pre-defined questions and prompts to guide the conversation and ensure that key topics were covered. For example, clients were asked to rate and provide feedback on specific aspects of Ferguson's service, such as the frequency and content of communication, the clarity of investment reports, and the accessibility of advisors.

Phase 3: Actionable Insights and Implementation

• Documentation and Analysis: Meticulously documented key insights and suggestions from each advisory board meeting using Google Docs. Conducted thorough analysis of the feedback, identifying recurring themes and actionable recommendations.

• Prioritization and Implementation: Prioritized recommendations based on their potential impact on client satisfaction and feasibility of implementation. Developed a detailed action plan with specific timelines, responsibilities, and metrics for measuring success.

• Communication and Transparency: Communicated the outcomes of the advisory board meetings and the implemented changes to all clients, demonstrating responsiveness and commitment to continuous improvement. Regularly solicited feedback on the impact of the changes and made adjustments as needed.

This structured approach ensured that the client advisory board effectively captured valuable feedback, identified key areas for improvement, and facilitated the implementation of impactful solutions.

Technical Implementation

The technical implementation of the client advisory board relied on readily available and cost-effective tools to facilitate communication, collaboration, and data analysis:

• Zoom: Utilized Zoom for conducting quarterly advisory board meetings, enabling remote participation and facilitating screen sharing for presentations and discussions. Employed features such as breakout rooms for smaller group discussions and polls for gathering real-time feedback.

• Google Docs: Created a shared Google Doc for each advisory board meeting, serving as a central repository for the agenda, discussion notes, and action items. Enabled collaborative editing, allowing participants to contribute their insights and suggestions in real-time.

• Net Promoter Score (NPS) Calculation: Employed the standard NPS calculation methodology, surveying clients on a scale of 0-10 regarding their likelihood of recommending Ferguson Estate Planning to others. Categorized respondents as promoters (9-10), passives (7-8), and detractors (0-6). Calculated the NPS score by subtracting the percentage of detractors from the percentage of promoters.

• Complaint Tracking System: Implemented a centralized system for tracking client complaints, capturing details such as the nature of the complaint, the resolution process, and the time required to resolve the issue. Analyzed complaint data to identify recurring patterns and underlying systemic issues.

• CRM Integration: Integrated the feedback from the advisory board with Ferguson's existing CRM system. This ensured that advisor profiles could be updated to provide more personalized service. For example, preferences in communication styles, risk tolerance and financial goals were tracked in the CRM to help service future client interactions.

The successful implementation of the advisory board was enabled by a dedicated staff member at Ferguson who was given the task of managing this process, from the logistics of the Zoom meetings to writing reports in Google Docs and integrating the results with the CRM.

Results & ROI

The implementation of the client advisory board yielded significant positive results for Ferguson Estate Planning:

• NPS Increase: Achieved a remarkable 25-point increase in NPS, from 35 to 60, within one year. This indicates a substantial improvement in client satisfaction and loyalty, with a significant increase in the percentage of promoters and a decrease in detractors.

• Reduction in Client Complaints: Reduced client complaints by 15% within the same period. This demonstrates the effectiveness of the advisory board in identifying and addressing underlying issues that were contributing to client dissatisfaction.

• Increased Client Retention: Improved client retention rates by 5%, resulting in a reduction in client attrition and a corresponding increase in assets under management. This directly translates to increased revenue and profitability for the firm.

• Improved Communication and Transparency: Enhanced communication with clients, providing regular updates on the actions taken based on advisory board feedback. Increased transparency regarding investment performance and firm policies, fostering greater trust and confidence among clients.

• New Service Offerings: Developed and launched new service offerings based on advisory board feedback, such as ESG-focused investment portfolios and enhanced financial planning tools. This resulted in increased client engagement and the attraction of new clients.

The estimated ROI of the client advisory board initiative was significant. The reduction in client complaints saved approximately $750 in staff time per month. Increased client retention boosted AUM by $10 million, producing an estimated annual increase of $75,000 in revenue for the firm.

Key Takeaways

For other RIAs and wealth managers considering implementing a client advisory board, here are some key takeaways:

1. Select Participants Strategically: Choose clients who are representative of your target market, engaged in their financial planning, and willing to provide candid feedback. Diversity in age, portfolio size, and investment experience will yield more well-rounded insights.

2. Establish Clear Objectives and Guidelines: Define clear objectives for the advisory board and communicate them effectively to participants. Establish clear guidelines for participation, confidentiality, and conflict resolution to ensure productive and respectful discussions.

3. Prioritize Actionable Insights: Focus on gathering actionable insights that can be translated into concrete improvements in your services and processes. Prioritize recommendations based on their potential impact on client satisfaction and feasibility of implementation.

4. Communicate Regularly and Transparently: Keep clients informed about the actions taken based on advisory board feedback. Demonstrate responsiveness and commitment to continuous improvement to foster trust and strengthen client relationships.

5. Track and Measure Results: Track and measure the impact of the client advisory board on key metrics such as NPS, client retention, and complaint resolution. Use data to refine your approach and demonstrate the value of the initiative.

About Golden Door Asset

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