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What does your HNI client really want?
A typical HNI client is perhaps one who has a large and growing portfolio, but insufficient time to manage it. He may well have decided to spread his portfolio among 2 or more advisors / banks in an effort to de-risk himself as also to ensure that he gets more than one view on an investment, which helps him make up his mind better. If you really think about what he wants from his advisor, he probably is looking for somebody he can trust, somebody who is competent and "is on top of what's happening in the market" and therefore gives him the confidence that whatever needs to be done in the portfolio, will be done by you. He is ideally looking to periodically make sure that the portfolio is on track and that there are no nasty surprises on the portfolio. An advisor who can deliver to these expectations is most likely to gradually win the lion's share of the client's portfolio and perhaps eventually even go to 100% wallet share.
If you are interested in growing your relationship to as close to 100% wallet share as possible, and are willing to devote time and energy to this cause, the first thing to be understood is that this aim is more likely to be achieved by the way you manage the account on an on-going basis and not on the basis of alpha that you deliver in a quarter or two. And, probably the most visible way in which you will demonstrate how well you are managing his portfolio, is during a quarterly portfolio review meeting that you schedule with him. Here are some suggestions on how you can maximize the value of these portfolio review meetings to ensure you achieve the client's goals as well as yours.
1. Set expectations, upfront
When you sign on a new HNI client, in your welcome letter to him, spell out exactly what he can expect in terms of portfolio reviews. If you propose quarterly review meetings, make a commitment in writing in your welcome letter that you will schedule and conduct quarterly review meetings. Spell out exactly what you intend covering in a typical review meeting. The agenda of a typical review meeting can include :
- Wrap up of key market developments and implications on portfolio - Review of action taken during the last quarter vs action planned - Review of progress against goals - Review of portfolio and discussion on tactical asset allocation recommendations - Agreement on portfolio action to be taken - Schedule date for next review meeting
Put yourself in your client's shoes. If you see this documented in the advisor's welcome letter, wouldn't you feel you are dealing with a professional who seems to know what he is doing? The fact is that most good advisors cover all these points anyway in a regular review meeting - its just that they don't present it well enough to get clients to appreciate their efforts better. There is an important point here - the last point talks of setting a date for the next meeting. If you actually wrap up a review meeting with an agreed date for the next meeting - albeit 3 months later - it gives your client a strong sense of continuity of process rather than any randomness attached to it.
2. Re-confirm appointment
Call, or get your assistant to call your client a week before the scheduled appointment date to reconfirm it. Your client is a busy person, a lot of appointments could have come into his diary since the time he scheduled your review meeting, 3 months ago. Ensure that he is called and the appointment is reconfirmed. Let your client know as soon as the meeting is reconfirmed, that he will get the material for the meeting within 24 hours and request him to review it, if possible, ahead of the meeting.
3. Send portfolio review documents, at least 5 days before the meeting
Send a mail to your client thanking him for re-confirming the appointment. Attach an agenda for the meeting and all the portfolio statements you wish to discuss during the meeting. Send as annexures any background information on investments you want him to consider, to enable him to review this ahead of the meeting, should he desire. Most clients may not go through the annexures and may prefer to hear from you directly - but sending the material in advance will give them a lot more confidence in your approach anyway.
4. Conduct the portfolio meeting by sticking to your agenda
Ensure that you conduct the meeting like a corporate executive would conduct a meeting or a presentation. By all means, be friendly, be relaxed - but be professional anyway. Your client may be your friend, but he also sees a professional in you who is tasked with managing his money. Showcase that professionalism, in a manner you are most comfortable, to reassure your client that his money is in safe hands. Ensure that you take notes of all action points discussed in the meeting.
5. Send minutes of the meeting, within 24 hours
Send an email to your client within 24 hours of the meeting, giving brief bullet points that document all the action points discussed along with timelines discussed if any. Action points could be routine operational issues or more strategic decisions on the portfolio - they all must be documented, to give your client the comfort that you will get all the points auctioned.
6. Ensure completion of all action points
Once an action point is documented, ensure that you "stay on top of it" and see it to logical conclusion and report promptly to your client. Always draw reference to action point numbers when you report completion. For example, when you send him a mail informing him that KYC for his wife has been processed successfully, ensure that you preface it with "Action Point No 6 from review meeting of dd/mm/yy - KYC of Mrs. Renu Arora" and then go on to give your update on the point. These little efforts will help reinforce in your client's mind that you are "on top of the situation".
7. Consider PPTs for NRI clients
NRI clients, or clients who may be travelling and thus unable to meet you personally for a review meeting, nevertheless need the same assurance to give them the comfort that their money is in safe hands. It would be tempting for you to send them long mails explaining what you would otherwise have talked through in a meeting. This may not be a great idea as most clients who see a "lengthy" mail, put it off for later, and that later may never come. Instead, consider sending them a crisp power point presentation, with each slide carrying bullet points for each agenda item that you would have liked to discuss. A crisper presentation will ensure they go through it and act on it - and at the same time, will convey a more professional approach of your firm. You can schedule a quick call with your client a few days after sending the presentation, to cover off any points he may wish to discuss and take down his next instructions on the portfolio. Complete this loop with an emailed minutes of the meeting.
8. Always include a cash flow forecast as part of your review process
IFAs unlike banks are not privy to fund flows in the bank accounts of their clients. They may not be able to call a client immediately on seeing a large credit into the account, as they have no way of knowing movements in the bank account. How then do you address this disadvantage? One way is to get one step ahead of the process by knowing when to expect large flows, rather than knowing when they actually happen. As part of your quarterly review process, ensure that you add one discussion point - which is a cash flow forecast for the next quarter. Your client will most likely know when he is expecting relatively large inflows and outflows, at least over the next 2-3 months. Include in your regular process a discussion on planned inflows as well as outflows. As an advisor, you ought to anyway need to know this so that you can plan for outflows well in advance and plan for parking the inflows too, sufficiently in advance. There is a lot of value you will add to your clients by understanding expected flows and planning for them. There is also a lot of value you will add to your business by ensuring that you get to intermediate on these planned future flows by being proactive.
9. Inform proactively on a "need to know" basis
Try not to flood your client's mail box with too many market updates and newsletters that he may not actually read. At the same time, understand that your client will not like a "nasty surprise" when he sees a portfolio statement that he is not prepared for. During times of high market volatility, be proactive in reaching out to your clients in any manner that is most effective, appraise them of the situation and help them understand implications on their portfolio. Do not wait for the next quarterly review meeting, when faced with periods of high volatility. When clients have talked to you, got your perspectives on market events and have agreed a course of action with you, they are less likely to receive a "nasty surprise" when they receive their monthly portfolio summaries from your office.
Many good advisors do a lot of work to ensure that they manage their clients' portfolios is the best possible manner. Putting a structure and a framework around these efforts and sharpening your communications will go a long way in helping your clients "see" advice and service being delivered on a consistent basis. Do this consistently and you should hopefully be well on your way to getting towards 100% wallet share from your HNI clients.
All articles in the Sell Well - Grow Well section are created by Wealth Forum. These are not to be construed as opinions given by SBI Mutual Fund.
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