US-EN Advisors

Building better client experiences

Episode 123: In this episode of the Better conversations. Better outcomes. podcast, we discuss the importance of setting your practice apart by developing an intentional client experience.
June 2021
Clients looking for a new advisor or firm are faced with an overwhelming set of options. One way to set your practice apart is by giving a lot of thought to developing an intentional client experience.
Our guest today is Angie Herbers, Managing Partner of Herbers and Company. Angie handles strategy management and innovation for independent advisory firms who desire to grow.

Transcript

Angie Herbers:
There’s two very distinctive types of leaders of advisory firms. There’s the ones who are focused on, “We’re going to grow revenue. We’re going to grow profit. We’re going to grow valuation.” They’re focused on the dollars. And then there are the ones that are focused on, “What can we do better?” And I can tell you without a shadow of a doubt, the ones that asked the question of “What we can do better?” beat most of the industry in growth, in revenue, expansion of profit, and expansion of valuation.
Ben Jones:

Welcome to Better conversations. Better outcomes., presented by BMO Global Asset Management. I’m Ben Jones. 

Emily Larsen:
I’m Emily Larsen. On this show, we explore the world of wealth advising from every angle, providing actionable ideas designed to improve outcomes for advisors and their clients.
Disclosures:
The views expressed here are those of the participants and not those of BMO Global Asset Management, it’s affiliates, or subsidiaries.
Emily Larsen:
Let’s for just a second step into the shoes of a client who’s looking for a new advisor or firm to work with and think about how overwhelming the choices are and how similar everyone seems. It’s an interesting perspective, right? So one way to set your practice apart is by giving a lot of thought to developing an intentional client experience.
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Ben Jones: 

Our guest today is Angie Herbers, managing partner of Herbers & Company. Now in her own words, Angie describes her work as strategy management and innovation consulting for independent advisory firms who desire to grow. In financial services, the service we deliver is often intangible. It’s not like building a house or a car where you can see the fit and finish of the product. So, the best place to start when thinking about client experience is to nail down exactly what client experience means. 

Angie Herbers: 

When we talk about client experience, what we’re talking about is the process in which you take a client through within your own organization, and the goal of that process is to make an intangible tangible. So the client experience is selling a process, but the outcome is actually a feeling. When many advisory firms come to Herbers & Company and ask for help on developing their CX or their DCX, which is popular post pandemic, they’re asking for a process. But the first question Herbers & Company asks is, “What feeling do you want the client to have as a result of your process?” And then the client experience then becomes the experience, the feeling that that client has as a result of the process that you build. 

Ben Jones: 

I think that’s a really neat way to approach it because ultimately you want the client to leave with some sort of feeling of either that they’re taken care of, or security, or connection. I think starting with the end in mind is always a great strategy whenever you’re building anything. I’m curious from your perspective, having worked with advisors for 18 years in this capacity, how important is this topic or should this topic be for financial advisors on a scale of 1 to 10? 

Angie Herbers: 

Well, let me give you the evolution of CX. When I started in the business 18 years ago, CX importance was, I would guess around a 2, meaning 2 being low. And the reason is, is because there wasn’t as many independent advisory firms, and what was being sold as the experience was independent, objective, fiduciary-driven advice. Well, as the industry has grown both in size and scale, number of advisors, number of firms, institutions entering into the independent space, CX has also grown in importance. Because when there are more independent objective fiduciary advisory firms out there, you have to set yourself apart. Today, post pandemic, I will, I mean, I’m going to give it a 10 because it’s what now sets independent firms apart from other independent firms. You add on top of that what we have just gone through in the pandemic, which was a digital experience. You had the digital experience on top of that, it becomes the number one in technology. Innovation becomes number one in driving client referrals, lead flow, and setting your brand apart from other independent firms out there. 

Ben Jones: 

And so, as a way to differentiate, it’s growing in importance. There are many advisors who have been doing this for a long time who may not have kind of come along that journey of importance. And so, for those out there who say, “Well, I give great customer service. Why do I need this special CX or customer experience?” What would you say to those people? 

Angie Herbers: 

Well, customer service is just servicing another human. Client experience is a more intentional service based on the feeling that you’re trying to drive. So I want you to think about all the types of firms out there and the many different types of clients that you can serve. You might be trying to drive the feeling of peace of mind in one firm. Specifically like if you’re working in the millennial market, you might be trying to drive innovation, or speed, or convenience. So, client service is just providing great service, which all firms obviously would not survive if they weren’t providing great service. But client experience is going much deeper into beyond service what is there and what cements a client into an organization, and then gets them to send referrals or increases your lead flow is the feeling that they walk away from that experience having and then sharing with others. 

So if your intent is just to stay status quo, then providing great services –  Awesome. Continue to do that. But if your intent is to grow, then client experience is where many firms need to turn their attention. 

Emily Larsen: 

According to Angie, most firms make the mistake of trying to map out their client experience like a flow chart. But what you really want to do is decide on a desired feeling that your customer experience will produce. So once you know that as the goal or the ending, you can come up with a process that will bring about the right outcome. 

Ben Jones: 

How many folks that you talk to, advisors, teams, firms, are clear about what feeling they want their customers to have? And I’m just curious, how does that align oftentimes with the actual feelings that their current customers do have? 

Angie Herbers: 

Well, most of the time advisory firms… And this is the beauty of Herbers & Company because we help them get objective. But most of the time, they’re building their client experience based on the feelings they, as advisors, want to have. So, we want the client to supply all the data that we need in one email at one moment so we don’t have to search for the data. Or we want to feel less overwhelmed by the process. The first goal with an advisor is to just take those feelings that they have and set them aside. Those are human capital issues, not CX issues, set those aside and get them looking directly at the client. One of the easiest ways to do that is to actually take the advisors through their own client service or client experience so that they can feel their own process in real time and then get objective on what it feels like to be a client. So the first step is get the advisors feeling what the clients are feeling. 

Ben Jones: 

I like that a lot. I wonder how many advisors have put themselves through their own process. 

Angie Herbers: 

Very few. I mean, for sure. In fact, we have a trick that we use in Herbers & Company. We have each advisory firm put together what we call a Service Book. That Service Book is essentially a pitch on their own firm. And then over the years, what we’ve learned is we’ll take that Service Book, we’ll edit it based on what we’ve heard, and then we pitch it back to the advisors. So we are pitching their own firm to them in their words. And what we often get is this, “Oh, wow. I didn’t know what it felt like to be on the other side of that.” So oftentimes it takes… Not all firms are like this, but it takes someone else helping you through your own process in an objective manner to help each advisor see what the clients are feeling. 

Once they do that, then we can ask the clients. We don’t do this all the time, but sometimes you can do a client survey. Sometimes you can have small groups of clients that are giving feedback. We have to be a little bit careful on that because the client often doesn’t know all of what they need or what they want and they may not be able to articulate the feeling either. So we can get feedback from clients, and then, now we’re sitting in a very objective place. We’ve pulled each advisor or each leader out of the organization, and now they’re looking back at their organization objectively to see it not from the advisor viewpoint, which is the role that they have played, but rather now the client viewpoint. 

Ben Jones: 

We had a branding expert on years ago on the show, one of our very early episodes. They were walking through the fact that if you heard the pitch from four or five different advisors, they all had kind of some line around a proven process and some line… It was the same pyramid structured in a different way. And when you put them all in front of each other, they can’t even tell which one was themselves, which is an interesting thing that they’ve spent so much time and you spend a lot of time as an advisor trying to think through what’s your message to the market and you come up with something that’s kind of what everyone else said. And so, I can imagine how valuable it would be in the customer experience process to not only have them go through the process they’ve created, but maybe experience a similar process at another firm. 

Angie Herbers: 

For sure. I mean, I think one of the best things that advisors can do is be a client. I mean, I think all advisors need a financial advisor. But I mean, the branding expert that you mentioned is absolutely right. We’ve worked with over a thousand advisory firms in this space. It’s hard to say, but it’s remarkable how alike they are. And just having that deep knowledge of so many advisory firms, Herbers & Company can then identify almost quickly what is truly different about the advisory firms we work with and what is not. Oftentimes advisors don’t know what makes them different. 

Ben Jones: 

And so, you mentioned this idea of trying to have the outcome of a feeling and you gave the generational example of millennials. Based on the feeling that the advisor is trying to create for the clients, does that need to be tailored kind of to some sort of demographic or niche that they work with? Is it better to start with understanding your niche and the feelings that those people want? Walk me through the chicken and the egg dance there. 

Angie Herbers: 

Well, that’s a big industry debate. Yes, it’s good to start with a niche. The reason why it’s good to start there is because you get what Herbers & Company calls a baseline. You get a baseline process for a particular group of people that you’re trying to target. But the cool thing about it is, most financial services can, in one way or another, be catered to all people. The problem is it’s very difficult to build a CX model when you’re catering to all people. If you start with a baseline, you can then repackage it over and over and over again to all the people that you want to serve. Where I think the industry confuses advisors is that there is a belief that you should only focus on one niche and you should grow only using that niche. And what Herbers & Company says is, that maybe more successful to do it that way, but it’s not the only way. However, when it comes to client experience, having one focus does then enable you to more easily focus on a broader audience. 

Ben Jones: 

Yeah, I think that makes a lot of sense. And we’ve seen some firms that have grown very big and very broad by doing a great customer service just a little different for a lot of different types of clients. 

Angie Herbers: 

Yeah. We’ve seen a lot of firms grow exponentially. I can tell you having the experience and watching those firms, that client of experience only has to have one little slight thing that’s unique and different from the industry that substantially enhances growth. The problem is, is finding that one thing. It’s a search and you have to take the time to do it. Making something simple starts out very complex. You have to just keep whittling down at it until you find that one thing that does hit. 

Ben Jones: 

I liked the way that Angie thinks about this idea of a differentiating factor. It’s also true that the one thing or that one differentiating factor could be a combination of smaller things that makes your firm truly unique. So be prepared for some hard work as you dig in and think about this. Often, a good source of inspiration is to look to other industries and borrow those insights to infuse them into your desired client experience. 

Angie Herbers: 

Depending on your firm, you can pull inspiration everywhere. Herbers & Company, I mean, myself in particular, if I am helping an advisory firm and I’m having a hard time really finding what is unique to that firm, I will pull – to be quite frank with you, I often go to the pharmaceutical industry and I look at healthcare because healthcare is very in tune with feelings, and I feel like healthcare does provide a lot of research in how to make a client experience better because we’re dealing with real lives here. So that’s where I go. 

But we’ve got firms who go to places, everything from Google, to Netflix, to Uber. There’s hundreds of options to find inspiration. At Herbers & Company, we encourage that looking outside of the industry for inspiration on how their experience can be enhanced, be better, or help them become different. The hard thing about client experience is that the advisory industry runs underneath a recurring revenue model. You have to be careful not to apply a transactional experience to a recurring revenue experience and know the differences between those experiences, because the feelings can be quite different based on how the client is paying. 

Ben Jones: 

Can you give me an example? 

Angie Herbers: 

Yes. A lot of firms will compare their client experience to, say a hotel, the Four Seasons. And there’s good elements to that, but you’ve got to realize that the experience of living in the Four Seasons suites every day over and over and over again is very different from going to the Four Seasons and staying the night, one night, and then going back to your house. You’ve got to be able to pull those things apart and look for recurring types of revenue model experiences versus that, “We’re just going to come and stay for a day and feel really good for a day.” Recurring revenue model requires you to have an experience that makes you feel good every day, ongoing, consistently, versus one interaction at a time. 

Ben Jones: 

And it’s got to last for many, 20, 30 year client experiences, right? I mean, that’s a different design than a short-term relationship. 

Angie Herbers: 

Well, for sure. Using the hotel example, you’ve got an aging client base. And what a 30-year old needs in their experience is very different than what a six-year old may need. You’ve got to look at those factors as you’re building the experience and building upon your experience and improving it. 

Ben Jones: 

Yeah, no, when you were saying it, I was thinking about the difference between when I was dating my wife versus now that we’re married, right? It was easy in the date to make it this fantastic experience and dinner and everything. But when you’re married and shuffling kids around and everything, it’s easy to lose a little bit of the magic at times. And so, the beauty of it is that you get the opportunity every year to keep that relationship and experience positive and moving forward. But it’s not the same as 20 years ago. 

Angie Herbers: 

For sure. I actually love the dating example and marriage example. I’m going to steal that and use it with clients. But it’s so true. The reality is, is you can’t do client experience in a recurring revenue model and say, “I’m finished with this. This is how it’s going to be. We’re going to keep doing this over and over.” It’s always a work in process. Dedicating consistent time to answering the question of, “What can we do to improve this based on our evolving and aging and growing client base?” is critical. 

Emily Larsen: 

Not only can you look to outside industries for inspiration in designing your client experience, but you can also outsource various components of your approach. So just remember to keep your most valuable asset, your financial advice, close to the vest. Outsourcing your core service would be a big mistake, although not the most common one by a long shot. 

Ben Jones: 

A thousand firms later, what’s the number one thing that you see people dropping the ball with when it comes to customer experience? 

Angie Herbers: 

I know the answer to that question. I’m trying to figure out how to say it nicely. I’ll just say it directly, that would probably be more impactful. Laziness. I mean, the reality is the hardest thing for financial advisory firms to do is stay focused on client experience. Because think of it this way. Let’s just say you’re an independent solo advisor. You can get 150 clients. You can carry them for the next 20 years, maybe losing one or two and gaining one or two. You get to know those clients very well. Sometimes it doesn’t require a whole lot of advice giving because they’re on a great plan and then you’re either managing the investments or you’re having someone else do that. There is a lot of complacency, laziness, that can happen because of this recurring revenue stream. When Herbers & Company sees that, we know that the growth rate is either going to flat now or sometimes fall, or the valuation may flatten out or sometimes fall. So it takes intentional work. 

Ben Jones: 

So part of that’s a mindset. And part of that is there’s some ways or habits you can create to make sure that you don’t fall into that mindset. I’m curious what you’ve seen as the habits that help keep people out of falling into the trap of complacency. 

Angie Herbers: 

Hands down, it’s innovation. Advisors are great planners. They’re also quite innovative when it comes to helping their clients in giving them solutions, especially years of experience over years of experience. And as people, when we’re doing the same job over and over and over, we can get bored with it, we can get burned out with it. But the firms who excel are the ones who say, “We’re going to dedicate some portion of our revenues or some portion of our time to creativity and create that type of culture within the firm.” And those are the firms that are leading. I mean, we’ve seen new verticals evolve. We’ve seen new service models come into play. We’ve seen new pricing structures within the industry. We’ve seen an amazing jump in proprietary tech built by independent advisory firms. Those innovation driven firms are, from our perspective, the ones who are leading. 

Ben Jones: 

Can you give me an example of how someone would dedicate… I understand how they dedicate time to creativity. But how would they think about that at a firm level of kind of dedicating budget to creativity? You reminded me of the old 3M model, where they were encouraged to think outside of the box, or the FedEx kind of project model. But tell me what are some of the things that you’ve seen some practices do? 

Angie Herbers: 

Well, I like to begin very, very simple. At the core, leadership is consistently and constantly asking, “What can we do better?” They’re asking their advisors. They’re asking their client service staff. They’re asking themselves. From our perspective, it’s… No, I’m going to put it this way. There’s two very distinctive types of leaders of advisory firms. There’s the ones who are focused on, “We’re going to grow revenue. We’re going to grow profit. We’re going to grow valuation.” They’re focused on the dollars. And then there are the ones that are focused on, “What can we do better?” And I can tell you without a shadow of a doubt, the ones that asked the question, “What we can do better?” beat most of the industry in growth, in revenue, expansion of profit and expansion of valuation. 

Ben Jones: 

It’s such a simple question but such a great reminder; we can always do better. Angie, I’m curious. You get this customer… You mentioned earlier, which I’m glad you said it, which is, it’s never done. People shouldn’t think of customer journey as a one-year or two-year project. It’s an ongoing journey that we’re on to improve customer experiences. But I’m curious. When you get kind of the formation of your customer experience revamped, how do you measure the success of that? Do you use customer surveys, net promoter scores? How does someone know if it’s working? 

Angie Herbers: 

I believe there’s lots of ways to know that it’s working. Client surveys are one, net promoter score is one. How Herbers & Company measures it is on the client referral rate. Generally, we see client referral rates around 43%. So if you have 100 clients, then each year those 100 clients would send 43 referrals. The goal is to create such a feeling within the clients that you’re working with and serve that they do word of mouth marketing. So they tell other people about them. They send a referral. And that to us is the measure of an effective CX. 

Ben Jones: 

I love that it’s really specific. 43% seems really high. How attainable is that? I mean, obviously you’ve had clients do it. 

Angie Herbers: 

It depends on the firm. We don’t set the goal and say, you’re going to get to 43%. We look at the actual number and we see it might be at 5% and we say, “All right, we’re going to do one thing to make this client experience better. That moves the needle 1%. And then the next year, it’s 6%. And then the next year, it’s 8. And then the next year, it’s 20. In the next year, it’s 30. And all of the sudden, we’ve got a firm doubling in size, and then tripling in size, and then quadrupling in size just on the client referral rate. And that’s all driven by client experience. 

The problem with it is you have to trust it. It feels like from a leadership perspective that you aren’t really doing anything and it feels like you’re not controlling anything except great service. That’s hard because with marketing, like a referral rate, you can see the actions that you’re taking. You can see the posts on social media. You can see the emails that go out. You can see the events that you’re doing. So it feels on the inside like you’re doing something. But when it’s just service that you’re focusing on and consistently improving it, you don’t often see it. You can just watch the number. 

Ben Jones: 

I want to thank Angie for coming on the show and sharing so much great advice with us on client experience and innovation. Now, we’ll have links to Angie’s resources in our show notes, so make sure that you take a look at those. And as we wrap up, I want you to keep in mind that although a good client experience requires hard work and intentionality on your part, that doesn’t necessarily translate into a massive budget or a bank braking investment. 

I’m sure there’s advisors that are listening to this saying, “Well, yeah, if I had five staff members and X number of dollars, I could make this an amazing experience. But I’ve got me and a para-planner and an executive assistant, how do I do it?” So maybe just lay out kind of what other resources required to be successful. Does everything require that much time and effort, or are there little things that can make a big difference? 

Angie Herbers: 

Well, from my perspective, it’s always the little things. I’m going to use this silly analogy that I use a lot with clients to help explain this phenomenon or concept. But many people when they want to lose weight, so I’m going to use dieting as an example, when they want to lose weight, what they’ll do is they’ll map out this plan, right? They’re going to start eating only salad, only chicken, whatever it is based on their body to lose 20 pounds. Well, the failure rate on diets is very high because you take on way too much – your body can’t adjust. It’s very difficult to be that perfect. So, you don’t end up achieving your goal. Or you end up achieving the goal and then it just goes by the wayside because it’s not sustainable. 

I have a background in family studies and human services. What they teach you in family studies and human services is that if we want to take better care of the body, then in particular with food, we start with one very small principle, and that is only eat when you’re hungry and stop when you’re full. So you master that first. Then the next thing is you master only eating a good breakfast, and then you can eat whatever you want in every other meal. And then you start mastering eating snacks to build your metabolism, then lunch, and then dinner. Over a long period of time, you’re mastering skills that make keeping the weight off sustainable as opposed to this fluctuating up and down. 

The same principle applies to client experience. You can’t create a client experience that is sustainable by actually using all of these resources all at once, because you aren’t trained. If you’re a solo advisor, you have to retrain yourself. And if you’re a multi, multi-billion dollar firm with, we’ve put client experiences in place in huge firms, if we’ve got 200 to 500 advisors in those firms, I can’t train or put together a training program that gets everyone trained on the entire new client experience all at once. So the goal is just simply retraining, but retraining with one very small initiative at a time. Where it fails is clients will lay out these amazing client journeys, which is the start of it. But, we’ve got to train both the solo advisors if they’re doing it on their own and the multi-billion dollar firms one step at a time. So ultimately, the implementation comes down to how you train. 

Ben Jones: 

I liked that. I mean, it’s all about self-efficacy, right? Which is the way that you achieve competence is being able to do each step correctly and building upon your competency so that when you get to the end, you’re one of the best. And I love that. 

Angie Herbers: 

Right. And the hard thing is that, often when I hear advisors say, “Well, we don’t have enough staff. We don’t have enough money. We don’t have enough resources”, I get that. It feels like that. But at the end of the day, you really don’t need a whole lot but your hands and your head. You can make one small change today and then you’ll see the revenue grow and the client referral rate grow. It may not be by 10%. It may be by a .5% Or 1%, but at least we’ve got some movement. 

Ben Jones: 

I like it. Now, you’ve been very generous with your time today. If you were to summarize our entire conversation today in two sentences or less, what would you say? 

Angie Herbers: 

Be better. 

Ben Jones: 

That is the most concise answer I’ve ever had to that question. 

Thank you for listening to Better conversations. Better outcomes. This podcast is presented by BMO Global Asset Management. To access the resources discussed in today’s show, please visit us at www.bmogam.com/betterconversations. 

Emily Larsen: 

We love feedback. And we’d love to hear what you thought about today’s episode. You can send an email to [email protected] 

Ben Jones: 

And we really respond. 

Emily Larsen: 

We do. 

Ben Jones: 

If you thought of someone during today’s episode, we would be flattered if you would take a moment and share this podcast with them. You can listen and subscribe to our show on Apple Podcasts or whatever your favorite podcast platform is. And of course, we would greatly appreciate it if you would take a moment to review us on that app. 

Our podcast and resources are supported by a very talented team of dedicated professionals at BMO, including Pat Bordak, Derek Devereaux. The show is edited and produced by Jonah Geil-Neufeld and Sam Peers Nitzberg of Puddle Creative. These are the real people that make the show happen. So thank you. And until next time, I’m Ben Jones. 

Emily Larsen: 

And I’m Emily Larson. From all of us at BMO Global Asset Management, hoping you have a productive and wonderful week. 

Disclosure: 

The views expressed here are those of the participants and not those of BMO Global Asset Management, it’s affiliates, or subsidiaries. This is not intended to serve as a complete analysis of every material fact regarding any company, industry, strategy, or security. This presentation may contain forward-looking statements. Investors are cautioned not to place undue reliance on such statements as actual results could vary. This presentation is for general information purposes only and does not constitute investment, legal, or tax advice, and is not intended as an endorsement of any specific investment product, security, or service. Individual investors are to consult with an investment, legal and/or a tax professional about their personal situation. Past performance is not indicative of future results. BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide investment management and trust and custody services. BMO Financial Group is a service mark of Bank of Montreal. Further information can be found at www.bmogam.com. 

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