The Experience-Centric Advisor - Build a Better Business

I recently read a study conducted in the U.S. by the independent research firm Cerulli called The Experience-Centric Advisor. The study found that the perception of value in the U.S. is changing as advisors face an increasingly digital, low-cost and fee-transparent landscape.

What’s an Advisor to do?

To remain competitive, the study found that advisors must consider the non-financial aspects of a client’s life to create a holistic and meaningful experience. The typical advisor-client experience has come to include, but not limited to, asset allocation, security selection and basic retirement income planning. But as investors become more fee sensitive and investment solutions become further commoditized, justifying the value you bring to your clients is now more critical than ever.

Cost Awareness

The research also points out that firms are choosing to move away from measuring their value based solely on their asset management services. Instead, firms are now focusing on the non-financial and intangible elements in the delivery of financial advice.

"If the cost-benefit of engaging with an advisor is unclear, they are likely to opt for other providers."

Contrary to sentiment, the research found little evidence of compression on advisor fees. Instead, investors are only becoming more aware of their advisors’ compensation. If the cost-benefit of engaging with an advisor is unclear, they are likely to opt for other providers, making it a priority for advisors to showcase value. 

Where is the Value?

Measurable Advantages

Of all the advisors surveyed by Cerulli, only 30% of them were classified as going above and beyond to make clients feel special and provided a repeatable and consistent experience. The study believes that experience-centric firms exhibit stronger results than their peers across several metrics:



• 93% higher median client size compared with the industry average of $518,732.
• 8% lower involuntary asset attrition rate (26%) than all advisors.
• 14% more services provided than all advisors on average. This translates to 8.9 average total services for all advisors compared with 10.1 for experience-centric advisors.
• 40% of practices with an affluent client core market are experience-centric, while only 20% of practices with a client core market of $100,000 to $500,000 in investable assets are experience-centric.
• Advisors who focus on the client relationship/experience have a sustainable competitive advantage over the 70% that focus primarily on the investment solutions only.

"Experience-centric firms can increase retention, drive growth, reduce attrition, and generate strong referrals."

The conclusion is that by outpacing competitors in these important categories, experience-centric firms can increase retention, drive growth, reduce attrition, and generate strong referrals. These findings align with the very essence of what IPC is all about – helping advisors build a better business through a remarkable client experience.

Our formula is to simplify your offerings to match the needs and wants of your clients, focus on great client relationships through our Total Client Experience (TCE) methodology, and help you establish continuous communication with your clients. Our own findings match the study, which is advisors who implement the TCE do far better (85% better) than advisors who do not.



Source: Cerulli Research 2019: The Experience-Centric Advisor