Active client management can benefit both the client and the advisory firm. It protects the client against unwanted risks and avoids having financial products that don’t fit them and their circumstances anymore.
It also limits the liabilities of the advisor and creates advice opportunities. It can produce more depth and stability in the client portfolio. But implementing active client management can be a daunting project. We’ve broken the process up into six practical steps.
Step 1 Consolidate the data
Consolidate all client data you have. In most cases, there is at least an advisory tool and a CRM system, but other systems often hold parts of the information. API tooling can bring all the data together without disrupting your ongoing business.
When you consolidate your data, make sure that you
- Protect the source of truth. Often both advisory tools and CRM tools have similar fields. Decide which one is likely to be the most current.
- Create a dynamic consolidated database, so your information is always up to date. One-off data dumps are just a shift of the problem.
Step 2 Enrich the data
The more time passes, the more irrelevant the data in your systems become unless you update the data. This blog discusses several ways to update your database.
Step 3 Define and implement the advisory framework
The advisory framework holds the conditions your client files should comply with. It is a set of rules that combine decision trees and calculations. You define the framework and apply it to the enriched, consolidated database. This blog discusses how you build an advisory framework.
Step 4 Prioritize using the Active Client Management Canvas.
Once the advisory framework is applied, you will be notified when client files don’t fit the advisory framework. Not all alerts are equally important. To help prioritize, use the Active Client Management Canvas to organize the alerts into categories.
The Active Client Management Canvas shows two axes:
- Urgent versus non-urgent.
- Not advice-sensitive versus very advice-sensitive
Plot the alert types on the canvas. Don’t plot the individual alerts, but the type of alerts.
For example, an upcoming fixed interest term end date within the next two weeks is urgent and a little advice-sensitive. Coverage of home insurance that is too low compared to the real estate value is a little urgent and not advice-sensitive. A possible poorly covered pension situation for a 30-year-old client is not urgent but very advice sensitive.
During the plotting exercise, keep in mind that all alerts will get the attention they deserve. So low urgency does not mean that the alert is disregarded; it merely determines how it is dealt with in step 5.
As you can tell in the example, the classification of alerts is defined by a combination of the nature of the alert on one hand and other aspects of the client portfolio on the other, like the client’s age or family situation. This step, therefore, always leads to the granulation of the Advisory framework. You want to differentiate between pension advice for people under 30 and those aged 30 and up. You want to distinguish between a fixed term of a mortgage interest rate that is ending within two weeks or in a good six months. Also, you want to consider clients with eight discrepancies in their portfolio as more advice sensitive than people with just one.
Step 5 Define follow-up based on priority
For the various quadrants in the canvas, you now define desired follow-up steps. It is recommended to do this top-down: start with the highest priority alerts and move down to the less urgent ones.
Urgent issues are dealt with through push communication, like the following:
- Push messages in apps
- Tekst messages/ WhatsApp messages
- Phone calls from the back office or advisor
Non-urgent issues can be handled more passively:
- Already scheduled recurring client meetings
- Notifications/ nudges shown in a client portal
- Collective mailings
- Newsletter campaigns
The need for personalized financial advice determines the Call to action or process flow that is prompted by the initial communication:
- Alerts that are not very advice sensitive can be handled in an automated and self-servicing way. Some alerts may require some guidance in the form of a conversational decision flow or calculated nudges.
- Alerts that require advice can prompt efforts to schedule a meeting with an advisor.
Your choices here depend partly on the gravity of the alert and partly on your identity as an organization and the channels available to you.
Step 6 Optimize
Active client management is a continuous process. You optimize as you go based on how your clients respond to your communication and changes in legislation and economic circumstances.