Why Client Engagement Drives Firm Growth

It’s no secret that referrals remain one of the top drivers of firm growth for advisors – but how do you actually get those referrals?

In a recent survey by Russell Investments, 60% of surveyed investors indicated that “more frequent and more personalized contact would give them more confidence in their financial plan.” To take it a step further, 81% of clients are more willing to refer their advisor to others if their advisor would communicate more often and more personally.

Client engagement is more important than ever, particularly for those firms who want to continue scaling and growing. Let’s take a look at what successful client engagement looks like, how to measure your success, best practices, and more. 

What Does Client Engagement Look Like in Financial Advisory Firms?

Client engagement is all about making your clients feel valued, well-cared for, and included in the conversation. It’s being proactive about checking in through market volatility or life events and responding swiftly to concerns.

Between the ever-increasingly competitive advisory landscape, robo-advisors, and other DIY or cost-effective options, clients who work with advisors want a relationship that feels personalized – they need to know you care about the person behind the portfolio.

Here are a few examples of what a strong client engagement strategy might look like:

• Your clients feel comfortable communicating with you often
• They voluntarily update you on important life or financial events
• Your conversations go beyond investments to include personal, non-finance-related life topics
• Clients interact with your messaging (including your email newsletters, social media posts, or other marketing materials)
• You receive regular and relevant questions about portfolio specifics. 
• Clients involve their families or additional advisors in the financial planning process.

Keep in mind that not all clients have the same communication styles. For example, a client may refuse to divulge personal information but may respond to questions quickly and provide relevant information. Client engagement data can help you prioritize client communication and needs, but knowing your client’s communication style can give you context to their engagement level.

How does client engagement contribute to firm growth?

As we mentioned before, 61% of 2024 Firm Growth Survey respondents said referrals were the biggest source of leads for their advisory firms.

The great thing about client referrals is that they tend to come already familiarized with who you are and what you do – as compared to somebody who may have received a mailer or promotional email. Clients also tend to gravitate towards others who are in similar socioeconomic positions or industries, meaning their referrals are likely to be a good fit for your target audience.

But if you’re not exceeding your client expectations in terms of communication, collaboration, reporting, and accessibility, they will be less likely to refer you to others. Ultimately, your growth goals will be that much harder to accomplish.

What are the key metrics for measuring client engagement?

So, how do you know if your efforts to engage effectively with clients are working? You’ll need to decide what key metrics can most accurately measure your efforts and find a way to track and review them regularly.

Some key metrics to consider include:

• Referral rates: How often are clients sending qualified leads through your doors? You’ll not only want to consider the frequency of referrals, but the close rate as well (meaning how many actually become new clients). If you notice your referral rate declining over time, it may be a good indication that your client engagement efforts are slipping.
• Surveys: Sometimes, all you have to do is ask your clients for feedback if you really want to know how they feel about your efforts. A simple survey or questionnaire can help you gauge how your client engagement is being perceived and where you may be able to improve.
• Content engagement: Things like email open rates or clicks, as well as interactions with social posts or other content, can help you understand what resonates with your target audience. 

What are the Best Client Engagement Strategies for Financial Advisors?

The more you’re able to personalize your interactions with clients, the better – mass marketing and general communications aren’t cutting it anymore. But you can’t personalize and standardize the client experience on your own, especially as you scale.

Leveraging client engagement tools can help your advisory firm offer better client support, streamline communication, improve the overall client journey, and, of course, create more consistent and positive client engagement. 

From lead-nurturing risk assessment questionnaires to personalized emails and visual reporting tools, your entire tech stack should work together to help you regularly connect and communicate with clients in a personalized way.

Fuel Your Firm’s Growth Goals with Nitrogen

The way clients perceive financial guidance is changing, and their expectations for the client-advisor relationship have evolved as a result. As you continue on your journey of growing your AUM and scaling your firm (without sacrificing the client experience), you’ll need to leverage the right tools to keep client engagement strong.

Book a demo of Nitrogen today to learn more about how our platform can support your client engagement efforts.