Communication Cadence: 8% AUM Growth in Retained Clients

Communication Cadence: 8% AUM Growth in Retained Clients

Executive Summary

Many Registered Investment Advisors (RIAs) struggle with client retention due to inconsistent communication, leading to feelings of disconnect and undervaluation. Whitfield Wealth Management, a mid-sized RIA, addressed this challenge by implementing a structured communication cadence encompassing newsletters, market updates, and personalized calls. This consistent engagement strategy resulted in an 8% increase in Assets Under Management (AUM) from retained clients, demonstrating the significant impact of proactive communication.

The Challenge

Whitfield Wealth Management, managing approximately $250 million in AUM, identified a growing concern: client churn, particularly among long-term clients. An internal audit revealed a significant correlation between client attrition and inconsistent communication. While Whitfield's advisors provided excellent financial planning and investment management, their client communication was often reactive, triggered only by market events or specific client requests.

Prior to implementing a structured approach, clients received sporadic communication, often limited to annual review meetings and occasional email updates. This lack of regular contact led to clients feeling uninformed about their portfolio performance and the overall market landscape. For example, during a volatile market period in Q1 2023, several clients expressed anxiety about potential losses, with some considering moving their assets to other firms perceived as more communicative. One client, holding $500,000 in AUM, specifically cited the lack of proactive communication as a reason for considering a transfer. Another client mentioned feeling left out from key information regarding the changing economic outlook.

The challenge wasn't the quality of the advice, but the frequency of communication. Advisors spent their time on investment strategies without a standard engagement schedule. This inconsistent approach created a perception of neglect, even when client portfolios were performing well. The sporadic nature of communication made it difficult to proactively address concerns and build stronger client relationships.

The estimated cost of client attrition was significant. With an average client AUM of $350,000 and a typical advisory fee of 1%, losing just five clients represented a revenue loss of $17,500 annually, not to mention the cost of acquiring new clients to replace them. Whitfield realized that addressing the communication gap was crucial for both client retention and revenue growth.

The Approach

Whitfield Wealth Management adopted a multi-pronged approach to establish a consistent communication cadence, focusing on providing regular, valuable information to clients. The core strategy revolved around three key pillars:

1. Monthly Newsletter: A professionally designed newsletter delivered via email, providing insights into market trends, economic updates, and relevant financial planning topics. The newsletter aimed to position Whitfield as a thought leader and keep clients informed about the factors influencing their portfolios.

2. Quarterly Market Updates: More in-depth reports and brief videos summarizing market performance, portfolio strategies, and upcoming economic events. These updates were personalized based on client risk tolerance and investment goals. The updates include commentary on current inflation, interest rate strategies, and anticipated movements for major market sectors like energy, tech and real estate.

3. Personalized Check-In Calls: Scheduled phone calls or virtual meetings with each client to review their financial goals, address any concerns, and provide personalized advice. These calls were not just transactional; they were opportunities to build rapport and strengthen client relationships. Each advisor had to spend at least 15 minutes with each client every 30 days, with notes entered to the CRM for the next call.

The strategic thinking behind this approach was to move from reactive to proactive communication. By consistently providing valuable information and personalized attention, Whitfield aimed to foster a stronger sense of trust and connection with its clients. The decision framework involved allocating specific time slots for client communication within each advisor's schedule, ensuring that client engagement was prioritized. The leadership team invested in staff training to ensure consistent messaging across all client interactions.

Technical Implementation

The implementation of the communication cadence relied heavily on the integration of Whitfield's Customer Relationship Management (CRM) system, Pipedrive, with marketing automation tools and email marketing software. The system was used to track client interactions, schedule communications, and automate email campaigns.

Pipedrive Automation:

• Task Management: Pipedrive was configured to automatically generate tasks for advisors to schedule personalized check-in calls with each client on a quarterly basis. Task reminders were set to ensure timely outreach.
• Email Campaign Scheduling: The CRM's email marketing functionality was used to schedule and send monthly newsletters and quarterly market updates to segmented client groups based on their investment profiles and preferences.
• Client Segmentation: Clients were tagged and grouped within Pipedrive based on factors such as risk tolerance, investment goals, and AUM. This segmentation allowed for targeted communication that was more relevant and engaging for each client.
• Reporting & Analytics: Pipedrive's reporting capabilities were utilized to track key metrics such as email open rates, click-through rates, and client engagement scores. This data provided insights into the effectiveness of the communication cadence and helped identify areas for improvement.

Technical Calculations:

• AUM Tracking: AUM was tracked weekly within the CRM to monitor the impact of the communication cadence on client retention and growth.
• Client Churn Rate: The client churn rate was calculated quarterly as the percentage of clients who terminated their relationship with Whitfield during that period. The goal was to reduce the churn rate by improving client satisfaction through proactive communication.
• Net Promoter Score (NPS): NPS surveys were conducted annually to measure client loyalty and satisfaction. The results were used to identify areas where Whitfield could improve its client service and communication. NPS was calculated as the percentage of promoters (clients who rated their likelihood to recommend Whitfield a 9 or 10) minus the percentage of detractors (clients who rated their likelihood a 6 or below).

Results & ROI

The implementation of the structured communication cadence yielded significant positive results for Whitfield Wealth Management.

• AUM Growth: AUM from retained clients increased by 8% within one year of implementing the communication cadence. This translates to an additional $20 million in AUM managed by Whitfield, directly attributable to improved client retention.
• Client Churn Reduction: The client churn rate decreased from 5% to 2% within the same timeframe, demonstrating a significant improvement in client loyalty. This represents a retention of nearly 8 clients representing approximately $2.8M in AUM and 28,000 annually.
• Increased Client Engagement: Email open rates for the monthly newsletter increased from 25% to 45%, indicating a higher level of client engagement with the content. Click-through rates also improved from 5% to 12%, suggesting that clients were actively seeking more information and resources.
• Improved NPS: The Net Promoter Score (NPS) increased from 30 to 55, reflecting a significant improvement in client satisfaction and loyalty.
• Revenue Impact: The increase in AUM and reduced client churn rate resulted in a 12% increase in overall revenue for Whitfield Wealth Management. This increase in revenue more than offset the costs associated with implementing and maintaining the communication cadence.

Specifically, with advisory fees at 1%, the 8% AUM increase of $20M translated to $200,000 in new revenue. This represents a substantial return on investment for Whitfield.

Key Takeaways

For other RIAs and wealth managers looking to improve client retention and drive AUM growth, the Whitfield Wealth Management case study provides several key takeaways:

1. Prioritize Consistent Communication: Implement a structured communication cadence that includes regular newsletters, market updates, and personalized check-in calls. Frequency is key.
2. Leverage Technology: Utilize CRM systems and marketing automation tools to streamline communication processes and track client engagement. Pipedrive is a great solution, but there are others.
3. Personalize Client Interactions: Tailor communication to individual client needs and preferences based on their risk tolerance, investment goals, and AUM.
4. Measure and Analyze Results: Track key metrics such as AUM growth, client churn rate, email open rates, and NPS to measure the effectiveness of the communication cadence and identify areas for improvement.
5. Invest in Staff Training: Ensure that advisors are well-trained on communication best practices and equipped with the tools and resources they need to effectively engage with clients.

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