Lisa Tanaka Boosts Client Retention by 15% With Goals-Based Planning

Lisa Tanaka Boosts Client Retention by 15% With Goals-Based Planning

Executive Summary

Precision Financial, led by Lisa Tanaka, faced declining client engagement and early attrition rates, costing the firm significant revenue. By implementing a comprehensive goals-based planning module powered by Advizr and integrated with their CRM, Lisa transformed the client onboarding experience. This new approach centered financial plans around clients' personal aspirations, resulting in a 15% increase in client retention within the first year and a corresponding $75,000 boost in recurring revenue.

The Challenge

Precision Financial, a growing RIA managing approximately $50 million in assets, recognized a concerning trend: clients were churning at an unacceptably high rate, particularly within the first 18 months of their engagement. A post-exit survey revealed a common theme – clients felt disconnected from their financial plans and didn't perceive a clear link between their money and their life goals. The existing risk assessment process, while thorough in determining risk tolerance on a numerical scale (1-10), failed to adequately capture individual values, passions, and long-term aspirations.

Specifically, the firm's historical client attrition rate was approximately 20% annually. Analyzing the churn, Lisa discovered that the average client lost within the first year represented approximately $50,000 in assets under management (AUM) and generated around $500 in annual recurring revenue. The traditional onboarding process, while efficient in setting up accounts and implementing a basic investment strategy, felt transactional and lacked personalization beyond surface-level risk profiling.

For example, one client, Mr. Henderson, a 55-year-old engineer, was placed in a moderately conservative portfolio based on his stated risk aversion. However, the plan failed to account for his deep desire to retire early at 60 and spend his time traveling the world. As a result, he felt the plan was too generic and lacked the aggressive growth potential he needed to achieve his dream. This disconnect led to frustration and ultimately, Mr. Henderson transferring his $250,000 account to another firm, costing Precision Financial $2,500 in annual fees. Lisa knew that stories like Mr. Henderson's were happening too frequently and were a major drain on profitability. They needed a better way to connect with clients on a deeper level.

Another recurring issue was the perception that investment recommendations were disconnected from real-life needs. Clients understood the concept of asset allocation but struggled to see how specific investments were helping them buy a vacation home, pay for their children's education, or ensure a comfortable retirement. This lack of clear connection between financial planning and life goals undermined client confidence and ultimately contributed to their decision to seek alternative financial advice.

The Approach

Lisa recognized that a fundamental shift in their onboarding process was necessary. She spearheaded the implementation of a comprehensive goals-based planning module, designed to deeply understand each client's unique aspirations and create financial plans directly aligned with those goals. The new approach involved several key changes:

1. Expanded Client Questionnaire: The existing risk tolerance questionnaire was supplemented with a detailed "Life Goals Inventory." This inventory included open-ended questions designed to elicit specific client aspirations, such as desired retirement age, hobbies, travel plans, charitable giving goals, and legacy planning wishes. Questions included: "What does your ideal retirement look like?", "What are your top three financial priorities?", and "What impact do you want to have on the world?".

2. Personalized Discovery Meetings: Instead of relying solely on the initial questionnaire, Lisa introduced in-depth, one-on-one "Discovery Meetings" with each new client. These sessions, lasting approximately 90 minutes, were designed to explore the client's values, motivations, and long-term goals in a conversational manner. Lisa and her team used active listening techniques to truly understand the "why" behind each goal. For example, if a client mentioned wanting to travel, they would delve deeper to understand the type of travel, the frequency, and the associated costs.

3. Goal Prioritization and Financial Modeling: Using the information gathered from the questionnaire and Discovery Meetings, Lisa and her team helped clients prioritize their goals and assign realistic timelines and financial targets. They then used the Advizr platform to create detailed financial models that projected the likelihood of achieving each goal based on various investment scenarios. This process provided clients with a clear understanding of the trade-offs between different goals and the impact of their financial decisions.

4. Goal-Focused Financial Plans: The resulting financial plans were no longer generic investment strategies but rather personalized roadmaps towards achieving specific life goals. Each investment recommendation was explicitly linked to one or more client goals, making the connection between money and aspirations tangible and meaningful. For instance, a portion of a client's portfolio might be earmarked for "Early Retirement Fund" or "Grandchildren's Education Savings."

5. Regular Progress Reviews: The firm implemented quarterly progress reviews, not just to discuss portfolio performance, but also to assess progress towards achieving client goals. These reviews provided an opportunity to adjust the financial plan as needed based on changing circumstances or evolving priorities.

By focusing on aligning finances with client aspirations, Lisa aimed to transform the client experience from a transactional one to a collaborative partnership, fostering deeper engagement and stronger long-term relationships.

Technical Implementation

The successful implementation of the goals-based planning module relied on integrating several key technologies and processes:

• Advizr Integration: Precision Financial selected Advizr (now part of Orion Advisor Services) as their financial planning software due to its robust goal-setting capabilities, intuitive user interface, and seamless integration with their existing CRM, Salesforce. Advizr allowed them to create visually appealing, interactive financial plans that clients could easily understand.

• CRM Customization: The Salesforce CRM was customized to capture and track client goals, priorities, and associated financial targets. Custom fields were added to each client profile to store information gathered from the Life Goals Inventory and Discovery Meetings. This allowed the team to easily access and update client goals as needed.

• Custom Goal Templates: Lisa's team developed custom goal templates within Advizr to streamline the planning process. These templates included pre-defined financial models and assumptions for common client goals such as retirement planning, college savings, and purchasing a home.

• Monte Carlo Simulations: Advizr's Monte Carlo simulation capabilities were used to project the probability of achieving each client's goals under various market conditions. This provided clients with a realistic assessment of the risks and rewards associated with their financial plan. The simulations considered factors such as inflation, market volatility, and longevity.

• Reporting Dashboards: Custom reporting dashboards were created in Salesforce to track key metrics such as client goal attainment rates, client engagement levels, and client retention rates. These dashboards provided Lisa and her team with valuable insights into the effectiveness of the goals-based planning approach.

• Risk Tolerance Re-evaluation: The original, numerically-based risk tolerance was now augmented with a "Risk Capacity" assessment. This took into account the client's time horizon, financial resources, and the potential impact of market fluctuations on their ability to achieve their goals. This allowed for a more nuanced and holistic understanding of the client's true risk profile.

The technical implementation was a critical component of the success of the goals-based planning initiative, ensuring that the team had the tools and data needed to effectively engage with clients and create personalized financial plans.

Results & ROI

The implementation of the goals-based planning module yielded significant improvements in client engagement and retention:

• Client Retention Increase: Client retention improved by 15% in the first year following implementation. This translated to retaining an additional 7 clients (based on their previous churn rate of 20% on a base of 50 clients).

• Revenue Impact: The increase in client retention resulted in an estimated $75,000 increase in recurring revenue. This was calculated based on the average annual revenue generated per client ($5,000) multiplied by the number of clients retained (15% of 50 clients = 7.5 clients, rounded to 7 clients for calculation simplicity. 7 clients * $5,000/client * 2 years (average client lifespan) = $70,000). In addition, the firm experienced a reduced marketing spend related to client acquisition as client lifetime increased.

• Client Satisfaction: Client satisfaction scores, measured through post-meeting surveys, increased by 25%. Clients reported feeling more understood, valued, and engaged with their financial plans. Specifically, the average satisfaction score increased from 3.5 out of 5 before implementation to 4.4 out of 5 after implementation.

• Assets Under Management (AUM) Growth: While not solely attributable to the goals-based planning initiative, the firm also experienced a 10% increase in AUM, partly driven by increased client referrals and the ability to attract new clients who were drawn to the firm's personalized approach.

• Reduced Churn Rate: The client churn rate decreased from 20% annually to 5% annually.

The ROI of the investment in the Advizr software and the implementation of the goals-based planning module was substantial. The increased revenue, improved client satisfaction, and AUM growth significantly outweighed the costs associated with the software license and the time invested in training and implementation.

Key Takeaways

1. Prioritize Client Aspirations: Move beyond basic risk assessments and focus on understanding your clients' values, motivations, and long-term aspirations. Ask open-ended questions and actively listen to their responses.

2. Link Investments to Goals: Clearly connect each investment recommendation to a specific client goal, making the relationship between money and aspirations tangible and meaningful.

3. Leverage Technology: Utilize financial planning software and CRM systems to streamline the goal-setting process, create personalized financial plans, and track progress towards achieving client goals.

4. Regularly Review Progress: Conduct quarterly progress reviews, not just to discuss portfolio performance, but also to assess progress towards achieving client goals. Adjust the financial plan as needed based on changing circumstances or evolving priorities.

5. Embrace Collaboration: Foster a collaborative partnership with your clients, empowering them to actively participate in the financial planning process and feel confident in their ability to achieve their life goals.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors personalize the client experience and optimize investment strategies. Visit our tools to see how we can help your practice.