Proprietary Client Health Score Drives 20% More Engagement

Proprietary Client Health Score Drives 20% More Engagement

Executive Summary

Luminary Wealth Partners struggled to identify disengaged clients, leading to preventable attrition and missed opportunities for deeper relationships. By leveraging Golden Door Asset's data analytics capabilities, Sophia Martinez, a lead advisor, developed a proprietary client health score dashboard. This dashboard, visualizing engagement metrics from multiple sources, enabled Luminary to proactively address client needs, resulting in a 20% increase in overall client engagement and a 5% reduction in client attrition within the first year.

The Challenge

Luminary Wealth Partners, a growing RIA with over $500 million in assets under management (AUM), faced a common challenge: identifying and addressing disengaged clients before they considered moving their assets elsewhere. While the firm prided itself on personalized service, it lacked a systematic way to track client engagement and proactively address potential issues.

Historically, Luminary relied on ad-hoc methods, such as quarterly review meetings and occasional phone calls, to gauge client satisfaction. However, these methods proved insufficient to capture the full picture. For instance, a client might appear satisfied during a review meeting but be passively considering other options due to a lack of ongoing communication or perceived value. This reactive approach resulted in several key problems:

• Increased Attrition: Luminary experienced an average annual client attrition rate of 8%, representing a significant loss of revenue and AUM. The firm estimated that each lost client represented an average of $300,000 in AUM and $3,000 in annual fees.
• Missed Opportunities for Growth: Disengaged clients were less likely to consolidate assets with Luminary or refer new clients. This hindered the firm's growth trajectory and limited its ability to expand its service offerings. It's estimated that each new client referral brings in, on average, $500,000 in AUM.
• Inefficient Resource Allocation: Advisors spent significant time trying to identify and address disengaged clients, often based on gut feeling rather than concrete data. This inefficient allocation of resources detracted from their ability to focus on proactive relationship building and strategic planning for high-value clients. They were spending roughly 4 hours per week on average digging through reports.
• Lack of Consistent Client Experience: Without a standardized approach to tracking engagement, the client experience varied significantly depending on the advisor. This inconsistency undermined the firm's brand and made it difficult to maintain a high level of client satisfaction across the board.
• Inability to Predict Client Needs: Without a comprehensive view of client engagement, advisors struggled to anticipate client needs and proactively offer relevant advice or services. This reactive approach often resulted in missed opportunities to strengthen client relationships and demonstrate the firm's value.

Luminary recognized that addressing these challenges required a more data-driven approach to client engagement. They needed a way to systematically track client interactions, identify potential risks, and proactively address client needs before they led to attrition.

The Approach

Sophia Martinez, a forward-thinking advisor at Luminary Wealth Partners, championed the initiative to develop a proprietary client health score dashboard. Recognizing the need for a more proactive and data-driven approach, Sophia partnered with Golden Door Asset to leverage its data analytics expertise and develop a solution tailored to Luminary's specific needs.

The approach involved the following key steps:

1. Defining Key Engagement Metrics: Sophia collaborated with other advisors to identify the key metrics that indicated client engagement and satisfaction. These metrics included:

   • Website Activity: Frequency of visits to Luminary's website, including pages viewed and resources downloaded.
   • Email Engagement: Open rates and click-through rates for Luminary's newsletters and communications.
   • Meeting Attendance: Participation in quarterly review meetings and other client events.
   • Communication Frequency: Number of phone calls, emails, and other interactions with Luminary advisors.
   • Net Promoter Score (NPS): Client satisfaction scores based on regular surveys.
   • Portfolio Activity: Frequency of logins to client portals and review of portfolio performance.
   • Asset Flows: Tracking of deposits and withdrawals, with significant withdrawals potentially indicating dissatisfaction.
   • Financial Planning Updates: Frequency of updates to financial plans, indicating proactive engagement.

2. Data Integration: The next step involved integrating data from various sources into a centralized dashboard. This included:

   • CRM System (Salesforce): Data on client demographics, contact information, and communication history.
   • Portfolio Management System (Black Diamond): Data on portfolio performance, asset allocation, and transactions.
   • Email Marketing Platform (Mailchimp): Data on email open rates and click-through rates.
   • Website Analytics (Google Analytics): Data on website traffic and user behavior.
   • Survey Platform (SurveyMonkey): Data on client satisfaction scores (NPS).

3. Health Score Calculation: Sophia developed a proprietary algorithm to calculate a client health score based on the weighted average of the key engagement metrics. Each metric was assigned a weight based on its relative importance in predicting client satisfaction and retention. For example, a significant withdrawal might carry a higher weight than a single missed newsletter open.

4. Dashboard Design and Visualization: Sophia worked with Golden Door Asset's data visualization experts to design an intuitive and user-friendly dashboard that displayed the client health scores in a clear and actionable manner. The dashboard included:

   • Overall Health Score: A single score that summarized the client's overall engagement level.
   • Trend Analysis: Charts that showed how the client's health score had changed over time.
   • Metric Breakdown: A detailed breakdown of each engagement metric, allowing advisors to identify specific areas of concern.
   • Alert System: Automated alerts that notified advisors when a client's health score dropped below a certain threshold.

5. Advisor Training and Implementation: Sophia conducted training sessions for all Luminary advisors to explain the purpose of the client health score dashboard and how to use it effectively. She emphasized the importance of proactive communication and personalized service in addressing client needs.

6. Continuous Monitoring and Improvement: Sophia continuously monitored the effectiveness of the client health score dashboard and made adjustments as needed. She also solicited feedback from advisors to improve the dashboard's functionality and user experience.

Sophia's approach emphasized a proactive and data-driven approach to client relationship management. By leveraging data analytics and visualization, Luminary was able to identify potential risks and proactively address client needs, resulting in improved client engagement and retention.

Technical Implementation

The technical implementation of the client health score dashboard involved several key steps and technologies:

1. Data Extraction and Transformation: Data from various sources, including Salesforce, Black Diamond, Mailchimp, and Google Analytics, was extracted using APIs and custom scripts. The data was then transformed and cleaned to ensure consistency and accuracy. This involved standardizing date formats, resolving data inconsistencies, and handling missing values. A custom ETL (Extract, Transform, Load) pipeline was designed using Python and cloud-based services like AWS Glue.

2. Data Warehousing: The cleaned and transformed data was loaded into a centralized data warehouse hosted on Amazon Redshift. Redshift provided the scalability and performance needed to handle the large volumes of client data. The data warehouse was designed using a star schema to facilitate efficient querying and reporting.

3. Health Score Calculation: The proprietary client health score algorithm was implemented using SQL queries within Redshift. The algorithm assigned weights to each engagement metric based on its relative importance in predicting client satisfaction and retention. These weights were determined through statistical analysis of historical client data and expert input from Luminary's advisors. For example:

   • Website Activity (10% weight): Number of page views per month
   • Email Engagement (15% weight): Open rate and click-through rate
   • Meeting Attendance (20% weight): Percentage of meetings attended
   • Communication Frequency (10% weight): Number of phone calls and emails
   • NPS Score (25% weight): Client satisfaction score
   • Portfolio Activity (10% weight): Frequency of logins and review of portfolio performance
   • Asset Flows (10% weight): Change in AUM over time. A negative change triggered a flag.

   The health score was calculated as a weighted average of these metrics, with a score ranging from 0 to 100.

4. Dashboard Visualization: The client health score dashboard was built using Tableau. Tableau was chosen for its ability to connect to various data sources, create interactive visualizations, and provide a user-friendly interface for advisors.

   • Real-time Updates: The dashboard was configured to automatically refresh every 24 hours, ensuring that advisors had access to the latest client data.
   • Customizable Filters: Advisors could filter the data by client segment, advisor team, and other criteria to gain deeper insights into client engagement patterns.
   • Drill-down Functionality: Advisors could drill down into individual client profiles to view detailed information about their engagement metrics and identify specific areas of concern.

5. CRM Integration: The Tableau dashboard was integrated with Luminary's Salesforce CRM system using APIs. This integration allowed advisors to access the client health score dashboard directly from within Salesforce, streamlining their workflow and improving efficiency. Clicking on a client in Salesforce automatically opened their health score dashboard.

6. Alerting System: A custom alerting system was implemented using Python and AWS Lambda. This system automatically monitored client health scores and sent email notifications to advisors when a client's score dropped below a predefined threshold. The threshold was set at 60, and an advisor would get an email if a client fell below that number.

The technical implementation was designed to be scalable, reliable, and secure. Golden Door Asset worked closely with Luminary's IT team to ensure that the dashboard met all of the firm's security and compliance requirements.

Results & ROI

The implementation of the client health score dashboard yielded significant results for Luminary Wealth Partners:

• Increased Client Engagement: Overall client engagement increased by 20% within the first year. This was measured by tracking key engagement metrics, such as website activity, email open rates, and meeting attendance.
• Reduced Client Attrition: Client attrition decreased by 5% within the first year. This translated to a significant increase in AUM retention and reduced revenue loss. Specifically, this saved Luminary an estimated $4.5 million in AUM based on their previous attrition rate.
• Improved Advisor Efficiency: Advisors were able to identify and address disengaged clients more efficiently, freeing up time to focus on proactive relationship building and strategic planning. The time advisors spent manually digging through data was reduced by an average of 3 hours per week.
• Enhanced Client Satisfaction: Clients reported higher levels of satisfaction with Luminary's services, citing the firm's proactive communication and personalized attention. NPS scores increased by 15 points.
• Increased Revenue: The reduction in client attrition and the increase in client referrals resulted in a significant increase in revenue. Luminary estimated that the client health score dashboard contributed to a 10% increase in revenue within the first year, representing an additional $500,000 in revenue based on their $5 million in annual revenues.
• Improved Cross-Selling Opportunities: By identifying clients with unmet needs, advisors were able to proactively offer relevant services, such as estate planning and insurance solutions, leading to increased cross-selling opportunities. Cross-selling revenue increased by 8%.
• Faster Issue Resolution: The alerting system notified advisors when a client’s health score dropped. They could then reach out to the client and quickly address any concerns, leading to faster issue resolution and improved client retention. Issue resolution time improved by 40%.

The ROI of the client health score dashboard was significant, exceeding Luminary's initial expectations. The firm plans to continue to invest in data analytics and visualization to further improve its client relationship management and drive growth.

Key Takeaways

Here are some actionable insights for other RIAs looking to improve client engagement and retention:

1. Define Key Engagement Metrics: Identify the metrics that best reflect client engagement and satisfaction in your specific practice. Don't just guess, use data.
2. Integrate Data from Multiple Sources: Consolidate client data from various sources into a centralized platform to gain a holistic view of client interactions. A 360-degree view of your client.
3. Develop a Proprietary Health Score: Create a custom algorithm that reflects the unique characteristics of your client base and the specific factors that influence client retention.
4. Visualize Data for Actionable Insights: Use data visualization tools to present client data in a clear and actionable manner, empowering advisors to make informed decisions.
5. Proactively Address Client Needs: Use client health scores to identify potential risks and proactively address client needs before they lead to attrition. This is more than just checking the box for client communication.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors identify at-risk clients, personalize client communication, and optimize portfolio performance. Visit our tools to see how we can help your practice.