Client Opinions feedback takes (some of) the sting out of gauging success. Like summoning the courage to head in for a years-deferred medical check-up, setting out to find out what your clients really think of your firm can be an unnerving task. For some -- especially if they suspect that all's not well -- it seems easier to assume the best and keep going. But, as with the delayed health exam, putting off finding out what your clients really think can make problems that are much tougher to set right.

In any case, says Colin Wahl of Chapel Hill, N.C.-based Client Opinions, "You're going to hear from [your clients] one way or another, though you may not get the bad news until they're ready to go." On the other hand, most firms "find that there's a lot of good news out there as well."

Early innings

Client Opinions is in the business of helping wealth managers and others uncover their clients' views, good and bad, of the products and services they receive. Unlike Moss Adams, the Seattle-based accountancy and research firm, which provides hard-copy client-sentiment surveys to wealth advisories, Client Opinions offers web-based surveys.

As it happens, independent wealth advisories aren't especially diligent about probing their clients' views. One 2005 study of the space, by Tiburon, Calif.-based research firm Tiburon Strategic Advisors, concludes that only around 1% of registered investment advisories and independent broker-dealer affiliates bother to do so in anything like a systematic fashion.

This makes VisionQuest Wealth Management a little unusual. The Morrisville, N.C.-based multifamily office not only sought out the means to gauge client sentiment, it did in its first year of life. "Most firms don't think even think about doing this until it's too late to correct problems easily," says Wahl.

VisionQuest's founder and CEO Steve Peters says the idea of surveying his client base came out of conversations with Wahl, to whom he was introduced by a mutual friend who thought the two -- both ex-Pennsylvanians newly moved to North Carolina --would hit it off. Peters and Wahl quickly found another thing in common: both worked at Oaks, Pa.-based SEI, though not at the same time.

Wahl -- who went on from SEI to found Wayne, Pa.-based Investorforce, an online investment-research company, says Peters' interest in probing client sentiment "was probably driven by what he saw at SEI, where there are a lot of people with research backgrounds [contributing to] product service and the concept of continual improvement."

Ultimate question

Peters, one of the early architects of SEI's Wealth Network, says his interest in probing client sentiment was also peaked by Fred Reichheld's book The Ultimate Question, which posits the notion that customer satisfaction is more important than any business criterion except profits and that it's is best measured by asking whether the client would recommend the business in question to a friend.

"This business is built on referrals," says Peters. "More than seminars, more than marketing, more than anything else. If you're going to be successful, you've got to have 'referencible' clients."

In fact, another Tiburon report finds that well over two thirds of fee-only investment advisors' new clients come from "passive" or "proactive" present-client referrals. Client referrals bring in around 56% of an independent broker's new business.

As it happens, VisionQuest scored very highly in its client survey, though Wahl and Peters say allowances have to be made for the firm's youth -- it's been open for business since late in 2005 -- and the consequent smallness of its client base. A larger base interacting with a firm over a longer period might find more to complain about.

VisionQuest got a 57% response rate to its online survey; Client Opinions says the average for advisories is around 40%. Of those who responded, a respectable 88% replied "Yes, definitely" to the question "Would you recommend our firm to a close friend or colleague that needs wealth-management assistance?" The balance of responses -- 12% in all -- was divided equally between clients who considered themselves "Likely" to do so and those who answered the question with a "Maybe." Client Opinions pegs the Maybes -- along with Unlikelies and definite Nos -- as firm detractors. The Likelies count as neither boosters nor detractors, giving VisionQuest a "net promoter" or "client enthusiasm" score of 82%.

That's a strong outcome, according to Reichheld's The Ultimate Question, which assigns client-enthusiasm scores to a range of big-name companies.

Top-rated companies v. VisionQuest Client Enthusiasm score %

VisionQuest

82

USAA

82

Harley-Davidson

81

Costo

79

Amazon

73

Ebay

71

Vanguard

70

SAS

66

Apple

66

Cisco

57

FedEx

56

Southwest Airlines

51

Sources: VisionQuest and The Ultimate Question; Reichheld, Fred (2006).

There's more to the survey than the headline "Enthusiasm" gauge, however. Among other things, it also asks clients to rate the range and comprehensiveness of services provided, the knowledge and expertise of firm personnel, their personal levels of confidence in firm principals, how well the firm communicates with them, how effective the firm is in helping them achieve their goals and how well the firm responds to clients' changing circumstances.

The survey Client Opinions supplied VisionQuest also gives clients the opportunity to bring up "outstanding issues that need our immediate attention" and to specify how -- and how often -- they prefer to hear from the firm.

Wahl recommends that firms survey their clients once every year to 18 months. "Even if the firm is doing well, the world around is always changing," he says. "This is a way to keep up changes the clients are experiencing as well as attitudes to changes in the marketplace."

As to the cost of surveying clients through Client Opinions, Wahl says it "more than pays for itself if this process helps [advisors] save a handful of relationships or gain access to two or three opportunities for deeper relationships." - FWR

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