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Friday, April 18, 2014

Feelings of Success Encourage Investors to Engage With Their Investment Firm

By Scott Vanderbilt

This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.

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Many people dream of successful investing and wonder what the “secret sauce” is to turning those investment dollars into a larger rate of return. From the moment they make their first investment, they hope to feel the sense of accomplishment that comes with a big yield. But the actual path to achieving that kind of success often seems long and confusing. That’s why investors need an attentive and proactive Relationship Manager (RM) to help guide them in the right direction. 

To achieve that feeling of success, both the investor and the RM must devote time and energy to the investment planning process. Diving down into data from Gallup’s most recent Mass Affluent Investor study, we found that investors’ feelings of success were strongly related to their overall level of engagement with their investment firm. In other words, people who felt that they were successful investors were more likely to be fully engaged with their investment firm, compared with those who did not consider themselves to be successful investors.


This finding suggests that both sides win when the relationship between investors and their investing firm is truly collaborative. If the RM makes a proactive effort to engage the customer, and the customer acknowledges that engagement, then the bond between them is strengthened. In fact, when successful investors believe that their advisor is important to their success, their engagement grows tremendously, further demonstrating the importance of this relationship. And investment firms should pay close attention to the role their RMs play, because engagement often means more business and revenue. To push the point about how important it is -- 93% of successful investors who are fully engaged are unlikely to switch to another investing company. That’s loyalty!

To better engage their customers and make them feel successful, investment firms and RMs should do the following.

  1. Listen to your customers. Relationships thrive on open communication and the investing relationship is no different. What are your customers’ needs? What are their goals for the future, and how can achieving investment success help them on their financial path? These are the kinds of questions that RMs should be able to easily recite. If you haven’t talked to your customers in a while, give them a call. The more engaged and successful investors quoted higher calls (and more proactive calls) between themselves and their RMs.

  2. Make it personal. Communication and financial investment plans that are tailored to individual needs are critical in both understanding your customer’s financial goals and showing them that you are listening. Again, reach out when you have an idea or just want to give them an update. Don’t always wait for them to call you.

  3. Give them the details. Inspire confidence, and show that you know what you are talking about, by providing customers with a plan that explains everything you recommend. Remember to show how the plan relates to them and their financial future. When your customers have knowledge of the financial planning process and the reasoning behind, it can only help your relationship.
As Vince Lombardi wrote, “The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied ourselves to the task at hand.” When both the investor and the investing firm devote the time and energy to help the investor succeed, the greater the customer engagement. It is hard work but when both parties apply effort and focus on the task at hand, the more connected the investor is, not only to their financial plan, but also to the firm and RM who helped them get there.

To learn more about how to increase customer engagement and growth, visit Gallup’s Banking Knowledge Center.

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