In today’s dynamic landscape, sustained success hinges on understanding and meeting client needs. More thoughtfully, you want to focus on four key needs: functional, emotional, life changing and social impact. Advisors who excel at serving those needs—particularly those needs that are most valued—will likely garner lasting loyalty and client referrals.
We discuss below how to think about a client’s needs and what you can do to deliver on those needs.
We include below the Value Pyramid, according to Bain Consulting. This Value Pyramid is loosely based on Maslow’s Hierarchy of Needs, which outlines human needs from the most basic to the highest level.
Note the four categories below—functional, emotional, life-changing and social impact—with the “needs” at the highest level having the most profound impact on the client. According to Bain, “In general, the more elements provided, the greater the customer’s loyalty and the higher the company’s sustained revenue growth.”
The Elements of a Value Pyramid
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Source: Bain & Company Inc.
Below, we review each layer of this value pyramid and how to align services that meet each critical part of the client’s needs. Keep in mind that the goal is to provide client services at every level of the pyramid with the emphasis on providing services nearer to the top of the pyramid as the best way to drive loyalty.
1. Setting the foundation: Functional services as table stakes
The foundation of any service plan must address the functional services. An advisor needs to focus on services that save clients time, simplify their lives, and reduce effort and hassle. These foundational services serve as a gateway to the comprehensive support you provide clients at the higher levels.
Here it is essential to maintain high quality even in the most basic tasks. Remember the old adage: How can a client trust you with the bigger things if they can’t trust you with the smaller things?
These tasks include essential services such as making distributions, organizing accounts, setting up their client portal, managing asset allocation and other basic financial activities. By excelling in these areas, we build trust and create a solid foundation for addressing more complex financial needs.
Pro tip: Although this could be an endless list, consider the following basic “functional” tasks for all clients.
- Tax summary letter: Provide clients with a summary of all tax-related transactions that occurred in the previous tax year. This letter serves as a reference when filing taxes in the current year.
- Tax return review and analysis: Request and thoroughly analyze clients’ most recent tax returns. Prepare a Tax Observation Report highlighting key figures and observations based on the tax return. This report serves as the starting point for deeper financial planning.
- Review retirement plan contributions and opportunities: Evaluate retirement plan contributions, including IRAs and self-employment plans, to ensure they were maximized in the previous tax year and continue to be optimized for the current tax year. Consider employer-sponsored retirement plans and backdoor Roth conversions as well.
- Request pay stubs, benefits, salary, expenses, cash levels: This information is requested at the beginning of the year so that updated data can be used to update the financial plan and to also provide special recommendations on a case-by-case basis. We included a screenshot below of the announcement we send in January requesting this information from clients.
These activities build the foundation of strong financial planning for all of our clients.
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2. Next level up: Meeting emotional needs through your offerings
Moving up the Value Pyramid, we next want to address the client’s emotional financial needs. Quite simply, work to make sure clients feel confident and secure. In other words, go beyond the basics and focus on their emotional needs. Now, more than ever, clients need an experienced guide.
What is one of the best ways to satisfy a client’s emotional needs and reduce anxiety? Creating a strong financial plan that meets a client’s goals and helps them retire comfortably and without fear. Polls show that a pre-retiree and a retiree’s No. 1 concern is running out of money in retirement. Be sure to address this concern head on.
Pro tip: Consider the following services to address a client’s emotional needs.
- Financial plan update: Update financial plans with any new data received. Highlight key figures and projections, such as net worth, guaranteed income, account types, and Monte Carlo simulation success rates. Include the financial planning scorecard to track completed financial planning topics. We insert a one-page update we use for our clients.
- Spring review meetings: Once tax season is over, consider Spring review meetings from mid-April to mid-July to discuss updated financial plans and address clients’ specific financial concerns and goals for the year.
By consistently reviewing each client’s financial plans and checking in with them, we can be sure to build trust and make sure we address all questions and concerns they may have.
3. Beyond the ‘emotional.’ Provide life-changing services
For many clients, you may end up stopping at the “emotional” level of the pyramid. But, the idea is to move forward to try to go deeper when possible. This is where the idea of providing “life-changing services” comes in.
Admittedly, this is not very easy. To provide a level of service that is life changing, you will need to develop a very deep understanding of your client, trust that may take years to develop, and thoughtful services that require extensive training and time.
For example, clients who have accumulated wealth are generally not as concerned about outliving their assets. Instead, they become more concerned with legacy planning and taking care of the people and causes they care about. They may also look to increase wealth by decreasing taxes, realizing that their lifetime tax bill could be millions of dollars. This is when we get to the “life-changing” category of service offerings.
When you have clients who fall into this category, you may be called upon to provide advanced tax planning and strategies to minimize taxes over the clients’ lifetimes and their children’s. Specifically, you need to address distribution planning to reduce large traditional retirement account balances. You also need to assist with estate planning and legacy planning. These are all areas that will provide “hope” to the client, and also create the “heirloom.”
Pro tip: Consider the following services to provide a “life-changing” experience:
- Goal review: Conduct a comprehensive review of client goals during the summer season. Start by celebrating completed goals and documenting key insights. Assess the status of any open goals, revising action plans as needed. Then, allow the client to add any new goals. This structured goal review and documentation process helps demonstrate the ongoing value you provide your clients taking into account their evolving priorities.
- Distribution planning and Roth conversion planning: Review traditional IRA account values for all clients to identify potential future tax issues. Analyze and recommend additional IRA distributions and optimal Roth conversion amounts for the current year, considering the size of the IRA and the client’s current tax bracket. Explore multi-year Roth conversion strategies and tax-efficient account distributions when appropriate. This planning work is extremely valuable as it can help your clients pass more tax-free wealth to the next generation.
- Estate plan review: Conduct a thorough evaluation of your clients’ estate plans. This includes examining wills, trusts, powers of attorney, and beneficiary designations to help ensure the documents continue to reflect your clients’ current wishes and family circumstances. This is valuable work as the estate plan governs how assets will pass to the next generation. The reviews will allow you to help identify any gaps or outdated information that should be addressed with an estate-planning attorney. And by proactively reviewing estate plans, you will help ensure your client maintains control over the distribution of their assets and protect their loved ones.
4. The highest level of them all: Having a social impact
The pinnacle of the service pyramid is about the profound impact you can have on your community, whether close by or far away. This could be having an impact on your local community, your place of worship, or helping people that you have never met. And a good advisor can do this through assisting with charitable giving and incorporating tax planning as part of the work to be done. This could also entail setting up a donor-advised fund or even a family foundation. Perhaps consider a charitable trust or even a charitable gift annuity? Are you familiar with the additional charitable opportunities provided under the SECURE Act such as larger QCDs and the one-time split entity charitable gift for $53,000 that is also allowed to be made?
We provided a list of eight charitable strategies to consider for 2024 below (per Fidelity).
Source: Fidelity Brokerage Services LLC
This is probably a very underserved area, but it is ripe with opportunity to bring along the right clients to a much higher level of satisfaction.
Pro tip: Consider those clients who want to go above and beyond and who have the means to do it. How are you assisting them with their philanthropic giving? Are you offering effective tax savings opportunities, and creative strategies to enable the client to satisfy their emotional needs? Have you created a charitable-giving plan for those clients who are so inclined?
In the end, the services you offer need to meet the diverse needs of each client at every level. Each level of the value pyramid focuses on a different key value your services should aim to address.
Creating a service calendar or a schedule of services for each client can be helpful to ensure you are only meeting the basic needs of your clients, but it will allow you to go beyond and truly make a difference in their lives.