How to re-engage and reprofile clients
In this article:
- The importance of re-profiling your clients annually
- Strategies for re-engaging clients
- The ROI of re-profiling annually
The importance of re-profiling your clients annually
Risk preferences evolve over time.
From our research, we've found that Attitude to Risk decreases consistently with age, while Sensitivity to Loss increases consistently with age.
This makes intuitive sense, as younger investors have a longer time horizon and are willing to accept more risk in return for potentially higher gains, while older investors want to protect their wealth.
Keep track of how your clients' preferences are changing over time
- We recommend re-profiling your clients' risk preferences annually, similar to an annual health checkup with a physician.
- This annual datapoint will give you a pulse on how each of your client’s risk preferences evolve over time, especially in light of major life events specific to each client.
A client’s risk preferences may change after having a child, purchasing a home, receiving a large inheritance, switching careers, or any other major life event.
It also gives you insight into life events that a client may not be forthcoming about, such as a family illness or job insecurity.
By having an evolving understanding of your clients’ risk profiles, you can continually personalise the advice you give them as their life circumstances change.
Strategies for re-engaging clients
When it is time for a client to have their annual re-profiling session, you will receive an email notification letting you know.
You can then click into the client's profile page and click Re-profile. A pop-up will appear confirming your decision to re-profile the client. You can then send the client the risk activity by either clicking Send invite or Copy link.
We recommend sending your client an email along the following guidelines
"Hello John,
I'd love to get a pulse on how your risk preferences have evolved since the last time we looked at them.
I am emailing you a link to the same Risk Activity that you completed during your initial onboarding to see what may have changed since then.
We can discuss your new results the next time we chat and see if your preferences are still in line with your investment portfolio, goals, and constraints.
Looking forward to meeting,
[Your Name]"
The client will then complete the Risk Activity again. You will receive a notification once the client has completed the task.
From here, we recommend meeting with your client to discuss how their risk preferences may have changed over the last year, touch on any major life events that may be influencing theirthinking, and evaluate if any changes are needed in their investment strategy.
The ROI of re-profiling annually
From our research, we've found that advisers who re-profile their clients annually have a NPS 12 points higher than those who don't and are 27% more likely to add AUM.
This is because re-profiling annually further cements confidence in the client's investment plan and instills trust in you as their adviser that you truly understand them.
The annual check-up is our recommendation, but you know your clients best and it is up to your discretion to decide how often to reprofile their risk preferences.
Did this answer your question?
If not, please feel free to reach out to us at customer-support@capitalpreferences.com