I have plenty of respect for the successful ‘we’ll-be-the-Airbnb-of-whatever’ entrepreneur. Can they actually deliver on the idea of ‘scale up until we’re huge and then figure out our business model’? Good for them! But in reality, such success stories are pretty thin on the ground.
It’s hard to run a business that way before you run out of cash or your investors’ money. And that’s just never been our way.
By training, inclination, and not a small amount of inherited business savvy, my co-founder and I operate in an efficient way compared to many business owners. We’re planners. We love data and we dig the details. We were Silicon Valley-style Lean entrepreneurs before it was cool.
The engaged client is an excellent client. We leave them to their devices and they get into it.
Before WealthBar, I came from a mechanical engineering background, before switching to finance. Chris, my CTO and my longtime partner in crime, came from math and computer science. So you could say that learning from data, tweaking processes and planning ahead come naturally to us.
One of the most important ways to get the data you need? Talk to your customers. That was the advice from my father-in-law who long ago started his traditional successful wealth management firm, Nicola Wealth Management (NWM).
Shocking, I know. But following this simple advice with our first 1,000 customers, we’ve learned some important lessons that have helped us grow far beyond that.
Clients like to win, but they really hate losing more
We started out with an idea of giving all Canadians access to better investment opportunities. That’s still central to what we do. But how we present our value to clients has changed.
Our first 100 or so customers all liked the idea of having access to private investments that were previously only available to very wealthy investors.
But thanks to some timely news broadcasts, Canadians were also increasingly aware of how badly they were getting dinged on fees. They really hate paying fees.
We’re hardwired from our caveman days to focus on avoiding problems, not necessarily focusing on the upside. Find a $50 bill under a couch cushion? You might feel lucky for a day. Lose $20? You might complain about it all month long.
A positive rate of return might quickly be taken for granted. But if clients can lock in lower fees (say, about 0.8% total cost with an Exchange Traded Fund (ETF) portfolio instead of a bank mutual fund’s 2.2%) and avoid a loss, that’s often more important to them.
We confirmed that initial feedback from customers when we started reaching out to online communities, including financial bloggers and the investment forum on Reddit. (You don’t need to reinvent the wheel on your own hosted forum. Existing online communities can be really helpful for understanding and tweaking your market fit).
So, we replicated the investment philosophy of high-net-worth investors the best way we could: using low-cost ETFs. We could manage volatility for clients without gouging them on fees. That shift in focus helped attract renewed attention from investors, positioning us for rapid growth.
Your customers want information, but only when they want it
Before WealthBar was a thing, NWM started offering detailed performance reporting to customers back in the ’90s. It was a huge competitive advantage and remains so, to this day.
For our first clients and for a long time after, we would send an email to people so they could schedule a call with me, as the founder of WealthBar.
We wanted to build on that good idea in a way that would help us listen to customers. We threw tools right into the WealthBar app and on our website. RRSP and TFSA optimization tools. Tax calculation tools. Do-it-yourself performance comparison graphs and asset-mix pie charts.
Clients can still talk with one of our financial advisors any time. But we know our customers are using these interactive tools.
You might think that this self-serve approach cuts out the need for a personal touch. Just the opposite.
The engaged client is an excellent client. We leave them to their devices and they get into it. Clients can test out a hypothesis in their dashboard optimization app. Then they go to one of our experts for confirmation about what they’re seeing, before they put money behind their decision.
That self-help approach works. It’s good to be seen as proactive and helpful. But you don’t want to be annoying. If you can help clients learn on their own, they’ll thank you for it.
A human voice pays untold dividends for a robo-advisor (or tech-whatever)
Isn’t a personal follow-up call just really inefficient? Email blasts, ad retargeting, and chatbots are mainstream now. Well, that personal approach is hard, but necessary.
For our first clients and for a long time after, we would send an email to people so they could schedule a call with me, as the founder of WealthBar.
We could have hired a customer experience person to act as a go-between, but that wouldn’t have worked as well when we were still juggling our product-market fit. The conversion rate of a lead who just found us through our website, an advertisement or referral hovered around 20 percent. But if they talked to me, it was 50 percent. That number has held up since we’ve grown our team.
It’s easier than you might think to do this. Choose from one of dozens of mobile-friendly self-booking tools and make it happen. We used Calend.ly, which let customers book a time instantly without a bunch of emails or phone calls back and forth.
It’s time-consuming. But talking to your customers is totally worth it. That’s how we learned. And that’s how we grew our company.
