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    It’s both an unpleasant word and an unpleasant reality for members of the professional services community. For financial advisors, some degree of client churn is to be expected, but ideally, advisors serve as decades-long guides to their clients and stewards of their financial well-being. Few other service occupations depend upon long, fruitful client relationships than that of a financial advisor.

    So, how can we enhance financial advisors’ client retention? Advisors hoping to cut down on client churn should consider whether they see these five relationship-damaging practices at play in their business.

    1. Failing to Communicate

    It’s number one on this list and number one in practice: Poor communication is the fastest way to lose a client.

    There are multiple factors that make good communication “good” and poor communication “poor.” One of the biggest is timeliness.

    Timely communication is especially important for advisors who want to cater to high-net-worth individuals, who tend to place a higher premium on their time. In fact, research by the Vanguard and Spectrem groups demonstrated that the wealthier a client is, the more likely they are to leave an advisor if they fail to respond to their emails and phone calls in a timely manner. 

    Take a look at the percentages of recently churned clients reporting that a lack of timely communication was the top reason they left their advisor:

    • 57% of clients with a net worth of $100k to $1 million
    • 61% of clients with a net worth of $1 million to $5 million
    • 63% of clients with a net worth of $5 million to $25 million

    “Timeliness,” of course, is highly subjective. Responding within 24 hours is a good rule of thumb for the bulk of your clients, but it may be worthwhile to identify your most valuable clients and affirm to respond to them within the same day or even the same hour.

    2. A Lack of Proactivity

    If your client ever contacts you to schedule a conversation about market activity, global events, their portfolio performance, new financial trends and strategies, then it may be a sign that you need to become more proactive at your practice. Ideally, you should have a robust communication strategy in place that enables you to provide the right framing and context for any topic that might make a client ask, “I wonder what my financial advisor has to say about this.” This can take the form of a newsletter, quarterly meetings, webinars, or, ideally, a mix of different media.

    Proactive communication is important, but proactive ideas are even better for retaining clients. Clients want to hear their advisor’s take on recent events. This indicates that their advisor is thinking strategically about how best to protect and grow their wealth, no matter the market conditions.

    Proactive ideas could take the form of unique investment opportunities, novel financial strategies and concepts, market insights, and more. If clients start to hear more compelling financial insights from outside sources than they do from you, your relationship could be at risk.

    3. Focusing on Performance to the Exclusion of All Else

    No one is going to argue that investment performance isn’t important. But it’s rarely the primary reason why a client leaves their financial advisor.

    If you: 

    • Do your due diligence or work with somebody that can do it for you;
    • Listen to your clients, understand their goals, and tailor their investment portfolio accordingly;
    • And explain why certain elements of the portfolio are there and how they’ll perform under different market conditions, then your clients that churn are almost certainly doing it for some other reason than investment performance.

    Most advisors are meeting the criteria above, and yet many still convince themselves that a financial advisor’s client retention hinges upon investment performance. That’s because chalking churn up to poor performance can be an excuse to avoid change.

    It’s easy to think, Well, I explained everything to them, but they still blamed me for the overall market performance and I can’t change that. It’s a lot harder to self-critique and identify what you could have done differently to keep them on as a client.

    You don’t have to take our word for it, though. To identify why clients are churning, make exit interviews a regular part of your practice. Find a non-confrontational way to ask clients why they’ve churned, record their responses, and then act on any emerging themes. The odds are good that you’ll recognize an item on this list other than poor investment performance.

    4. Thinking that Transparency = Fee Disclosures

    Any service-based business must be transparent if it's to earn the client’s trust, but it’s even more crucial for a financial advisor. Your clients have entrusted their financial well-being and futures in your hands — that takes a lot of trust and a commensurate degree of transparency.

    Financial advisors understand this, but they sometimes become fixated on fee transparency. Clients absolutely should be aware of what fee you’re charging and what you’re doing to justify that fee. But there’s a lot more to be transparent about in a financial advisory practice.

    If you have a tiered service offering (which we advocate for), make sure your clients understand what services they are entitled to at their current tier, what services they could receive at higher tiers, and that as their wealth grows under your management, they may qualify for those higher tiers. 

    Set expectations with them about how frequently you’ll hold meetings. Tell them that they should expect responses to their questions within 24 hours, within the same day, within the hour, or whatever cadence you choose. 

    Some financial advisors formalize all of this in a service-level agreement, or SLA. In essence, an SLA lays out the level of service you should expect from a vendor — in this case, the financial advisor. SLAs are a commitment to certain standards of quality, response time, and other metrics. Having your level of service written down and formalized in an SLA lays out in black-and-white detail what your clients should expect when working with you.

    5. Thinking You Can Do it All Yourself

    Today, the client experience is what differentiates a good financial advisor from a great one. Speaking with clients, understanding their goals, and building out bespoke plans for them is the only part of a financial advisory practice that absolutely must be carried out by the financial advisor themselves. Without a strong client-advisor relationship, there can be no client experience.

    Naturally, this isn’t the only part of running a financial advisory practice. There is business administration, investment management, due diligence, marketing and prospecting, IT, and much, much more. Fortunately, none of these require the direct involvement of a financial advisor in the same way the client experience does. To the contrary — advisors who try to run their business and serve their clients effectively at the same time wind up doing neither.

    Being an effective financial advisor and creating a superlative client experience means delegation and outsourcing. As a holistic wealth management platform, AssetMark works with financial advisors by taking on these non-core functions — thus, we can say from experience that advisors who effectively outsource tend to deliver a better client experience. Outsourcing investment management, for instance, saves advisors up to eight hours a week, which many of our financial advisors invest back into their client relationships.

    If you’re feeling overwhelmed by trying to run your business and serve your clients all at once, why not start a dialogue with us? The AssetMark team will learn more about your practice’s unique needs, and you’ll learn more about how we help financial advisors’ client retention rate.


    AssetMark is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses.

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