Is Your Firm Losing Clients? Here Are 6 Impactful Ways to Respond

Sep 19, 2022 | Blog Posts

For financial planners, customer retention is crucial for running a stable operation. But lately, many advisors have been seeing a lot of turnover due to forces outside of their individual control. Losing customers, particularly in a turbulent economy, can feel unsettling. However, it’s important to maintain a long-horizon view of the issue rather than become discouraged.  

So what can financial advisors do to stop the leaky bucket? Here are 6 impactful steps you can take.  

1. Ask more (and better) discovery questions

As a financial advisor, you spend your time immersed in numbers. This focus is critical to staying accountable for the results that you promise, no matter the conditions of the market. Especially with the up-and-downs in today’s economy, you need to be laser-focused on meeting client expectations. .

Despite your best intentions to remain meticulous and follow through on results, your clients aren’t necessarily evaluating you for the numbers that you deliver. Rather, they’re seeking human interest, empathy, and coaching in addition to great results from their financial advisors. 

According to a 2020 study from Natixis Investment Managers of 300 U.S. finance professionals (wirehouse advisors, RIAs, and independent broker/dealers), there are two major factors that drive clients away from their financial advisors: not communicating with clients in a way that meets their expectations (69%) and not listening to the needs of clients (64%).

The reality is that you likely don’t have enough hours in your day to give each client the attention that they want, need, and deserve. According to the Bureau of Labor Statistics (BLS), there are 9.70 financial advisors for every 10,000 adults ages 25 and older. From a pure economics perspective, there isn’t enough supply of financial planning expertise to meet the demand in the market of potential clients. 

One small, impactful step you can take is to simply ask more questions during routine conversations. That means talking less and listening more.

“The goal of the advisor is to become the master of the questions, not the answers,” explains Bernard Ferrari, author of Power Listening and the former dean of Johns Hopkins University’s Carey Business School in an interview with RIA Intel. “Help the client come to conclusions rather than telling them everything.  Lead them to the answer like an educator.”

It’s about demonstrating curiosity and discovering what makes your clients happy and successful.

2. Get clear on your ideal customer profile

As you navigate your discovery process, you’ll begin to notice patterns among the clients that are the best fit for your business. What keywords do they use to describe the level of service that you provide? What are their criticisms about your firm? What do they consider to be priorities in their financial lives? What are some fears that they might be navigating? 

You can think of these questions as drivers for informal market research. As you deepen your insights exploration, the intelligence that you gather will help you understand the attributes of your best customers. The idea is to attract more of them to your firm. 

For instance, you may notice that your most successful clients — in terms of their portfolio performance and firm retention metrics — are new parents. Observing a trend like this, a natural next step would be to ask why your firm seems to be attracting people at this life stage. One explanation could be that you have a reputation for offering sound, practical, and trustworthy recommendations for future scenario planning. Your ideal client may be seeking out this particular service, intentionally. Perhaps you are a parent and highly astute to the concerns of new parents, as a result of your experience. 

With an understanding of the strengths that your clients perceive for your firm, you can better refine or position your offerings — and more importantly, have more relatable, human conversations with people who are seeking advice. 

3. Focus on a few consistent marketing activities

Marketing doesn’t need to feel like extra work or a high-pressure activity. At the simplest level, your goal is to be a storyteller and to reach an audience that values what you have to have to say. 

Most importantly, marketing activities have the potential to be an enjoyable expression of your creative talent. You can think of marketing as a break from your day to day activities rather than a chore. 

For an example of a financial advisory practice with effective marketing, take a look at Silverman + Associates Wealth Management, LLC. Based in Tucson, Arizona and established in 2008, the firm’s founder Mark Silverman has turned his solo-practice into a platform for sharing online media. In addition to serving a core group of clients, he maintains a blog and podcast where he publishes regular content. He is also active in local communities including serving on the local Financial Planning Association (FPA) board and being an active member of Real Estate & Allied Professions (REAP), Foothills Club of Tucson (FCT), Caballeros del Sol (CABS), Southern Arizona Estate Planning Council (SAEPC), in addition to other local groups.

The bottom line is that marketing doesn’t need to feel transactional or like a heavy lift. It’s about building relationships and strengthening a sense of community.

4. Stabilize your communication infrastructure

When it comes to connecting with clients and prospects, you don’t need to be in constant touch over phone or email. Instead, use technology to help keep conversations organized — so you can focus and be intentional about your time and attention.

According to a 2021 study published in Financial Advisor IQ, 76% of RIA principals in Raymond James’ RIA & Custody Services division now offer client portals, which represents a 15% increase from 2020.

With this communications infrastructure, financial advisors are better equipped to stabilize their client relationships, which ultimately reduces cognitive load and enables financial advisors to grow their business.

The key to establishing client communications infrastructure is to set clear expectations. Make sure that clients know exactly how and where they can reach out to you — such as a client portal, for example.

6. Focus a bit more on the early stages of the relationship

First impressions — and early collaboration dynamics — between financial advisors and their clients are critical to establishing  the longevity of a successful, long-term business relationship. 

Financial Advisor Magazine conducted an analysis in 2019, based on data from firms like E-Trade and Bain and Company, to better understand turnover patterns at financial advisory practices. An assessment of 180 RIA firms found that 20% of new clients turnover in their first year and 25% turn over in the first 2 years. The sooner that firms can get on the same page with their clients, the better the relationship becomes over time.

One approach to strengthening communications is to establish a structured onboarding process. As an example, Silverman + Associates follows a similar approach, implementing a methodology from Money Quotient, which provides tools for analyzing the emotional side of money.

With this foundation, Silverman and his team are able to connect ongoing, routine client communications back to long-term strategic investing goals. This approach can help establish a perception of long-term stability — and fortify trust for the long-term.

7. Tastefully request referrals

The idea here is not to ask your clients to operate as your sales team. Rather, the idea is to simply mention that you’re accepting new business. According to Financial Advisor HQ, 65% of RIAs said that referrals were the primary growth channel for customer acquisition. 

If you don’t feel comfortable having these conversations with your customers, you can reach out to fellow advisors in your network — particularly through membership associations such as the Financial Planning Association. After all, some of your trusted peers may be turning away new clients due to a lack of fit or managing a full load.

It never hurts to ask, and you can always offer value to those who support your business, in return. 

Final thoughts

When it comes to building a thriving financial planning practice, the numbers are in your favor given the ratio between Americans and wealth managers. There simply aren’t enough financial advisors to meet the needs of people seeking advice. Especially given the rise of remote collaboration, your best clients can come from anywhere in the country — and potentially in the world. When customers are a good fit for your particular practice, your business will simply run better and with fewer headaches.

Success is ultimately about delivering exceptional results and growing in the right direction. This goal is possible to attain in any market.

If you found this resource valuable, we encourage you to please share it with fellow financial advisors in your network or in any communities in which you belong. 


Learn more about CircleBlack

CircleBlack is an all in one management platform for the wealth management industry. You can think of it as an operational dashboard to better connect financial advisors and their clients around a shared perspective. The outcome is better collaboration and communication for relationship-focused advisors.

To learn how our software can help you build, manage, and grow your wealth management practice, get in touch.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.

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