Powerful Client Retention Strategies for RIAs

Mar 30, 2023 | Blog Posts

As a financial advisor, it can sometimes feel like you’re operating in a crowded space. In addition to competing with other RIAs for business, you’re also running your business in a landscape with automated and AI based options. Moreover, an increasing number of new investors are gaining economic power. At the end of the day, you’re dealing with a lot of changes outside of your control.

One way to fortify your business is to focus on client retention — ensuring that the people who sign up to work with you are fulfilled enough to stick around. That means doing more than offering quality service. Client retention is an art form that requires a strategic, thoughtful, and well-planned approach.

Here are some recommendations to consider as you build the right approach for your firm.

What exactly is customer retention?

The phrase customer retention has origins in the field of marketing. It is a metric that captures loyalty and describes the ability for a business to keep its customer base. From a measurement perspective, customer retention refers to the rate at which customers stay with a business during a given period of time. It is the opposite of a churn rate, which measures the rate at which people leave.

“In general, the lower the churn, the more loyal the customers and more successful the business, as the business retains more customers over time,” explains an article from Salesforce, one of the leading customer relationship management (CRM) platforms on the market.

The most direct way to increase retention (and minimize churn) is to understand why clients leave in the first place. Here are a few reasons, according to an article in Yahoo! Finance:

  • Feeling neglected
  • Waiting too long for a response
  • Getting advice that doesn’t feel personally aligned
  • Thinking that portfolio underperformance is because of received advice

The tough truth; however, is that you won’t always know why clients end up leaving. This article in FA Magazine points to a range of reasons: your client’s spouse doesn’t like you, another advisor used the ‘you can work with more than one’ argument, your client has outgrown you, etc.

Despite these factors outside of your control, there are two things you can do: (1) demonstrate your value and (2) communicate it effectively.

High-impact client retention tips for RIAs

These days, financial advisors are strapped for time. Between work, family, health, and other life commitments, to-do lists are extensive — and it’s tough to build in time for ‘extras.’ You need to make a maximum level of impact with your focus, attention, and energy.

One approach is to build customer retention into your existing routines. Here are a few ideas to help you get started.

1. Build a communications strategy for your firm

A communications strategy is more than just picking up the phone, sending emails, and responding quickly to client concerns. It requires strategic, carefully planned forethought. The goal, with any communications program, is to move from a reactive to proactive approach — so that you can get ahead of the conversation. 

There are a few touchpoints to consider when building a communications program for your RIA:

  • Goal setting. At least once a year — and as often as once a quarter — it’s important for advisors and clients to align on high-level goals. With this foundation in place, advisors and clients can work together to continually revisit those goals to ensure they are being met. 

“For most people, if they’re honest with themselves, their goal is to be 

financially stable and secure,” says Rob Michel, Chief Investment Officer at Glen Eagle Advisory. “It’s about going to bed worry-free about finances. It’s about providing support to grandchildren, making repairs to homes, getting married, and other life milestones. With an understanding of these milestones, we can build financial plans that are sustainable and attainable.”

The key is to revisit these goals continually and often enough to ensure a shared basis of understanding. 

  • Proactive outreach. It’s a good idea to proactively reach out to clients rather than waiting for a fire drill. How often will you be reaching out? Through what channels? It’s important to answer these questions ahead of time, so that you’re ready to jump into action when necessary. 

For instance, Pat Hehir, founder at Princeton Financial Partners, starts his 

mornings by logging into CircleBlack to review assets over the previous few days, to see if any accounts were more volatile than others. He also double checks which clients have been logging into Princeton Financial Partners’ branded app as a sign for who might be feeling nervous.

“This data tells me whether I should be reaching out to clients to be more proactive,” he explains. “We can quickly get on the same page by looking at the same data in CircleBlack.”

  • Personal check-ins. It’s important to show that you care about your clients on a human level. What values matter to your clients? When are their birthdays and other family milestones?

“A struggle that many new advisors and even experienced planners can often 

fall into is focusing too much on the investment and not the investor,” explains 

Brian Mann, Chief Distribution Officer & Partner, C2P Enterprises in an article for Nasdaq. “While it  is important to get the highest possible ROI for your clients, it shouldn’t be done at the expense of making them feel like they are only a number.”

Be sure to ask questions about your clients’ lives, to keep conversations as human as possible. Relationships matter.

2. Build relationships with the entire family

Building relationships across family generations is a smart move for financial advisors. That’s because it’s inevitable that wealth gets transferred to somebody else — especially these days with millennials and gen Z gaining economic power. 

“Parents in their 60s and 70s trust us to communicate what’s going on with their wealth with their kids,” explains Andrews in an interview. “Even in the tightest-knit families, the lack of a plan can cause major problems. It’s crucial that everyone knows what’s going on, so families can be on the same page.”

An article in Schwab recommends taking the following steps to build relationships with clients’ families:

  • Encourage family meetings to help parents, kids, and grandkids align on financial priorities
  • Take on the role as moderator by acting as a neutral party to help facilitate conversations
  • Know your audience — make sure you’re employing communication strategies that resonate with the baby boomers, gen Xers, millennials, and gen Zers in the room
  • Offer multigenerational services, such as financial plans, that demonstrate your value to every member of the family

3. Double down on building community

Building community is a great way to establish your business as a staple in your clients’ lives.

Why not host a virtual or in-person client appreciation event to start?

As an example, ShirleyAnn Robertson, a financial advisor with Prudential in Schaumburg, Illinois, hosts quarterly events that bring people together as a community. These include dinners, wine and cheese tastings, barbecues, and games for the kids.

When in-person gatherings aren’t a possibility, virtual meetups are always an option. Examples include webinars featuring guest speakers and workshops.

The idea is to offer value without a direct sales pitch. Just bring people together in very human, enjoyable ways. Create a non-transactional rapport with your clients, to instill a sense of value that transcends investment decisions.

Final Thoughts

Client retention doesn’t need to feel like extra work. The right strategy will feel like a valuable extension of your business rather than an extra set of processes or workflows. Remember that people will always be human beings. We could all use a bit more support and humanity these days.

About CircleBlack

CircleBlack is an all-in-one technology platform for relationship-focused financial advisors. To learn how our software can help you build, manage, and grow your wealth management practice, get in touch to request a demo.

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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