Top 5 Reasons Why Clients Look for New Advisors

In wealth management, client retention is as crucial as acquiring new clients. Understanding clients' needs is pivotal for strengthening relationships and retaining your client base. Recognizing this, let’s delve into the top five reasons, sourced from respected industry surveys, that prompt clients to look for new financial advisors.

Lack of Communication

According to Spectrem Group's April 2020 report, 65% of investors rank regular communication as vital in their relationship with financial advisors. Communication means more than just sending periodic reports; it's about engaging the client, offering financial advice tailored to their needs, providing regular updates, and explaining complex financial jargon in a comprehensible manner. Advisors demonstrating initiative in communicating and showing genuine interest in client matters can set themselves apart.

High Fees Relative to Value

Costs and value are primary factors clients take into consideration. According to a global EY wealth management survey, 36% of clients consider the management fees they pay as too high for the services received, suggesting a value deficit from their perspective. Devising a fair and transparent fee structure and critically, demonstrating value relative to the price, not just in terms of financial performance, but also in terms of advice, service, and personalized attention, can make all the difference to a client.

Inadequate Personalization

Accenture's wealth management research indicates 48% of clients have turned away from an advisory firm due to inadequate personalized service. In a world loaded with cookie-cutter solutions, personalized wealth management advice that reflects clients' specific needs, risk tolerance, and financial aspirations, distinguishes a superior advisor. Therefore, adopting a comprehensive, client-first approach is essential.

Lack of Investment or Strategic Transparency

Transparency builds trust and loyalty. Ernst & Young's survey reveals around 50% of clients are likely to leave their advisors for those offering more transparency. A lack of clarity or frequent discrepancies can trigger significant trust issues, pushing clients away. Transparent practices—such as clearly explaining fees, sticking to advised strategies, and detailed disclosure, including the good, the bad, and the ugly—can help retain trust and subsequently, clients.

A Non-User-Friendly Digital Experience

Our day-to-day lives are intertwined with technology, making its use non-negotiable for all businesses, including financial advisory. Fidelity’s 2020 investor survey reveals that well over half (67%) of clients appreciate digital tools and technology in their wealth management experience. Thus, advisors offering a seamless, secure, and user-friendly digital experience are more likely to engage clients effectively in the long run.

While these factors suggest common pain points faced by clients, they should also inspire critical reflection among advisors. All advisors have the tools to turn these weaknesses into strengths; it boils down to demonstrating commitment, listening, understanding specific needs, and working continuously to improve the client-advisor bond.