ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

The Satisfaction Gaps that Cost You Clients

May 7th, 2013

by Dan Richards

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Dan Richards

Most advisors recognize that clients are unhappy with returns in the last decade, but believe they are satisfied with communication and the relationship as a whole.

That’s why three recent conversations I’ve had with investors and advisors should set off alarm bells.

Three causes of client defection under your control

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In my 25 years working in the investment industry, I’ve had numerous conversations with advisors and investors about what makes clients leave. Sometimes it truly is beyond advisors’ control – markets underperform, clients have unrealistic expectations or feel they can save money investing on their own. And sometimes clients are won over by a sales pitch from another advisor who shot the lights out.

But often, the issues that cost clients fall into three categories that are absolutely within advisors’ control.

The first of these relates to communication.

A recent article described a conversation with clients thinking about switching because they weren’t getting updates between annual meetings on market developments, leading them to wonder whether their advisor was actually on top of what was happening. Other clients complain that they never hear from their advisor unless they initiate contact or that when they meet, their advisor dominates the conversation.

A second set of issues within advisors’ control that damages relationships and can cost clients hinges on responsiveness and clients feeling unimportant or unappreciated.

A while back, I wrote about clients who left because their advisor hadn’t responded to requests for a comprehensive financial plan. Other clients have talked about advisors failing to respond to questions in a timely fashion or things like changes of address that drag on without resolution.

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