With retention rates for financial planning sitting around 90%, losing a long-term client might seem like a scenario out of left field. This situation can catch you off guard, especially when you thought they were happy. However, the reality is that client departures rarely happen on a whim. Instead, this churn most often reflects subtle issues that gradually build up under the surface, going unnoticed until it’s too late. The reasons are often less about financial returns and more about the interpersonal nature (or lack thereof) of the advisory relationship.
Losing a client hurts your practice’s financial health and it can also erode your confidence. However, this isn’t the time to turn a blind eye. These disappointments can be a sign that something in your practice needs further scrutiny. Understanding the forces at play can help your practice become a more resilient, retention-focused operation.
1. The Slow Kiss of Death: Communication Breakdowns
Good clients often flee because of a communication breakdown. In most cases, it’s tied to the quality, not the quantity of outreach. Perhaps your quarterly check-ins have become mechanical. You might be too focused on returns without giving ample credence to their life goals. It’s also possible your communication is too generic and makes them wonder if you have their best interests in mind.
Clients want to be in partnership with their advisors. When you neglect to address their family, career or retirement goals, they start to drift. They might not expressly mention their discontent, but they will notice when another advisor seems more in touch.
To get ahead of any potential communication issues, proactively schedule calls with no intention other than to check in. Let the client lead the conversation, practice active communication and be sincere in your responses.
2. Feeling Like a Number
Your best and most long-term clients have looked to your guidance to chart their financial future. They’ve likely shared intimate details about their lives. As such, they expect you to engage with them beyond the surface level. When they feel like you’re going through the motions, their loyalty begins to waver.
This can happen even with the best of intentions. You might assign their account to a new advisor without a warm handoff, or you may simply become less involved. Over time, this weakens the relationship.
However, there are ways to show attention and care, even as internal dynamics change. Some advisors have found success by developing a system to log important client life events and personal details. Use this information to inform your interactions. A handwritten card, for example, can reinforce that you care about their lives beyond performance metrics. Research from The University of North Carolina at Chapel Hill makes the case for sending snail mail. Upon receiving such a special touch, the recipient feels valued, loved and respected.
3. Misaligned Expectations and Evolving Goals
The financial plan you crafted five years ago may no longer be relevant. Life changes, health challenges and financial priorities add pressure and infuse emotion into investing approaches. If you don’t check in and respond to these variables, your clients might feel a disconnect between their expectations and your services.
It’s in your best interest to integrate goal assessment into your annual client review process. These touchpoints are important to ensure your advice still applies to their lives and circumstances and demonstrates. For this reason, AdvisorHub makes the case for introducing a living financial plan.
Build an Unbreakable Client Relationship
Don’t wait for that uncomfortable phone call or email before you take action. Start tending to client relationships today and you’ll be well on your way to locking in industry-leading retention numbers.
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