Why Clients Leave You (their Advisor) & What to Do About it

Why Clients Leave You (their Advisor) and What to Do About it

Losing clients hurts your revenue and is certainly not conducive to growing your firm. It is, however, an unavoidable part of business. What’s important is how you improve your systems and procedures afterwards to increase client retention.

Consider this:

A tiny 2% increase in retention can create as much revenue as decreasing operational costs by 10%, according to Mike Lover, SVP of key accounts at Trust Company of America, an RIA service provider. [1]

So, Why Do Clients Leave?

According to a study conducted by the Spectrem Group, the most highly-cited reasons that investors (worth between $1-5 million) leave their financial advisors are “service” related [2]:

  • Not providing quality advice or ideas consistently (48%)

  • Not returning phone calls in an appropriate, timely manner (61%)

  • Not returning emails in an appropriate, timely manner (46%)

  • Not initiating contact or being proactive with communication (53%)

What’s interesting about these findings is that the top reasons cite poor communication.

Client Retention: Then vs. Now

Study after study, along with trends across culture and technology, show us that thoughtful and consistent communication is in high demand. Clients want to hear from their advisor often. If better communication is the solution to client retention—and we know it costs 5x more to acquire a new client than to retain one—why do advisors drop the ball when it comes to client nurturing/communication?

The reasons vary: no time, no budget, not enough staff, too busy prospecting, etc. These reasons might be valid, but I find the real root of the issue is with an advisor’s perspective of client retention.

In the old days (i.e. Pre-Internet Era), an advisor managed accounts for a client and interacted with that client a few times per year; this was adequate enough to maintain the relationship with the client. For the most part, clients were low maintenance and maintenance didn’t cost much. This basic retention protocol worked for decades.

That is no longer the case. Today, clients are high maintenance and the relationships costs more to maintain. Clients want the same first-class service they have come to expect from their advisor—plus resources, education, technology, transparency, appreciation, convenience, and more.

When evaluating your practice management and client retention, be sure to review the quality of your client onboarding program, client outreach and communication, and the overall experience you provide to your clients year after year.

Stay tuned for my next article, which shares a few client retention tactics every advisor should implement.

Contact us with questions or comments.

Jaclyn Boruch

Jaclyn Boruch


Wealth Marketing Group


1. ThinkAdvisor

2. Study by the Spectrem Group

#FinancialAdvisor #RIA #PracticeManagement

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