Building Stronger Bonds to Increase Client Retention

Two of the most common reasons clients leave their advisors are infrequent/ineffective communication and misaligned financial goals. Improving the efficacy of the former has the added benefit of also preventing the latter.

Improving client communication

Reaching out to schedule an annual or semi-annual review is of course necessary, but not nearly enough. For many clients, a review with their advisor is akin to a dental checkup; just substitute not reducing their spending and making the promised increase in 401(k) contributions for sugary drinks and intermittent (at best) flossing. Monthly newsletters sent to your entire book are nice, but it is difficult to make content created for everyone timely and relevant to anyone.

Creating regular, targeted outreach to remind clients of things they need to do or actions you took on their behalf – at the time when the information is relevant – demonstrates true value-added, rather than pro-forma outreach. Examples include

  • Reminding clients their RSU are vesting and their options for funding the tax event
  • Letting your clients know upon (tax-efficiently) rebalancing their portfolio when a asset class is hitting its max
  • Reminding them to file their FASFA early to put them in the best position to get the most aid
  • Informing them when you’ve reached out to their estate planning attorney when re-titling assets may be advisable
  • Sending them plan information when it is time to enroll or renew Medicare

Misaligned financial goals

When a financial plan is out of alignment with a client’s goals or circumstances, it (usually) is not because the financial plan was poorly conceived, but rather something in the client’s life changed. When a client comes into a meeting and tells you he retired 6 months ago – 3 years earlier than planned – you might be forced into a difficult conversation, ending the relationship.

Advisors that build strong relationships with their clients are in the best position to proactively inform the decisions that directly and indirectly impact their financial wellbeing, rather than being forced to reactively adjust to the fallout. It takes time to cultivate rich client relationships, but the ground is more fertile for doing so when clients are hearing from you frequently with specific, relevant, and timely communications.