The battle for client retention is won—or lost—within the first two years of acquisition, according to a recent article in ThinkAdvisor. The article’s author says that out of their typical yearly client attrition rate of 7%-10%, they discovered that 45% of these clients were leaving within the first two years of coming on board. Implementing some simple customer service and support models and processes reduced their account closures.
Keeping even just a fraction of that business can mean a lot to a financial advisor’s bottom line. The author found that “a simple 2% increase in customer retention can create as much revenue as decreasing operational costs by 10%.”
Here are six key takeaways you can implement in your practice:
- Return phone calls and emails promptly.*
- Reach out proactively to provide good ideas and advice—don’t just wait for your clients to call you.*
- Create a financial plan for your clients and use it as part of your model for customer service and support.
- Track goals and provide progress reports. You can’t stop “selling” the value you bring to a client, especially during the first two years.
- Assess risk tolerance accurately, especially when dealing with couples who might have different viewpoints, and use that risk tolerance to explain investment returns.
- Manage expectations. Define your role as a financial coach and educator, with the goal of training your clients about investment performance.
* “According to a study conducted by The Spectrem Group, the four most highly cited reasons that investors worth between $1 million and $5 million leave their financial advisors are service related, which include not returning phone calls (61%); not proactively reaching out (53%); not providing good ideas and advice (48%); and not returning emails in a timely manner (46%).”
If you are wondering how you can reduce potential client attrition, contact your Shurwest Advisor Development Consultant at 800-440-1088 for ideas on improving and formalizing your client experience.
Source: Think Advisor. “4 Ways to Keep More Clients.” July 13, 2017. Thinkadvisor.com http://www.thinkadvisor.com/2017/07/13/4-ways-to-keep-more-clients?eNL=596928e9150ba0775dd817&slreturn=1500314249 (accessed July 17, 2017).