Build Loyalty Before Your Clients Shop for a New Advisor

Jan 5, 2021 Share This 


Client_LoyaltyMost of the time, financial advisors have inertia on their side.

In general, people resist change for its own sake, and clients aren’t actively looking to leave their advisor — unless their advisor gives them a reason to look elsewhere.

So it might not seem like there is much to worry about. But consider the time, effort and investment that goes into prospecting and marketing for new financial advisor clients. Prospect inquiries are down significantly since the start of the pandemic, and in-person marketing and outreach is complicated by potential public health risks.1

And when you consider the value of referrals from satisfied clients, it’s easy to see why it’s more important than ever to nurture the client relationships you already have today, and show those clients the ways you make a difference in their lives.

Two Reasons Why Clients Go Financial Advisor Shopping

It’s probably no surprise that the two most commonly cited issues that drive clients away from financial advisors involve portfolio performance and communication.

Underperformance can be a matter of advisor competence — or market turbulence, lack of diversification, poor investor choices or even high fees — so it’s absolutely critical to keep building your product knowledge and take advantage of ongoing educational opportunities in the field.

But even some “underperformance” situations can actually be chalked up to poor communication. An underperforming portfolio can point to a number of failures. A client might not give investments enough time, might evaluate a portfolio against the mismatched criteria or might have unrealistic expectations.

And every one of those situations points to lack of communication.

First Set Expectations, Then Work to Live Up to Them

From the very first meeting, it’s crucial for financial advisors to set clear expectations, not only about products and investment choices, but also about the relationship. Make sure considerations like fees and contracts are crystal clear, and that clients have access to everything in writing.

It’s just as important to set parameters for advisor-client communication. Your client should know how often to expect to hear from you, and you should know how best to reach them.

Do they want face-to-face meetings? In-person or virtual? Do they prefer an email communication or a phone call to check in? To feel in control, do they need 24/7 access via a website or mobile app?

Factors like age, experience and education can influence these differences, and it’s on you as an advisor to give each client the right level of attention, using the right tools.

The Advisor-Client Relationship is a Two-Way Street

At the same time, communication is about so much more than check-ins and portfolio reviews. It’s also about human connection. By cultivating active listening skills and deeper client empathy, you can better understand clients’ risk tolerance — and even more important, their personal circumstances, life milestones, core values and vision for their future.

When you understand the whys behind their investment decisions, you can provide personalized communication and attention, and you can also offer the products and investment tools that best suit their needs. That could mean high-risk, high-reward opportunities; products that help control risk; or environmental, social and governance (ESG) investment options. The better you know your clients, the better you can serve them.

Deeply understanding clients also enables advisors to experience the added value their voice can bring to clients in uncertain moments. Often, to clients, advisors are more than financial experts. By recognizing the importance of the emotional support your rational voice can bring to a panicked client in turbulent times, you can help clients feel like more than just another portfolio.

In turn, you can become not just any advisor, but your clients’ preferred advisor. Over time, that translates into long-term client relationships, deeper trust and maybe even those precious referrals to friends and family that can help grow your business.

Learn more about how you can help clients make more rational decisions that may help them achieve their long-term financial goals. Just click the link below.

Defusing Emotions: An Advisor’s Role In Disciplined Long-Term Investing



1MarketWatch, The financial advice business was attracting young professionals. Then the coronavirus pandemic hit, May 21, 2020.


Topics: Client Relationships