Tips to instil client loyalty

The Covid-19 pandemic has tested advisor-client relationships, and a lack of client confidence contributes to the strain, a report from the Investments and Wealth Institute says. Finding ways to help clients gain a sense of control can turn those relationships around.

An institute survey conducted over two weeks in March, as the pandemic’s severity became undeniable, showed strong client satisfaction. However, the survey also pointed to a potential “looming loyalty crisis,” as clients interviewed later in the survey period said they were more likely to leave their advisors.

Report author Julie Littlechild, founder and CEO of industry research firm Absolute Engagement, linked client loyalty to self-confidence.

“Confidence is not only a reflection of what is happening in the markets and the value of our portfolios,” the report said. “It is about a sense of control, clients’ belief in their own abilities, and the clarity of the clients’ plan.”

With many clients feeling a loss of control in various aspects of their lives due to job losses, health concerns or caring for children, advisors have an opportunity to help clients feel more confident. Doing so will contribute to trust and loyalty, the survey found.

More than three-quarters of clients with high self-confidence were extremely likely to continue working with their advisors; that dropped to less than half of those with moderate self-confidence, and less than one-third of those with low self-confidence.

“You can see the knock-on benefits of helping create more self-confidence with clients,” Littlechild said in an interview. “This is a unique ability of a good advisor.”

She recommended taking more time at the start of meetings to discuss what’s happening in a client’s life before getting into financial plans and investments.

“If clients are feeling a little out of control or are feeling a lack of confidence, then taking the time to name that emotion and then tying it back to the successes that they’ve already had or the plan that’s in place or where they are relative to their overall goals — it’s reassurance in a way,” she said.

The survey found increased client interest in non-financial topics related to health and wellness. Advisors have an opportunity to support clients on issues “that might feel a bit out of their swim lane, like managing stress or health,” Littlechild said.

That doesn’t mean advisors should try to become experts overnight. Rather, they can play a curatorial role, providing reading material and links to resources.

Information was gathered for the report in an online survey of 1,178 respondents across North America between March 10 and March 24. All respondents worked with financial advisors and had more than $500,000 in assets. The 427 respondents from Canada were the focus of the report. Read the full report here.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.