Why clients leave

Clients drop their advisors for a variety of reasons. Knowing what they are is the first step to ensuring it doesn’t happen to you.

Level of Contact

Interviews with wealthy investors confirm lack of contact is a major reason for leaving. A professional fundraiser I spoke with complained he couldn’t get his advisor on the phone. A restaurant owner told me, “He doesn’t pay attention anymore.” A real estate developer was “Reassigned with no personal contact,” while a bank president complained he “Never heard from him – I was just another number.”

Read: Wealth managers must adapt to new realities: PwC

What can you do? Initiate regular contact, including face time. Don’t volunteer an apology for not being more accessible in the past – focus on the positives going forward.

Needs Changed

Life happens in cycles. Children grow, people retire, needs change. Advisors are supposed to anticipate these developments, but some don’t. One property developer I spoke with said, “Our needs changed and we outgrew our advisor.”

What can you do? Has the client withdrawn? If so, something else is on their mind. Letters or surveys won’t bring it out. Face-to-face conversations or long phone calls are required.

Whose Interests Come First?

Some interviewees left because they felt their advisors weren’t on their side. Clients may see advisors in one of three roles: an advocate, similar to having legal representation; a bystander, like a croupier in a casino; or an adversary, when one party profits at the expense of another. They want the first, tolerate the second and avoid the last.

A business consultant explained that after a significant life event he turned to his advisor and received inappropriate advice. He changed firms. A restaurant owner was more direct: “I don’t feel my broker was working in my best interests.”

Read: Worry about value, not fees

What can you do? Outside factors create doubt in a client’s mind, especially when the market is brutal. Clients should understand how you make money and which activities trigger fees. They might assume you profit on every change. Reallocating and rebalancing within a wrap account might not add additional costs. Remind them advice was given based on information known at that time.

Additional Reasons Clients leave

We assume performance issues drive departure. This isn’t necessarily the case. If you keep in touch and frequently report to them, they can be surprisingly understanding. Poor performance coupled with lack of contact is the problem.

We assume they sometimes leave because of fees. If they understand the value they receive this isn’t usually a big issue. Moving often involves fees to leave and more fees to establish a new portfolio.

Perception of strategy is important. They are a passenger as their portfolio travels through a volatile market. They want you as a captain, not a fellow traveler.

Can You Get Them Back?

Sometimes we’re too late. A New York advisor I know calls his former client a few months later and explains: “I realize you had your reasons for leaving. I enjoyed working with you over the past several years. You were an important client. I wanted to be sure things worked out as you hoped.”

Often people leave because they think the grass is greener elsewhere. It’s the same grass. Pride keeps them from admitting their mistake. Because she takes the first step and meets them halfway, it becomes easier for them to consider returning.

Read: How to attract Gen Y