Email FacebookTwitterMenu burgerClose thin

Financial Advisor Client Retention Strategies


Acquiring new clients is one of the top priorities for your business. But client retention is equally important. A high client turnover rate can be detrimental to your bottom line and it may deter new prospects from seeking you out. That’s not what you want when your focus is on growth. Adopting some of the top financial advisor-client retention strategies can ensure that you’re creating a loyal client base that will stick with you for the long term.

Are you looking to expand the marketing of your financial advisor practice? Try SmartAsset AMP, a holistic client prospecting and marketing automation platform.

Why Do Clients Leave Their Financial Advisors?

When discussing financial advisor-client retention, it’s helpful to first understand why clients leave. Some of the most common reasons clients fire their advisors include:

  • They feel neglected or that their advisor doesn’t pay enough attention to their needs.
  • Lack of communication or waiting too long to get a response to phone calls or emails.
  • Getting advice they believe doesn’t align with their needs or goals.
  • They feel that their portfolio is underperforming because of the advice they’ve received.
  • High fees that detract from their overall investment earnings.

Those are just some of the reasons why clients may rethink working with you. The good news is that these kinds of missteps are avoidable if you have a better understanding of what your clients need.

Keep in mind that some client turnover is normal and unavoidable. For example, a client may simply decide that they no longer need an advisor, and they’d rather go it alone. While client retention reached an all-high of 94.6% in 2020, that still meant advisors lost over 5% of their existing clients that year, according to a report from McKinsey & Company. Losing a client obviously is not ideal for your business, but it’s an opportunity to remind them that you’re always available to help should they decide they need professional expertise again in the future.

Financial Advisor Client Retention Strategies

SmartAsset: Financial advisor-client retention

1. Set Clear Expectations

Setting clear expectations is one of the most effective ways to retain clients and it really begins in the prospect stage. From the first contact you have with a prospect or client, you should be laying the groundwork for what they can expect from you and what you will expect from them in turn.

For example, it’s important that your clients know:

  • What your overall approach to financial planning is and which investment strategies do you prefer?
  • How often you’ll communicate with them and how quickly you’ll respond when they reach out with questions?
  • What fees do you charge and how those fees are structured?

It’s also essential that your clients understand what they can expect with regard to the type of results they’re seeking from you and what you’re realistically able to deliver. If a client comes with the expectation that you’re going to be able to generate a 20% return for them every year without fail, they need to know how realistic that goal is.

When it comes to client retention and expectation-setting, it’s a good idea to be as transparent as possible. And if expectations change on either side of the table, it’s important that you’re actively communicating about it with your client to avoid misunderstandings and keep them engaged.

2. Back-Up Your Advice With Numbers

Clients want to know that you’re working hard on their behalf and actively earning the fees that you’re charging. Offering regular progress or status updates that incorporate real numbers can help them underscore the value you’re providing while encouraging that all-important transparency.

For example, if you’re meeting with your client for the first time in six months you could provide them with a detailed report showing all of the actions you’ve taken on their behalf since the last time you met. Or if you’ve been working with them on a specific goal, you can produce metrics showing how far they are along toward the completion of that goal.

Documenting the work that you’re doing for them and their financial journey with you can help to foster trust with clients. Being able to see results for themselves can help tamp down any doubts they might have about the advice they’re receiving or whether the plan that you’ve created for them is a good one.

3. Ask for Feedback and Actually Use It

One of the best ways to gauge how you’re doing in the eyes of your clients is simply to ask. For example, you might send out an annual survey to your current clients asking them to share their opinions on what’s working or not working and what they like or dislike about your practice.

You can do something similar with clients who choose to leave. Asking them to fill out an exit survey can provide you with invaluable insight into areas where you might need to improve.

You can also ask for feedback from the people around you. The members of your team might have strong opinions on things they believe you could be doing better. Asking them to complete an anonymous survey can be a good way to get feedback without putting anyone on the spot.

4. Implement Systems

Systems can make your advisory business run more smoothly and potentially save you time and money. They can also help to create a better client experience overall, which could lead to higher retention rates.

For example, do you have a clear-cut, uniform process for onboarding new clients? If not, what could you do to implement one so that the onboarding experience is seamless from start to finish?

Communications are another area where systems can lead to a better experience for clients. No one wants to feel like they’re chasing after you. And having a system for relaying client messages and responding to them in a timely manner can help you avoid that.

5. Be Consistent

Clients want to work with an advisor who’s reliable and can be counted on to do what they say they’re going to do. If you’re inconsistent with any aspect of your business, whether it’s the way you approach communications or marketing or branding, that can be confusing for clients.

Your messaging should also be consistent and aligned with your brand and vision. If you decide to change things up and move your business in a different direction, it’s a good idea to let your clients know what your plans are so they can decide if working with you is still going to be right for them.

Bottom Line

SmartAsset: Financial advisor-client retention

Your clients are the reason your business exists. Without them, your advisory practice doesn’t have much room to grow. Practicing good client retention strategies can be key to ensuring your success and longevity. The more clients you’re able to retain, the less you have to obtain to reach your goals.

Tips for Growing Your Financial Advisory Business

  • SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Expand your radius. SmartAsset’s recent survey shows that many advisors expect to continue meeting with clients remotely following COVID-19. Consider broadening your search. And work with investors who are more comfortable with holding virtual meetings or spacing out in-person meetings.

Photo credit: ©, ©, ©