The Whiteboard: addressing the primary reason clients leave you and how to minimize those losses
Investment advisors get fired by their clients all the time - it’s the reality of the business we are in.
But the advisors who limit the number of clients that leave them are generally the special ones that will often lead their firms. Personally, I can’t stand the thought of losing a client. In our “Extreme Ownership” culture at Endeavour Wealth Management, we tend to internalize these types of things. We search high and low to determine what possible reasons the client could have had for leaving and then take ownership for those reasons.
Thankfully, this has led us to building what I feel is an exceptional client offering and so we rarely see a client departure, but when it does happen it’s important to take a good, hard look at the situation and even ask the departing client for feedback so that we may become a better business.
So why do clients leave advisors? Well, as we all know there can be a variety of reasons but study after study shows it’s typically not for the reasons we would think. To this day, most advisors put a great deal of emphasis on their ability to create value for clients through investment returns. What’s interesting about that, though, is that survey after survey shows that poor investment performance is often not the reason why clients are leaving their advisors. Why, then, are we still focusing on this area as a key differentiator?
I’m not saying that investment performance isn’t important because it is but if we are looking to run good strong efficient businesses, should we not put more emphasis on areas that matter more to our clients?
Communication, or lack thereof, is often listed as one of the primary reasons why clients make a change with their advisor. Miscommunication, lack of listening, or infrequent connection can all be reasons a client will choose to work with someone else. Let’s face it, if investors were interested in working with a solution that simply provided investment advice without further guidance or support, there are some very sophisticated solutions available which are much cheaper than you.
Clients are with advisors because they still want to work with a person (likely one that is backed by great technology) and they feel more comfortable knowing that when they have a question or when a coronavirus-like event comes up they can contact someone and get a straight answer that they trust.
So, given that communication is so important to clients, we determined that we needed to develop a process and strategy for it. Here are some helpful suggestions I am happy to share if you are looking to do the same:
- Client Segmentation – In order to effectively communicate with your clients and manage your time, you need to specify what you are willing to do for each different segment. Certain communications are for every client and can be done easily with technology. Other touchpoints, including meetings, might be done more frequently for higher-net-worth clients or for clients in a different segmentation. No matter what your segments are, it’s important to have them and know the cost of your time versus the revenue each client generates;
- Lead by listening – Pretty simple yet many advisors are still making the mistake of just spouting out information without listening to find out what information is important to each individual client. Get to know your client, find out what’s important to them and what scares them and customize their experience going forward;
- Be proactive – Establish a communication calendar based on your client segments. A great place to start is by adding a monthly newsletter where you can include a variety of articles on various topics. There are services out there that will provide content for a fee, but I have always preferred to write our own content because it makes it more personal and builds our brand. Either way, having a regular piece that you put out will serve your clients well and reduce the number of inbound calls you receive. Ironically, this will likely save you time. Once this process is in place, take it another step and engage on social media;
- Put a team in place – Building content and managing a communication calendar can be difficult to do and is not a one-person job. Having a good associate in place who can help you manage it is going to be a lifesaver. On top of that you need to have good technology supporting you. Solutions which include a good CRM to manage client communications, group email software to build newsletters, a social media management software, etc. will be critical to your success;
- Be committed – So many communication plans get started and are stopped three months later. It will take time to get into the rhythm but commit yourself to it and book time into your calendar to manage it. If you are hoping to generate new client business from your communication strategy, then I would suggest you commit for a minimum of two years before you will see meaningful results. That may seem like a long time, but it will be worth it.
Better communication can lead to better client behavior and is critical to developing a long lasting and trusting relationship, which is what we are all looking for. Having a plan, with a little bit of upfront work, can add significant value to your client’s experience and, as a bonus, the value of your business. As always, if you are looking for more information on where to start feel free to reach out to me.
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager/Investment Advisor for Industrial Alliance Securities Inc. Opinions expressed in this article are those of the Portfolio Manager/Investment Advisor only and do not necessarily reflect those of Industrial Alliance Securities Inc. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
Manager/Investment Advisor only and do not necessarily reflect those of Industrial Alliance Securities Inc. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.