The financial advisory industry has changed dramatically over the past two decades. Close examination of the RIA market reveals a vibrant industry with a compounded annual growth rate of 12% in AUM over the past five years. But with growth comes increased competition: everyone wants a piece of the pie. This can make the hunt for the very best clients challenging. To sustain healthy growth and find new business, advisors will need to work harder. To find and keep good clients you need to communicate, educate, and communicate again–by asking for referrals from existing clients.

The benefits of retaining satisfied and loyal clients are tough to quantify, but meeting client needs and communicating with clients are necessary elements. In this challenging environment, communication with clients is vital to keeping them satisfied. If clients feel that you are constantly communicating with them, their trust and confidence in you will increase. Taking the time to make this extra effort goes a long way in helping to build long-term client relationships.

No. 1: Keep Talking, Especially in Tough Times

The fear of recession has had a measurable impact recently on the minds and hearts of investors. “Clients are getting very nervous and more so than any other time in the last 20 years; they are fearful their future retirement is going down the drain,” according to Pat Raskob of Raskob Kambourian Financial in Tucson. How are advisors addressing the needs of clients who have serious concerns about an economic recession this year? The best advisors in the industry are proactive, keeping customers informed of the status of the economy and market on a regular basis. E-mail is the most popular way advisors communicate with clients–with 80% of advisors using this communication tool. Seventy-three percent of advisors use newsletters to impart information to clients and build closer relationships. In fact, the number of advisors in our survey sending newsletters to their clients increased to 73% from 62% last year.


During times of financial stress, clients either contact their advisors frequently, expressing varying degrees of anxiety or concern, or conversely they worry alone and wait for their advisors to reach out to them. The latter group should be top of mind for advisors, especially since their biggest challenge is how they manage their time. In other words, they’re not spending enough face time with clients. In fact, 50% of advisors say client communication is the area that most needs improvement.

No. 2: Be an Alternatives Teacher

When facing a more challenging market environment, advisors are increasingly using alternative investment products to enhance returns and mitigate risks. In the past six years, 80% of advisors have increased their use of alternatives (investments outside of stocks, bonds or cash), with 18% of advisors increasing their use more than 100% since 2001. But according to advisors in our AdvisorBenchmarking survey, clients are not familiar with alternative investments, with 67% of advisors claiming that less than 20% of their clients ask about alternative investments. About half of advisors (51%) say the main reason clients hesitate to invest in alternative investments is a lack of understanding. This presents an opportunity for advisors to educate their clients on these investment options and their potential benefits.

No. 3: Ask for Referrals

As advisors look to the future, 86% say the key driver for growth in the next five years will be referrals from existing clients, while 58% believe that organic growth from existing clients will lead to greater success.


At the same time, when evaluating threats to their businesses, advisors cited finding new clients (63%) as their most daunting task. No matter how you boil it down, the continued survival of your business depends on the acquisition of new clients. More than half (60%) of advisors surveyed realize this, and say finding new clients is their top priority next year. Twenty percent of advisors say improving service to existing clients, including education, is the highest priority next year.

Areas for Improvement

The message is clear: Advisors need to improve communication with clients–and educate them. Never underestimate the role that customer service plays in your advisory business. In today’s competitive environment you’ve got to please your clients consistently. You’ll earn their loyalty, become a better wealth manager, and may have more to manage.

- Establish expectations and goals with clients as soon as they become clients

- Constantly educate your clients

- Open and maintain a consistent line of communication with clients, being especially proactive during turbulent market times.

- Seek referrals from clients–and reward them when they deliver

- Harvest relationships with other professionals

Maya Ivanova is a market research manager with Rydex She can be reached at

About Rydex AdvisorBenchmarking, Inc., an affiliate of Rydex Investments

AdvisorBenchmarking is a free practice management program designed to help RIAs better manage and grow their firms. The analysis on Rydex is based on the number of completed surveys and reflects only information from those surveys. This information is intended to be general, and these overviews are no substitute for professional, legal or consulting advice. This information should not be construed as advice from Rydex Investments or any of its affiliates.