When the subject of client retention arises it usually creates a great deal of interest among advisors. In my view, there are two areas which are most important to sustain a business. The first is creating a steady stream of prospective clients. The second is to retain existing clients. It is this second area on which we will focus today.
Why Do Clients Leave Their Advisor?
This has been the subject of much discussion and multiple surveys. The most-cited reasons in surveys often include lack of contact, incompetence, poor investment performance, etc. Although I lack the empirical data to support my theory, I am wholly convinced that in the absence of an illegal or unethical act on the part of the advisor, the primary reason a client leaves is because the advisor failed to meet the client’s expectations.
From the client’s point of view, the truth is whatever the client believes it to be. This is where we derive the maxim, “The customer is always right.” While this is not always true, if the client expects something and the advisor fails to deliver, even the most patient client will depart. Therefore, it is not only important, it is vital, that the advisor and the client are in complete and full agreement about expectations. This is not to say that lack of contact is unimportant. However, a lack of contact is really nothing more than an unmet expectation. I believe it all boils down to properly establishing and consistently meeting the expectations of those we are so privileged to serve.