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Industry Spotlight > Broker Dealers

Holding Onto Clients: Start by Listening

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In my blogs over the past few weeks we’ve discussed how unmet expectations lead to client departures (see my Oct. 8 blog, Matching Client Expectations With What You Offer: the Portfolio). In this post, I’d like to highlight a few things advisors can do to help retain clients. 

Most advisors understand that when a client leaves, the client feels their actions are justified. However, the actual reason may or may not be rational. This is because human beings are not always rational. Also, people make decisions based on the information they possess at a given point and time. However, as people age, their views change, which changes their perspective and hopefully improves their decisions. Enter: unsatisfied client.

When a client leaves an advisor they do so based on the information they possess. In short, they believe they would be better served elsewhere. Consider this. To make an optimal decision about their current advisor, the client must understand the nuances of the financial markets and the economy, the strategy of their advisor (and decide if it’s a good strategy), and how they would fare with a different advisor. At best, it’s an educated guess. At worst, the client may end up buying into the sales tactics or salesmanship of a less-qualified advisor (i.e.; sizzle over substance).

 One problem is that there are a number of quality strategies pertaining to money management. While some may disagree, the truth is that no single manager o one has a lock on the “one and only best method” of managing money.  However, if you listen to some, you might be convinced otherwise.

As foolish as this may seem, put yourself in the place of the client. You receive a call from an advisor who exudes confidence. Perhaps they’re working with one of your friends. All you really want is a competent and ethical person looking out for your best interests. However, because you haven’t studied the financial markets or the economy and don’t know the difference between an ETF and an ETN, how could you possibly make a quality decision to hire the best advisor? Moreover, this is a very important decision! Therefore: Limited information often leads to poor decisions which leads to undesirable results! What’s a client to do?

There are several things a client can do to increase their odds of picking a highly qualified advisor. However, as promised, I’ll focus on a few things advisors can do to help retain clients. It begins and ends with trust. Before a client will hire you, they must have a certain degree of trust. Theoretically, as the relationship continues, trust will rise. Until then, a client may trust you enough to hire you, but not enough to resist a good story from a competitor. Therefore, it’s critical that you communicate with your clients and educate them to the degree they desire to be educated.

In my view, clients need to know what they should expect from you and their portfolio. Moreover, you need to understand what the client expects. Ask several open-ended questions and listen. There’s no magic formula. Therefore, listen closely and your clients will tell you everything you need to foster great long-term relationships.

People want to be heard! They also want someone who will listen, understand and advise accordingly. That’s why we’re called “advisors.” Even though this moniker doesn’t adequately describe everyone who uses it, advice is precisely what people are seeking.