11 Reasons Clients Stay With Their Advisors: Morningstar

New research from Morningstar looks at why clients keep their financial advisors, a topic that sometimes receives less attention than taking on a new client or losing one.

Morningstar noted that its previous research on why investors hire and fire their advisors suggests that returns may not be the key factor in clients thinking about the advisor-client relationship.

Sixty percent of respondents cited an emotionally grounded reason for hiring their financial advisors, such as the degree to which someone feels comfortable making financial decisions and has the ability to stay the course.

The three most common reasons that clients fire their advisors are the quality of financial advice/services provided, the quality of the relationship with the advisor and the cost of service.

To gain insight about advisor retention, Morningstar researchers asked 620 advisor clients in four surveys conducted in 2021 and 2022 to list some of the reasons they continue to work with their advisors.

Morningstar used existing research from both industry and academia to identify common motivations that investors have for working with an advisor. These fell into two broad categories: emotional, such as comfort, trust and guidance; and financial, such as cost, returns performance and specific financial needs. The remaining reasons fell into the “other” category.

The survey findings indicate that investors continue to work with their financial advisors more for emotional reasons, cited by 59% of respondents, than for financial ones, cited by 42%. The surveys also found that no demographic variable provided insight into whether a respondent would cite an emotional or a financial reason for staying with any advisor.

“These results support the importance of the interpersonal aspect of a financial advisor’s role,” Morningstar said.

See the accompanying gallery for 11 reasons that clients keep their financial advisor, according to Morningstar.