Wealth management is a relationship business. Many advisors will repeat this adage, recognizing that success hinges on understanding clients and connecting on a deep, personal level.
Still, many advisors struggle to retain clients or expand existing relationships. With an estimated $124 trillion set to transfer to charities and younger generations by 2048, this task grows increasingly important.
If you’re an advisor who wants to keep up, you need to sharpen your skillset. Building relationships is an incremental process, so small gestures and habits can add in large ways — boosting trust, referrals and organic growth.
Here are three steps to help address client retention.
Get Under the Hood of Clients’ Lives
You have to understand why clients tend to leave. Studies show that a third of unhappy clients in wealth management switch advisors due to the quality of services offered. Roughly a quarter, however, leave due to the quality of the relationship. Market performance and investment strategy may be important, but relationships make or break your ability to work together.
These ideas are linked: You can’t provide tailored advice unless you understand exactly where your client is coming from.
Alignment starts with one thing: communication. You need to learn about your clients’ inner worlds. It’s not enough to see their portfolio; you have to grasp their broader life circumstances, including financial and personal goals. Just as you wouldn’t invite a summer sports enthusiast on a ski trip, you shouldn’t provide financial advice that ignores a client’s needs. Avoid suggesting generic financial plans that target broad success while ignoring a client’s distinct goals.
Many factors can influence clients’ preferences, including their career, life goals and comfort with risk. The formula is much more complicated than income in and expenses out. Asking deep questions of clients can help build trust while developing the best plans for them. Successful retention is about creating positive, personalized experiences.
Build Connections Early, and Maintain Them
Many advisors make the mistake of connecting with clients too late. While you’re starting with a new client, or even while the client considers if you’re the right fit, you should take a personal interest. Be personable and authentic in your interactions, presenting your strengths with confidence. Starting off with truth and positivity will set a good tone for the relationship. Your first impression can be your most lasting, so make every early meeting count.
When you check in with existing clients, make a point of learning more about them every time. Don’t just talk about finances; prioritize life connections. Follow up on personal goals, family news or hobbies they have shared. Don’t be afraid to share details about yourself that can build a connection, either. Do you have any common interests that can start a conversation? Can you make them feel comfortable and understood, even before you dive into their finances? This effort will go a long way toward making them feel confident and heard. It will help them trust you when considering a new asset class or sharing an additional account for your oversight.
A strong connection will not only help you to manage client finances but also to understand potential ways to grow your work with them.
If you really have an eye on organic growth, you need to connect with more than just the individual client. You want to make an impression on their families, beneficiaries and anyone who is important to their financial decision-making. It’s best to connect with a client’s spouse or adult child now, well before your client is preparing to transition their wealth, or in the unfortunate case of a client passing away.
Often, this transition will coincide with conflict. It’s much easier to build relationships proactively while everything is calm.
Apply Interpersonal Skills to Accelerate Growth
As you build confidence with current clients, you may find new opportunities to branch out. Growing your connections today can help build new ones tomorrow. A strong interpersonal skillset will benefit your retention as well as your growth.
If clients appreciate personalized service, they may introduce you to members of their network who need help. Maximize these connections. Referrals start you with an advantage, but remember that each client relationship requires a tailored approach.
On the other hand, don’t limit yourself. Many advisory firms build their client base around a specific niche, but don’t get too comfortable in your lane. Challenge yourself to view each client as an individual, regardless of commonalities with others. This skillset will help you during complicated situations, such as a wealth transfer. Don’t assume that an heir will want the same financial approach as their parents, even if their lifestyle choices and level of income appear similar.
If you want to retain your clients and grow your base, you need to prioritize relationship-building and take an active interest in each person you encounter. Remember, any advisor can deliver a basic financial plan. Few, however, can create an individual, holistic plan through an effective partnership with a client. It’s the most important way to secure your role — not only in their finances, but in their lives.
Adrian Johnstone is CEO of Practifi, a leading customer relationship management platform for advisors.
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