Financial Service Client Retention Through Career Moves

Ryan Shanks February 21, 2022
Financial Service Client Retention Through Career Moves
man and woman shaking hands over table with two others looking on340877989
In the financial services industry, we spend a lot of time talking about assets and value. We discuss strategies to grow both of those over the short and long term. We look at a variety of investments and consider how to maximize them. However, as financial advisors, we should be careful not to prioritize or overvalue monetary assets over one of our strongest assets with significant value– our client base.

One of the reasons we spend so much time stressing client relationships and client communication is because our clients are more than the sum of their assets or accounts. From your strategies, expertise, and efforts in building their assets to the network they help establish, your clients are, quite literally, the lifeblood of your business. It should come as no surprise then that client retention, especially when making career moves is a huge concern for financial advisors.

Quick Links

What is Client Retention?

In simple terms, client retention is the ability to keep clients over a certain amount of time. However, a simple definition doesn’t necessarily capture the full meaning of the concept or the practice. Client retention, for financial advisors, comes down to how well you service your clients, deliver on your promises, and nurture the relationship ensuring that, even with career moves and changes, your clients follow you, even if you switch firms or breakaway to go out on your own.

older couple gets financial advice 261051798Why Client Retention is Important in Financial Services

Customer or client retention is important for any business. One of the primary metrics businesses track is Net Promoter Score (NPS) which is how many existing customers would recommend a business or service. Obviously, happy clients will not only promote you, but they’ll stick with you.

When much of your career relies on building a financial future for your clients, your future is, essentially, tied to theirs. While that growth is an important aspect, clients who are willing to stick with you, whose accounts continue to develop, whose financial futures improve through their relationship with you are the best marketing tools you have.

Further, as many advisors know, prospecting and client acquisition are not only time-consuming but can be quite costly as well. Retention, therefore, becomes an even stronger growth strategy as you can allocate more time to existing clients and cut your costs. Time spent with or on existing clients reinforces your relationship with them and extra funds can be allocated on the kinds of services that also help with retention.

Top 5 Factors that Impact Client Retention

While there are a few obvious factors, like numbers and return on investment, that factor into whether a client stays, there are other elements to consider when looking at your client retention strategies. 

Before we jump into some of those factors, let’s consider some recent research and important aspects to consider regarding retention. In a PriceMetrix retention study, 95% of clients stay with an advisor for up to 2 years. However, in years 2-4, that number drops to 74% and then seems to level off. Something crucial happens during those years and applying some of these retention strategies may enable you to stave off the post-honeymoon exodus experienced by many advisors.

1. Communication
As you likely already know, communicating with your clients is essential. This certainly means advising, but it also means listening. Clear, proactive communication is one of the best ways to keep your clients happy and reassure them that you are listening and keeping their strategies and accounts in your mind. Further, this means when a client reaches out to you, you’re responsive, not waiting days to return a call or an email.

2. Be transparent and honest
One of the biggest fears clients have about financial advisors, and one of the biggest reasons they leave is that decisions are being made without discussion. This means you should be clear about your plans; walk clients through your decisions, advice, and course corrections so they understand; own any mistakes, and be patient and responsive to their questions. When you’re short with them, it sends two potential messages– the first is that you don’t have time for them (see #1 above) and the second is that you either have something to hide or you don’t have a rationale for your decision or advice. Transparency and honesty are core characteristics people seek in an advisor…any advisor.

3. Consider quality over quantity
Clients are more than numbers and advising is more than a numbers game. Over the last few years, more and more advisors are beginning to recognize that building deep relationships with clients can create value for everyone. For some advisors that means choosing fewer but more affluent clients to focus on. However, research does suggest that fewer clients and deeper relationships work across the board. Further, success with one client in a household can result in acquiring additional clients in the same family or household.

4. Build deep relationships

As noted in some of the research shared above, building stronger relationships with clients has a significant impact on their desire to stay with you. Clients want an advisor who knows and cares about their overall goals and dreams and how their financial future can facilitate that. It means knowing if they’re hoping to pay for college, for weddings, for a home (first, vacation, or second), or saving for retirement and keeping their goals at the forefront of the strategy you develop for them. It means reviewing those goals and investing in them with your clients.

5. Manage expectations and deliver better
Finally, your clients are looking to you as an authority, as an advisor, and many don’t know what to expect. You can help establish and clarify expectations and aim to deliver better than that. Delivering on those expectations also has to do with communication, not just returns. Everything you can do to meet and exceed expectations builds the kind of trust that creates a long-lasting relationship.


younger couple gets advice from financial advisor3307808825 Tips for Client Retention During a Financial Advisor Career Move

Obviously, working to retain clients before your move and instituting strategies that will increase client happiness will keep you connected to your clients should you choose to move firms or break away. In fact, the groundwork you lay prior to that decision will have been vital. Still, once you have decided to initiate a career move, how you handle the process and how you communicate with your clients may determine, for some, whether they stay at the existing firm or move with you.

1. Communication is key

As always, communication remains a key component of your retention strategy during a move. It’s important to check with your new firm, RIA, or broker-dealer to see if they offer communication and administrative assistance through the transition. If they don’t, have a communication plan in place. Some firms will cut off access to your existing client base pretty quickly, making communication difficult, so knowing how and when to reach out to clients is essential.

2. Mitigate legal risks

There are policies instituted to protect everyone when an advisor leaves their firm, some are directly related to your communication plan. Protecting yourself against any potential legal trouble related to your clients is essential so as not to create problems for you with your new firm or arrangement. More specifically, the Broker Protocol may dictate your communication options based on what information you can take when you switch firms. Further, you’ll want to be sure you’re adhering to all legal guidelines to keep you, your business, your new firm, and your clients safe through the transition.

3. Get support where you can

Hopefully, your new firm or RIA offers transition assistance. One of the big concerns your clients may have is whether they’ll get the same service and attention they’ve grown accustomed to. Assistance from your new colleagues or your new firm can make a huge impact on the reassurance your clients feel about the transition, the level of service they’ll receive, your ability to deliver on expectations, and, in general, prevent any cognitive dissonance.

4. Continue to establish and deliver on expectations

One of the biggest potential missteps during a move is to miss deadlines or fail to deliver on expectations you’ve set with clients in the past. To be proactive, let clients know if there may be delays in communication or responsivity, especially if you’ve set a high bar. Set new expectations by being honest and transparent and then deliver on them. When it comes to communication, it may be a good idea to establish a communication schedule and stick to it.

5. Create an exit strategy and plan

Finally, how you leave and how you announce your departure are vital. This strategy can set the stage for retention success or failure. As mentioned above, you’ll want to be sure you’re following all regulations and you’ll want to coordinate with your new partners or firm. Many of your clients will want to know why you’re leaving, what your plans for the future are, and how your new vision aligns with their goals and best interest. It’s a good idea to practice how you’ll respond to difficult questions and proactively communicate the change.

Whether you’re in the process of planning a move now or just considering one for the future, establishing strong client retention strategies early in your relationships will make it easier to extend them through any career moves. As always, the key to building deep client relationships is communication and delivering on expectations. When those key components are consistent, and you create concrete plans to ensure stability through any transitions, your clients will feel that, see that, and be willing to buy into your vision.

If you’re starting to consider breaking away, looking at exploring your options, or ready to make your move, request a demo from the FA Match team. We’ve been there ourselves and we’ll be there for you, helping you find the best options to meet your career goals and objectives.