Adviser client acquisition outpaces losses: Survey

Most advisers saw clients leave their practice last year, often due to issues out of the adviser’s control, according to a new survey. About 55% lost up to three clients and 15% lost between four and six clients in 2012, a Russell Investments survey of about 250 advisers found. Only 18% did not lose any clients.
In identifying the primary reasons for losing clients, many advisers pointed to death, according to Kevin Bishopp, director of practice management for Russell’s U.S. adviser-sold business.
Even with the losses, though, most advisers expanded their client base in 2012. About 86% of advisers said they brought in more new clients last year than they lost, the survey found.
About 23% of the respondents attracted 20 or more new clients last year, 21% attracted seven to 10 new clients and 18% said they brought on between four and six new clients last year, according to the results.
“Many advisers are finding it easier to acquire new clients than it was just six months ago, as investors’ willingness to participate in the market is bolstered by strong recent performance,” Mr. Bishopp said.
Advisers reported client referrals was the top way they received new clients, a finding consistent with most adviser surveys. About 35% also cited professional networking, while a slim 4% of the respondents said clients came to them through social media, this study said.
“The root of success in generating referrals or proactively asking for them is in engagement with current clients,” Mr. Bishopp said. “Investors put trusted relationships at risk when making referrals, so it’s essential that a client understands their adviser’s offering and expertise, and believe that their family and friends can benefit from the excellent service that they receive themselves.”
For this year, about 30% of advisers said they hope to bring on seven to 10 new clients, while 21% seek to add more than 20 new clients in 2013, according to the survey.
The survey also asked advisers about what topics clients are most likely to bring up with them. About 59% of advisers said clients asked about concerns with government policies, and a similar number initiated a conversation about the markets going up or down. More than one-third of the respondents said clients asked about global events and 31% said clients brought up the possibility that they would run out of money in retirement.