Practice Management

Your clients' loyalty must be earned

Advisers who show genuine concern and good faith are building trust that will last a lifetime

May 5, 2013 @ 12:01 am

Have you ever noticed that some financial advisers experience moderate client turn-over, while others ap-pear to have clients for life?

Even when a firm goes through major changes, some advisers are blessed with extremely loyal clients. What do these advisers do to deserve that reward?

Let's look at several long-term factors that can have a profound effect on client loyalty, especially during times of transition.

First and foremost, clients want advisers they can trust.

Trust isn't built overnight. It forms over time, strengthening with each positive interaction.


Short-term, transactional business tends to yield little loyalty. But advisers who embrace the consultative financial planning process, meeting with clients at least annually, build loyalty by showing consistently that they have clients' best interests at heart.

And don't forget: Staff members' relationships with clients can be as important and influential as those with advisers themselves.

The business model that an adviser uses also helps build client loyalty. An adviser who is predominantly an investment manager may not enjoy the same level of client stickiness as a wealth manager does.

After all, a wealth manager is concerned with every aspect of a client's financial well-being.

Data show that the more that a client works with an adviser in various areas of financial management, the greater the loyalty.


When an adviser decides to make a significant change in the business, such as moving from one broker-dealer to another, client stickiness becomes even more important. Transitions made for business reasons can be difficult for clients to understand.

But when the relationship between adviser and clients is healthy, it is clear that the adviser's business success is in the clients' best interests. Once clients understand the rationale for a change, they typically support the adviser's decision.

If you are about to enter a period of change, here are some tips to keep in mind:

Accentuate the positive. In times of transition, advisers may, without thinking, begin to share mild business frustrations with clients. Remember that any comments made about the change should reflect possible benefits for the client. For instance, a new broker-dealer may offer a user-friendly website that gives clients easy access to their financial data. Ease of doing business or access to certain products or services are other potential bonuses.

Communicate effectively. When the time comes to tell clients about a transition, written communications are critically important. Keep the message genuine, straightforward and relatively short, focusing on what is in it for clients. It may be worthwhile to have important letters or e-mails professionally edited by someone with knowledge of the industry. Time permitting, consider sharing the communication with four or five trusted clients before sending it to the entire book. A beta test can provide insight into how clients will receive the news and may help prevent miscommunication.

Be available. Once a transition occurs, advisers should make an all-out effort to ensure that clients have 24/7 access to them and their staff via phone, e-mail and face-to-face meetings.

At this point, the cooperation and enthusiasm of a well-trained support staff is essential. Ensuring that all transition-related paperwork is done correctly the first time also will go a long way toward sustaining clients' confidence during the transition process.

Consider whether you want every client to stick around. One task that is typically difficult for advisers becomes substantially easier during a major transition. A change from one broker-dealer to another, for instance, may be an optimal time to sever relationships with clients who are no longer a great fit for the firm with fewer hurt feelings.

Although there are plenty of things advisers can do to increase client loyalty, don't expect any of them to bear fruit immediately. Advisers are in the relationship business, and sticky relationships are built gradually, one interaction at a time.

Joni Youngwirth (jyoungwirth is managing principal of practice management at Commonwealth Financial -Network.


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