Now that we’re back from the end-of-the-year celebrations, I’d like to draw your attention to a little-known date that should be part of every financial advisor’s calendar. January 2 is the day that most advisors should circle and celebrate – and for good reason.
The vast preponderance of advisors these days are heavily weighted toward fee-based business, and an increasingly large number have migrated to becoming fee-only advisors. Ask any advisor who has been in the industry for a while about their commission-based years, and they will tell you that January 2 was easily the worst day of the year. That’s because advisors wouldn’t have ongoing income coming in to help start the year; they would be sitting at their desks, trying to figure out what product they could sell – and to who – in order to have money coming in.
When the industry shifted business models to charging fees for assets under management, all of that changed. Advisors who conduct fee-based business can now start the year from a position of strength. They know what assets are on the books, what income is reasonably expected from them, and how their revenue streams will work. The unexpected can still happen (e.g., market movements or legislative changes), but for the most part, fee-based advisors can forecast and plan in ways that commission-based advisors could only dream about.
Your current clients are the key to this sustainable revenue stream. So, it’s important to take a closer look at your best clients and start paying careful attention to client retention. Not all advisors have a plan or services focused specifically on client retention – instead, these activities may get lumped into a vague “offer excellent client service” category.
According to the 2024 EY Global Wealth Management Industry Report, 44 percent of clients plan to switch, add a new provider, or move assets in the next three years. While the report doesn’t break out the US specifically, there may be many dissatisfied clients who are preparing to make a move.
So, to ensure that your best clients remain your best clients for years to come, start implementing the following ideas in 2025.
While adding new clients to a practice is a goal worth pursuing, retaining your existing clients is vital to the continued health of your practice. Take a thoughtful and deliberate approach to client retention, and make January 2 a day worth celebrating every year.
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