Over half of clients don’t want to fire their advisor

As the rock group Chicago once sang, “You're a hard habit to break,” a sentiment that apparently applies to financial advisors.

A recent study led by Dynasty Financial Partners, their annual Dynasty Connect Survey of high-net-worth investor sentiment, found investors are having a hard time breaking up with their financial advisor.

Like a real relationship with a partner or ex-spouse, the reality is, leaving a financial advisor is emotionally hard for many investors to do. Even legally, making that switch is straightforward and can often be facilitated by the new advisor.

Fifty-two percent of respondents have only ever had a relationship with one advisor, according to the report. Only 25 percent have voluntarily changed advisors once, with 17 percent deciding to move to another advisor twice.

The data reveals a “wake-up call” to the industry, said Tim Oden, Dynasty’s chief growth officer, citing both risks and opportunities for advisors seeking to maintain strong client relationships.

“The most striking finding," Oden said, is the "strong inertia" keeping clients with their current advisors, even when their needs are not being fully met.

"Fifty-two percent of clients are simply hanging on because they don't have a better option," he explains. “You have a great opportunity to make connections there that are going to resonate more and to be able to spur your organic growth efforts through a stronger reach out, stronger messaging, and maybe a broader product and service selection.”

Equally concerning is the finding that 48 percent of respondents who cited potential conflicts of interest as a reason to change advisors, he said.

“That erodes the trust that is the foundation of every strong client advisor relationship. That’s something that needs to be called out,” he said.

Advisors should ask themselves a critical question about their client relationships, he said.

"If the person I usually interact with for this account were unavailable, do I have a meaningful relationship with anyone else in the beneficiary chain?"

Many advisors overlook engaging with secondary or tertiary beneficiaries, like spouses or children, missing a chance to secure their role as the trusted advisor for future wealth transfers, he said.

Sean Williams, principal and senior wealth advisor at Cadence Wealth Partners, attests the firm gets new clients from high turnover among other firms.

“The reason they leave is that we provide a service they aren't currently getting from their existing advisors. It's never about returns, always about planning,” he said in an email.

“You'd be shocked at how many clients we get have advisors that have never asked for or looked at their tax returns,” he said.

As some would say, you don’t know what you have until it’s gone, sometimes, it’s better left that way.

“If advisors aren't delivering a full suite of services, they deserve to get terminated,” said Jason Gordo, co-founder and president at Modern Wealth Management.

“They deserve to get fired if they're not doing the new way of wealth management, which is financial planning. It has to be the core of the relationship.”

Gordo wagers that most terminations from Dynasty’s survey come from advisors who “are focused on investment management solutions or insurance solutions exclusively,” and using Excel sheets and documents, rather than delivering comprehensive wealth management services.

“They're not doing tax or estate planning and using investments to power those plans to success,” he said. “They're not having regular meaningful dialogue with the client about what is important in their life.”

By integrating family-focused questions into their planning, such as exploring a client’s desire to fund a grandchild's education, advisors can deepen multi-generational ties. This comes as 41 percent of survey respondents’ adult children do not work with their financial advisor, with 34 percent saying they likely won’t in the future.

When advisors have bad performance in the delivery of what they’re bringing to the client's life, in addition to having bad communication, “that's when you get terminated,” he said.

Advisors who are “fired” from their clients should treat it as getting fired from your first job, he said.

“Ask your employer, 'Why did I get fired? What could I do to improve? How could my performance be better for my next employer?,'" he said. ":That's how you should look at your clients. These are your employers. Work hard for them.”