Ground-Breaking Survey: How Loyal Are Your Clients?

Canadians who work with financial advisors are better off financially than those who do not, and many clients feel that their advisors add more than just financial value, impacting many aspects of their lives. That’s the good news. The bad news? Only 36% of clients said they would stay loyal to their advisor’s business when the advisor retires; in fact, about 50% are prepared to walk when you retire.

Ozy Camacho, Publisher of Investment Executive (IE) and Finance et investissement (FI), certainly woke the audience at DAC 2015 up with some eye-opening insights from an ongoing survey conducted by IE/FI in conjunction with Credo Consulting for DAC. Other key findings from this ground-breaking survey include:

• While 20.8% feel that advisors add great value and say they would provide referrals, and 50.1% are generally satisfied with their advisors, almost one-quarter are in “the switch zone.” You need to become very aware of clients who are less than satisfied and are quiet about it, or risk losing them.
• As above, one shocking revelation was that about 50% of your clients are prepared to walk when you retire. The takeaway? Choose your successor carefully, and choose that person early. Give your clients time to build trust with that person while you are still involved in the business. Your transition planning is just as important as theirs.

• Clients say that only 25.7% of the value you provide them comes from product selection and investment decisions. If that’s the primary basis of your relationship, then beware: You can easily be replaced by robo-advisors.
• To add more value for your clients, make investments the end of a much fuller conversation that also includes retirement planning, estate planning, budgeting, insurance, elder care, referrals to other professionals, financial education and information, and more.
• Here’s a finding to be concerned about on the verge of CRM2 taking effect. In response to the statement, “My advisor does not charge for their services,” 21% agreed and 20% were not sure! That means that almost half of your clients could be shocked when they see your fees broken out on their statement when CRM2 kicks in. Get ahead of the curve on managing this issue or you’ll be forced to do some damage control in the coming year.

The survey also revealed some interesting gender differences:

• Women are generally less comfortable speaking to financial advisors than men are. It’s worth making the effort to make them feel at ease because they control or are involved in a big share of financial decision making.
• Women feel less protected against financial disaster than men do. With some clients there may be an opportunity to allay their fears by exploring insurance options and other investment and planning risk management strategies.
• Women are less comfortable evaluating the advice you’ve given them, so use plain English rather than jargon, and take the time to engage them and to make sure they understand the information and advice you are providing.

It’s clear from the results that your value proposition needs to be based on more than just product selection and investment advice. All the takeaways from the survey revealed how critical it is to understand the needs and priorities of each individual client; recognize their differences and tailor your interactions to their unique situation.

This is a great opportunity for informed advisors to make sure that clients know where and how you add value with a more holistic, strategic, informational approach.

The Distinguished Advisor Conference (DAC) will be held November 6-9, 2016 in San Diego. The theme is SOAR HIGHER: Plan for Your Greater Potential. This year, the Distinguished Advisor Conference is for and about the Top Guns. Learn what it takes to soar higher in your success as we tackle cutting edge technical tactics and demonstrate skilled maneuvers to employ when your clients’ affairs are under attack from a variety of risks. Explore your greater potential: be fully prepared to gain the upper hand in financial dogfights relating to tax, retirement, succession and estate planning. Registrants are urged to reserve their spots early and take advantage of early bird tuition reductions until December 15, 2015.

Investment Executive (IE) and Finance et investissement (FI) is the Media Sponsor for the Distinguished Advisor Conference. Sponsorships may now be reserved at the following link: https://www.knowledgebureau.com/index.php/dac2016/dac-sponsorship//

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