The 2018 Macquarie Accounting and Financial Services Benchmarking Report found 58% of financial advice firms believe adding value for existing clients is a key driver of profit and client retention. And yet, firms only rate themselves 7.9 out of 10 at being able to maintain or improve their client experience.

So if keeping clients is vital to profitability, what are the warning signs your clients may have wandering eyes?

1. No new inflows

Why it matters

The majority of client attrition in financial services businesses occurs when a client is still with the firm. According to Bain & Company, hidden defection (where customers purchase an additional product from a competitor), accounts for 46% of all additional product sales in the industry.

How to overcome it

Consider additional marketing and sales pitches targeting existing clients. Bain & Company research in the US found 42% of defectors bought from a competitor because they received an offer or saw an advertisement. Over 50% would have purchased from their current provider if they had received an offer.

Set up alerts to indicate when inflows cease and funds under administration decline. Contact the client to check if there has been a change in financial circumstances. Ask for new investment inflows. Advisers have detailed data on a client’s risk profile and life stage, so present the offer at the right time and place – before your competitors do.

2. Heightened risk period for defection

Why it matters

Most clients are more susceptible to defection when they have been with an advice firm between four and nine years. Clients have seen the benefits the adviser provides, but the frequency of face-to-face engagement naturally drops off. They are then at risk of succumbing to Fear of Missing Out (FOMO) and believe other advisers or digital platforms may have a better offer.

How to overcome it

Use predictive analysis. Identify clients moving into this time-linked phase with the firm. Implement a clearly documented program of regular, active engagement between the client and their adviser or other staff throughout this period.

Prove your value to the client by regularly highlighting your value-add.

3. Involvement of other financial providers

Why it matters

If your client is using an accounting practice outside your firm and it offers planning services, at some point that business will chase your client. The same will happen with their bank, and increasingly, digital platforms like Apple and Amazon who are seeking to enter the financial service sphere.

How to overcome it

Build a relationship network. Wealth-only firms need to build a network of trusted professional partners they can refer clients to without fearing they will seek to poach them.

Become the client’s central financial contact. Position yourself not as just an investment expert, but as their trusted adviser and first point of reference for financial concerns or questions.

4. Low share of wallet

Why it matters

Clients with a low share of their total investments and finances under advice with you regularly receive marketing and offers from other financial providers. This makes it easier for them to leave, or silently defect by making new investments without your knowledge or assistance.

How to overcome it

Be proactive. Start talking to clients well before a financial trigger event. For example, if a mortgage is switching off from a fixed rate, discuss their options and possible strategies well ahead of time. Contact them before a term deposit matures, don’t wait for them to come to you.

Ask about other investments or banking arrangements. Take an active interest and discuss other strategies or options and how they work with existing investments. Add it as an agenda item to every review meeting, and make sure you have the tools and knowledge to proactively promote the breadth of your firm’s offer.

5. Not acting on advice

Why it matters

If clients are receiving advice but are not acting on it, the relationship could be in trouble. Investors want information and education, but if they don’t action your advice, it could indicate you are not communicating effectively or they have lost faith in your professional skills.

How to overcome it

Try using different ways to communicate concepts and ideas with your clients. While good communication alone cannot sustain a relationship, poor communication will nearly always break it.

Ensure your client understands your recommendations and is not afraid to admit it if they don’t. Check their expectations about when and how you communicate, as a key reason for leaving an adviser is usually client expectations were not met or were not communicated clearly.

6. Poor client experience

Why it matters

Although customer experience is not the top reason a client selects a financial services adviser or provider, it is critical for retention. Attrition analysis by Novantas found 43% of customers left their financial services provider due to bad service, or serious issues with their financial accounts.

How to overcome it

Ensure client service is always first rate. Make it a top priority for everyone within the practice. Customer experience is critical for retention reduced client churn, so ensure every client interaction is high quality and meets their expectations.

According to Foresee research, great customer experience not only makes consumers more likely to continue their relationship with a financial services business, but also increasingly likely to invest additional funds and recommend you more to others.

7. Communication breakdown

Why it matters

A breakdown in communication or change in the usual dynamic is often a sign the client is thinking about going elsewhere. Avoiding meetings, not accepting phone calls and not returning messages usually indicate the relationship is in trouble. Putting distance between you is a way to avoid having tough conversations.

How to overcome it

Don’t become defensive. Approach the client with a mindset of curiosity about the current relationship. Use open-ended conversations to discuss the client’s general situation. Talk face-to-face if possible, but don’t be accusing. Instead, discuss their behaviour and your experience of it.

Every time you contact your client using any channel, ask yourself, “What is the one thing I can do today ensure our relationship remains strong?”

Find more insights by downloading our Accounting and Financial Services Benchmarking Report.

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