Even the best advisors lose clients, and for a variety of reasons. This week we asked readers to share their experience(s) with losing clients, and keeping the ones almost lost.
First off, it may be a function of the times — or maybe those who had recently lost clients were simply more inclined to respond to a poll on losing clients — but more than 44% of this week’s respondents had lost a client in the past six months. About 6% had lost one in 2015, and roughly 38% had lost one in the last 30 days. For just over 1 in 10, their last client loss was prior to 2014.
Reasons To Be Leaving
And yet, despite a plethora of possible reasons for that client loss, two-thirds cited “fees” as the primary reason, though in a variety of different circumstances. For example:
“Client takes good service as a given without investigating the quality and level of services provided.”
“They received a settlement from one of the lawsuits against an investment provider claiming excessive revenue sharing. That made them think they must have been getting ripped off for years, so they moved their assets to Vanguard and decided not to use an advisor.”
“Misunderstanding after moving client to a new/better platform with existing provider.”
“Wanted a simpler solution — someone to handle sending in contributions through their payroll system and bundle it with other benefit programs.”
“Client felt he was equipped to manage his own assets.”
“Client felt that we weren't able to ‘time the market’ like his new ‘advisor’.”
And then there was the reader who noted that, “After 22 years with me, the new management just wanted something different,” and chose to not offer employee education... they wanted self-serve online only. They gave me a service award, a large piece of Waterford crystal, and a going-away party... a great way to be ‘fired’!”
The rest cited a desire by their client to do business with another firm, notably the reader who noted that their previous client “wanted to work with the son’s advisor.”
Approximately half of this week’s respondents were surprised by the client’s decision, though the rest broke out between “not really” and “no.” Or, as one reader noted, “Not surprised and frankly, relieved.”
‘Saves’
Turning to potential client losses that were “saved,” half did so by helping those clients see the flaws in the proposal of their competition, just under a third (31%) repitched/reminded the client of their service/history, and the remaining 19% renegotiated fees/services. One reader noted that they “also came up with some creative solutions to other problems and issues they were having,” while another explained that the loss was tied to a new HR person, so they “built relationship and trust” — a.k.a., took them to lunch.
One reader explained, “We don't attempt to ‘save’ a client. If we haven’t proven our worth and they feel that there is someplace or somebody else that they want to do business with, then we step aside.”
On the other side of the ledger, the vast majority (84%) said they had helped a client leave, though 11% hadn’t done so (yet). And the rest? Well, they said they had done so with some regularity. However, one reader noted, “We don’t like to burn bridges, and sometimes clients do come back. So we do all we can to make leaving as easy as possible for them — maybe they'll look back and remember how helpful we were.”
Getting Buy
On the subject of getting, rather than saving, clients, a third had picked up that last client due to poor service, another 27% had done so due to poor service by their provider, and 17% did so due to service/capabilities. The rest either wanted to do business with their firm, or with a fiduciary (which their firm was).
By the way, about half (47%) of this week’s respondents say they regularly review their client roster for vulnerabilities, while 17% don’t — and the remaining 35% said they do, but not regularly.
Other reader comments on the topic:
“Still find a focus on fees (especially fund charges) and performance at face without looking into the reasons for differences. Also see a focus on technology based ‘solutions’ that may seem great to the plan sponsor but aren't valued by participants. Finally, good service is taken as a ‘given’ and not appreciated until they have left. Many times the decision makers are insulated from the impact of their poor decisions. They do not feel the effects of the lower quality of service. Try finding someone at service provider to help solve a problem.”
“There have been some clients that I regret not firing. The time spent on these difficult clients and their unwillingness to pay timely overshadows the income derived from their business. They typically cause more headaches than they are worth and the extra time spent prevents us from utilizing our time in a more beneficial manner and where it is appreciated.”
“Any time a new decision maker comes aboard at a client, it’s imperative to re-sell my services. New decision makers like to make new decisions, and replacing existing service providers makes them feel in control. If I’m not proactive in that situation, it's likely that the plan will move.”
“Relationship is key. Client wants a stable Advisor and team they can trust. Must be competitive on fees, services and thought leadership, but the trust factor remains the #1 key area.”
“A lot of times we lose clients because of fees (or perceived fees, anyway). Advisors have to show their clients other investment options on a regular basis, and some have lower fees. Sometimes these are fully-bundled products so they no longer need us as TPA. Other times it's because our clients don't realize we can work with their new investment recordkeeper and so get a new TPA as part of the package. Recently, it’s because these fully-bundled providers will take care of all the notice mailings for them, supposedly for ‘free’.”
“The best way that I know of to try to keep clients is to engage with the entire HR dept. and plan committee; the deeper your relationship, the less likely you will be swept out with new management.”
“One should be able to articulate their value proposition to ALL of their clients. If the client chooses to explore other pastures, then either we didn't articulate that proposition or the client now believes in another proposition. Attempting to ‘save’ a client is pure folly.”
“I’ve learned in my 30+ years that we cannot please everyone and that turnover is inevitable. For that reason, in spite of our heavy workload, we continue to interview new prospective clients in a never-ending search for ‘ideal’ clients.”
Thanks to everyone who participated in our weekly reader poll!
Got a question you’d like to run by our readers? Want to find out what your fellow NAPA-Net readers are thinking? Post it in the comments below, or email me at [email protected].
