Did you know one of the most accessible paths to growing a practice, asset and client roster is within an advisor’s existing business? Consider this: It costs five to seven times more to acquire a new client than to serve an existing one. Firms that increase customer retention by 5% can see profits rise by 25%!

What these above statistics don’t explain is how to retain clients. Financial advisors spend a lot of time, energy and money building their book of business, but they may not expend as much effort to maintain that business. And that can be a costly mistake. 

The Challenge

Client retention can be one of the best investments of time and money an advisor can make into their business, but not at the detriment of recruiting new business. On the contrary, firms should not recruit new clients at the expense of nurturing existing client relationships — especially after a volatile year in investments. 

Both strategies should be employed to ensure success and can be executed with a thoughtful plan. The biggest challenge is finding time, resources and skills to focus on client retention and recruiting.

The Opportunity

Happy clients refer new business! With the increase in generational wealth transfer, the financial services industry is estimating more than $80 trillion will change hands in the next two decades. There is a multiplier effect built into every referral. For instance, retirees may have children and grandchildren who could become potential clients. 

When advisors engage with existing clients, they are simultaneously recruiting new ones. 

Segmenting and outsourcing marketing strategies can be cost-effective in building relationships and brand recognition. 

Communication – What Are You Doing About It?

Advisors needing a solid communication plan risk losing clients to a more attentive firm. Getting advice elsewhere is easier than ever, and unhappy clients are not afraid to make changes. Do-it-yourself investment programs, like Acorns, SoFi and Plynk, are becoming increasingly relevant. With industry estimates showing the average client pays about $4,000 a year in advisor fees, something as innocuous as charging fewer or less expensive fees could be enough for a client to consider making a change, especially if that client doesn’t perceive value in your firm’s services

Advisors need to move beyond the standard quarterly or annual portfolio review and check in with clients more regularly. For firms pressed for time, third-party organizations have solutions and support for managing communications and engagement efforts.  

These outsourced marketing opportunities run the gamut from simple automated email campaigns to full-service solutions. This includes programs that offer concierge-like services to develop and execute marketing and engagement strategies. 

Patience is a Virtue 

Human nature gravitates toward the instant gratification that client prospecting can yield. Retention is an ongoing process that takes time and isn’t always linear. Advisors should possess a long-term business goal with client retention as a priority. 

With the great wealth transfer in its initial stages, there is a lot of FOMO (fear of missing out) going on. Pursuing heaps of new clients is very tempting to financial advisors, but doing so at the expense of current and loyal clients can be risky and expensive. 

If current client engagement efforts aren’t resonating, the decreased revenue associated with the loss of dissatisfied clients can add up over time, unless you do something about it now. 

You can get a jump start on nurturing your leads and engaging your current clients with our FINRA-reviewed drip campaigns, email newsletters, social media marketing and more. To learn more about our marketing solutions, contact an Executive Marketing Consultant by phone (844) 949-9497 or visit our website. 

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