25% of clients plan to switch advisers. How can you keep them?

In my role as Head of Strategic Partnerships & Platforms at Investec Wealth & Investment (UK), I speak with financial advisers and wealth managers constantly. Something I’ve heard from many is that clients tend to become easier to manage over the long term. A significant amount of time is spent upfront getting to know them and arranging their finances, and this effort is rewarded later down the line.

High turnover of clients is, therefore, concerning. Even with a steady pipeline of new clients, firms have to prioritise retention to operate efficiently. Advisers should take note of a recent Investec Wealth & Investment (UK) study, which reveals the remarkable number of clients considering an imminent move.
 

One in three clients is considering switching advisers

Many advisers have told us that clients seem quicker to hop between firms in recent years. To back this observation with statistics, we surveyed over 500 UK adults who currently hold stock market-related investments to find out if, and when, they’re planning to switch advisers.

Almost one-third of respondents (31%) told us that they’re currently considering switching advisers. 82% of those (i.e. 25% of all respondents) say they’re thinking about making this move within the next 12 months, and 92% in the next two years.

That’s a figure that should prompt all advisers to reflect on the strength of their client relationships. Building strong and trusted relationships is a pivotal skill for any financial adviser, and this research shows that there’s no room for complacency when it comes to retaining those clients.
 

Clients want more than just good advice

It would be easy to jump to the conclusion that clients are switching advisers because they feel they’re getting bad advice. If that were true, advisers who give reliably good advice could feel confident about retention.

Interestingly, our data doesn’t support that assumption. We asked the same panel of clients to rate the advice they receive from their current adviser, and most are satisfied.

In case the key point here is unclear: only 14% of clients consider the advice they currently receive to be average or below. That’s less than half of the number who told us they’re considering switching.
 

Client movement has a hidden upside

Undoubtedly, this data calls for a greater focus on retention and relationships in the competitive financial planning sector. However, it also presents an opportunity that we shouldn’t ignore.

If nearly a third of financial advice clients are presently shopping around or will be imminently, firms should consider how to win these prospective clients – and, if successful, how to manage the workload associated with onboarding them.
 

Clients want insight, information, and attention

People are becoming better educated about the financial markets and want more information on how their investments are faring. That is especially true against the backdrop of volatile financial markets seen in recent times.

That’s not just my opinion. We surveyed a panel of financial advisers and found that 91% agree that clients have become more demanding over the last three years, and desire greater insight into how their investments and assets are performing. They may feel compelled to explore other options if they believe another adviser is better able to help them navigate complex financial situations.

So, whether your goal is to retain clients or to win clients who currently feel underserviced by their adviser, success is dependent on spending more time building trust in the relationship, providing personal attention, and addressing individual concerns.
 

Time must be spent wisely catering to these priorities

Of course, your time is not infinite, and simply spending longer servicing each client is not possible. So, the alternative is to focus on reallocating your time to the tasks that are most important, and most visible, to clients.

Research has demonstrated that working in conjunction with a DFM can not only help firms to grow their assets under management but also enable IFAs to allocate more time to client relationships, thereby supporting retention.

At Investec Wealth & Investment, we’ve been working with advisers for over 25 years. Everything we do is designed to free up your time, remove the burden of day-to-day administration and decision-making, and build a competitive advantage.

Further information

Get in touch if you’d like to explore a partnership, or learn more about our products and services for advisers.

Read the next article in this series

The information in this document is believed to be correct but cannot be guaranteed. Opinions, interpretations and conclusions represent our judgment as of this date and are subject to change. Past performance is not necessarily a guide to future performance. The value of assets such as property and shares, and the income derived from them, may fall as well as rise. When investing your capital is at risk. Copyright Investec Wealth & Investment Limited. Reproduction is prohibited without permission.