A Morningstar report based on feedback from 3,003 investors highlights that investment performance is not the primary reason clients fire their financial advisors. According to the report, most advisors are fired for reasons such as the quality of financial advice and services, followed by the quality of the relationship and the quality of their communications.
Twenty-one percent of investors cited the quality of the relationship as the top reason for cutting ties with their advisors, while 9 percent of the survey respondents cited the quality of communication as an issue.
According to InvestmentNews, some of the responses from disgruntled clients included complaints about their advisors using cookie-cutter solutions and not understanding their specific needs.
To avoid being fired by their clients, financial advisors should focus on the personal side of finance, communicate values, and set expectations early on. Here are some specific steps advisors can take:
- Build a relationship: Clients want to work with a person, not just a financial advisor. Build a strong relationship with your clients by getting to know them personally and showing empathy toward their financial concerns.
- Communicate regularly and effectively: Communication is vital to maintaining a strong client relationship. Make sure you communicate regularly and effectively with them and listen actively to their concerns and needs.
- Set clear expectations: Set clear expectations with your clients from the beginning of the relationship. This includes expectations around investment performance, communication and service.
- Provide customized advice: Clients want financial advice tailored to their needs and goals. Avoid cookie-cutter solutions and provide customized guidance to your clients.
- Act as a coach and teacher: Help your clients focus on their long-term goals by acting as a coach and teacher. This means educating them about financial planning and helping them make informed decisions.
- Communicate value: Communicate the value of your services by walking clients through the investment process, reaching out proactively, and keeping them informed. This will help clients understand the value you provide beyond investment returns.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
