Advisor Warning: Increased Turnover Likely


Let’s be honest, advisors generally don’t worry too much about losing existing clients.  Advisor turnover rates, based on Spectrem’s historical data, generally run between 6-8 percent. That trend was broken shortly after the Great Recession with advisor turnover rates increasing to 10-12 percent for 2010 to 2012.  Investors didn’t immediately fire their advisors after the 2008 market crash. Most had never experienced such an unprecedented financial event, so they held tight for a year or so before deciding to fire their financial advisor. For most, as the market improved, so did their relationship with their advisor.

But things are about to change!  Based upon research just completed by Spectrem Group with investors with over $1 million of investable assets, twenty percent of wealthy investors are thinking about changing their financial advisor.



As you can see, as wealth increases, the likelihood to change increases.

So, why are investors so much more likely to change financial advisors today than they were after the Great Recession? Two reasons. Client service and investment performance.

Customer services ratings are rated as “Good” by fewer than half of investors (43 percent). Financial advisors should be aiming for “Good” ratings from 100 percent of their clients.

Additionally, investors are not happy with their financial advisor’s recent investment performance with 43 percent of investors rating their advisor’s performance as Fair/Poor.

Keep in mind that many younger investors have not experienced a bear market.  Even many of the Baby Boomers were very young the last time the U.S. experienced an inflationary recessionary market. 

So, what can financial advisors do to retain customers in this volatile time?

  1. Communicate constantly. Most investors are looking for proactive communication regarding their accounts and the markets.
  2. Update your website and other materials with information on how to deal with a bear market. Investors are demanding this guidance and more than 40 percent have indicated they will move their assets if their advisor does not provide this type of information.
  3. Start conducting frequent client satisfaction studies. Client satisfaction studies are common throughout multiple industries and are no longer considered intrusive. In fact, investors may be expecting an opportunity to provide their opinion regarding what they need. 

Advisors need to reassess their relationships with their investors. For more information regarding how to conduct a client satisfaction study, please click here. To purchase Spectrem’s research reportWealthy Investor Series - How Advisors Can Establish Deeper Client Relationships please click here.