ThinkAdvisor, December 16, 2015 - How Advisors Can Ensure Client Loyalty


Affluent investors tend to be very loyal to certain service providers, such as medical professionals. What about to their financial providers?

To find out, Spectrem Group conductedresearch in late 2015 with individuals primarily responsible for day-to-day financial decision making within the household. These included 1,108 mass affluent respondents ($100,000 to $999,999), 1,007 millionaires (between $1 million and $5 million) and 602 ultra-high-net-worth respondents ($5 million to $25 million).

According to the study, all affluent investors considered themselves very loyal. On a 100-point loyalty scale, respondents gave themselves a rating of 83.26.

The research showed that the degree of loyalty for different service providers depended on the time spent developing the relationship.

Following are respondents’ loyalty ratings for different types of service providers:

  • Doctors/dentists: 82.92
  • Financial institutions: 73.53
  • Financial advisor: 70.99
  • Credit cards: 67.65
  • Grocery stores: 67.62
  • Airlines 55.30

Loyalty typically increases with increasing age and wealth, the study found. This is especially true with loyalty to financial advisors.

Spectrem said this was likely because the two parties spend more time together as advisors provide the increased number of services their wealthier investors require.

The research showed that senior corporate executives were most loyal to their financial advisors and financial institutions, followed by managers. Counterintuitively, business owners, who most rely on loyalty for their personal businesses, had the lowest levels of loyalty to their own service providers.

Four in 10 affluent investors in the study considered themselves more loyal to a person within the company than to the company or provider itself, while about a third felt the opposite.

Affluent investors rated service as the No.1 way to build client loyalty, followed by a track record with no problems.

The study found that affluent investor loyalty varied according to type of institution, provider and the person within an institution or provider.

Even though a somewhat higher percentage of respondents said they were more loyal to a person than to a company, more than half said they would stay with the firm if their financial advisor should leave for another one.

In particular, firms benefited if a new advisor immediately initiated a new relationship with the client.

In a critical finding, the research showed that regardless of their claims of loyalty, affluent investors did not necessarily refer their service providers to their friends and family. The largest percentage of respondents said they “sometimes” did this.

Spectrem said increasing the percentage of clients who would refer “very often” versus “sometimes” could potentially increase an advisor or provider’s business by a substantial amount.

Eight in 10 affluent investors said loyalty programs created at least some loyalty to an organization or provider. Respondents in the study most commonly participated in credit card and airline programs. However, cash was the most enticing incentive for affluent investors.

Younger investors were more influenced by loyalty programs than older ones, especially with regard to remaining at a firm after an advisor left.


To read the original article, click here