Changing or firing one’s financial advisor is not common.  In fact, only 14% of investors have changed or dropped having a financial advisor in the last 5 years, according to research conducted by Spectrem Group.  Younger investors are more likely to have made this type of change than older investors, primarily because they have not locked into a relationship and thus their loyalty is not as great.  Overall, research indicates that the longer the relationship has existed, the less likely it will be terminated.

So, what does cause an investor to terminate a relationship with their financial advisor?  While there are numerous reasons for terminating the relationship, the most common reason chosen by investors who have terminated an advisor is “not returning phone calls in a timely manner”. Forty-three percent of investors who terminated their advisor chose this answer.

 

There are multiple other reasons for terminating an advisor, but failure to respond to phone calls is the greatest for almost every age group.  Note that younger investors rate failure to return an email in a timely manner equally to failure to return a phone call.  And what is an acceptable time frame to return a telephone call or email?  While younger investors have greater demands for the return of a call or email, and each investor is different, most investors expect a response within 2-5 hours.

Note that “Not being proactive in contacting me” and “Not providing me with good ideas and advice” are the second and third most common reason for firing an advisor.  Because the markets are currently rather volatile, advisors may want to proactively reach out to investors at this time to discuss any concerns they might have. 

Note that only 23% of investors fired their advisor for investment performance.

Ultimately, good service, responsiveness and proactive communication will cause investors to remain loyal to their financial advisor through good times and bad.