Brokerville Blog

I see financial advisors who lose accounts and these losses are avoidable in most cases.
Even if you lose 5 accounts a year which could be avoided, that’s an additional 50 accounts you would have at the end of 10 years plus their referrals and their kids accounts, etc. In other words, knowing how to stop exiting clients can be very profitable. Client retention is easy with the proper steps in place–it can even be automated.

Client Retention Starts When You Meet The Prospect

Let’s face it. The main reason clients leave is because their expectations are not met. They think you do not call enough, or they don’t trust you, or they do not understand when you answer a technical question, etc. Studies show that rarely do clients leave because of poor investment return. Therefore, the major reasons they leave are due to something amiss in the communication or your follow through.

If you are not sure what each client wants, ASK THEM. In fact, every time you open an account, you must ask a client, “What are your expectations of me? What would you consider a very good result of our relationship? There’s no need to guess at what your clients want–just ask.
You may want to ask subsidiary questions:How often would you like me to call? To meet?Do you like phone, fax, email or mail contact best?When you call me, how quickly do you think I should be able to return your call? What do expect from your portfolio? Answers to the above question will also help you decide if you should take this client. If their expectations are unreasonable, say goodbye to them now. Client retention is somewhat a matter of selecting reasonable clients in the beginning.

Last, do not assume that because the client gets a portfolio statement every month, they know what’s going on with their account. Call after the first statement for a statement review meeting. Many clients cannot understand the statements and they get confused (and may be embarrassed to say anything because they feel they may be stupid). So 6 months later, the client tells his friend, “I closed my account because the financial advisor never let me know how I was doing.” This is especially important–statement reviews, during a bear market when the news will unsettle your clients.

Client Retention is Solidified by Your Actions

1. Do not use jargon. When you answer a question, use plain English. Ask yourself if a third –grader would understand your answer. Jargon = misunderstanding = lack of trust = lost accounts.

2. Respond fast. (a) If you cannot return the call within an hour, have your assistant return the call and tell the prospect that you are tied up until (time) and that you will call back by (time). Then do not be late with this scheduled call.(b) Block out times during the day when you’ll return calls. When a call comes in, your assistant can set a phone appointment at a specific time. (My assistant also sets an alarm for me on my computer.) That way, you can manage the prospect’s expectation. It’s okay if you don’t call back in an hour, as long as your client doesn’t expect you to do so and knows you will serve them at a specific time later that day. Client retention is partially illustrating to your clients how important they are to you.

3. Never depend on your firm to follow through. It’s your responsibility to make sure client requests get handled. Remember, the people that work in the processing area of your firm are not highly paid. When a processor takes a week vacation, their work probably just sits on their desk getting old. When they return, they lose a week just getting re-organized. Your client has now been waiting 2 weeks with no response. Do you think they may be irritated?

Therefore, you must have contact management software with an alarm function. Set yourself an alarm to follow up in 3 days with a specific person in your firm. Similarly, if you are waiting for an outside transfer firm to handle an issue or another company to transfer funds, it’s your responsibility to follow up (of course, an assistant can do the follow-up, but it’s your job to have a well-trained reliable assistant who understands that their income is paid by your clients).

Place Complaints At The Top Of Your Priority List

Not only will a tardy response to a complaint result in a lost client, you may be tempting a legal confrontation. You must handle complaints immediately. Drop everything. In my observation, most arbitrations are the result of the complaints not be handled quickly and properly in the beginning by the producer.

When you call the client in response to their complaint, before they have a chance to say anything, you say “Mr. Smith, I understand you are not happy about (item). I want to assure you, I will do everything possible and as quickly as possible to fix this. Tell me what I can do.”
It amazes me that some brokers will argue with the client, tell the client they are wrong or worse, ignore the complaint thinking it will go away. The client may go away only to be replaced by their lawyer.

If you already have good client retention practices, learn how to automate client retention here.

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