Wakeup Call: Why HNW Clients are Unhappy

Two recent research studies upended the conventional wisdom about why advisors lose clients – one an internal study by a large investment firm, the second a research report from the consulting firm Accenture.

The internal study probed the immediate reasons that its advisors lost clients. Historically, conventional wisdom was that there were two key triggers for clients to leave: unhappiness with performance, which was often related to unrealistic expectations, and changes in circumstances – clients passed away, moved due to work transfers or changed residences when they retired.

In other words, most advisors felt there was nothing they could do about losing these clients.

This research study identified performance and changes in circumstances as reasons for defection, but pointed to three other reasons that clients leave:

  • Value: Clients felt that they are not getting good value for the fees they paid and looked for lower cost alternatives.
  • Attention: Clients believed that they were not getting enough attention on issues like preparation of a financial plan or resolving service issues.
  • Relationship: Clients were unhappy with the relationship with their advisor.

Providing value

The Accenture study, Wealth in the Digital Age, amplified those findings. A broad range of investors in the United States and Canada were asked about the value provided by their advisor, and the majority of the wealthiest respondents reported that they are questioning the value from their advisors:

When asked about attitudes towards their advisor, almost three in 10 said that they don’t feel important enough to their advisor or that they are getting enough attention and feel that their advisor is too expensive.

These findings should be a wake-up call for advisors, especially those targeting million-dollar-plus clients. In the period ahead, I’ll be exploring how advisors can address some of these satisfaction gaps. Not all of the reasons for dissatisfaction are under advisors’ control and many are complex and challenging to address – if the reasons that clients become unhappy were easy to fix, they would have been resolved and every client would be 100% satisfied.

Here’s the good news: There is one cause of client unhappiness that is entirely under your control. All it takes is a 10-step checklist whenever a client reports a service issue.