New Schwab Study Shows Why Clients Have Been Moving

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July 3rd, 2012 by Stephen Wershing

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Clients weren’t getting what they wanted, and they want to address more than the portfolio.

Charles Schwab recently released its 2012 survey Independent Advisor Outlook/High Net Worth Investors Study. Among the data was an update on why people have been changing advisors and how they found their new advisor.

Referrals continue to be the single most important way clients connected with their new advisors, accounting for over half of the clients who moved.

When it came to the reasons people moved, 66% said they didn’t get the kind of attention or service they wanted from their prior advisor and 51% indicated that they wanted someone to take a more holistic approach to their finances and investments. This reinforces other studies that have shown that conversations beyond the portfolio drive client engagement. We would expect this to be especially true in difficult investment markets, but this study was completed on February 3, 2012 – a time when the market was particularly strong.

It also indicates the importance of getting systematic client feedback. While two thirds of the clients who moved indicated they were not getting what they wanted from their prior advisor, I do not believe it can fully be explained simply by poor service. Rather, I suspect the service they received was not what they had hoped for or expected as opposed to inadequate for infrequent. Given that this is by far the most common reason for people to move, compounded by the fact that we are in a volatile or declining market, it makes more sense than ever to make sure that part of your service model includes client surveys or an advisory board.

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Stephen Wershing, CFP® coaches financial advisors to be more effective and successful, and attract more clients and referrals, by developing more client-connected and client-driven practices. His process of collecting systematic and objective client feedback and using it to reorient an advisor’s practice effectively engages an advisor’s best clients to drive the strategic plan of the business. He consults financial practitioners on many practice management issues, including strategic differentiation, client advisory boards, and implementing technology. Read more from the author/contributor here.