It might help to have a look in the mirror when business goes out the door.
Offense is the best form of defense, and when it comes to defending your practice against the competition, one of the best tactics is to target client retention. My grandmother used to say that "people in glass houses shouldn't throw stones", so before blaming others for stealing your clients, spend time identifying the reasons they jumped ship.
Every practice will experience attrition. PriceMetrix, a leading practice management software and data services company, has published an exceptional document, Stay or Stray, that analyzes client attrition and retention in financial services. It should be required reading for everybody in our business.
PriceMetrix surveyed financial advisors in the US, and found that in 2013 advisors retained 90% of their clients. Think about that; in order to just maintain their practice an advisor must attract 10% new business. As practice sizes increase, so does the challenge. Clearly, in order to keep a practice strong, reducing attrition should be a primary concern.
Accept responsibility and take action
Studies clearly show that the number one reason clients leave a professional advisor is a lack of communication. But is that the main reason clients are leaving your practice? Try some simple analysis to shed light on what's required to keep your clients.
* Make note of each departing client in terms of their age, asset levels, gender or life situation. See if you can spot any patterns. For example, if all of your client attrition is coming from younger clients, it may indicate that you need to change how you deal with this group.
* Ask clients why they left. This isn't the time to make a desperate pitch to retain the client -- they've already made up their mind. If you show respect for their decision, maybe they'll honestly share their opinion with you.
* Ask clients regularly for feedback on their experience with you. Consider implementing a simple feedback form or make use of any number of online survey's to collect anonymous feedback. Act on what you hear.
* Embrace change. If you find this challenging, hire a consultant to provide you with insights. It's money well-spent if it helps you retain even one affluent client.
Above all else, remember that the reason clients leave is usually down to you, not the competitor. If you are truly their trusted advisor, they wouldn't dream of looking elsewhere.
Years ago we used to routinely talk about professionals "building a moat around their practice." These days that isn't enough. Even with a moat your practice is still constantly under siege. Go on the offense and push competitors out completely by focusing on client retention. At that point, you'll have no need to throw stones.
Craig Swistun is a Vice President with CC&L Private Capital Ltd. and can be contacted [email protected]. CC&L Private Capital Ltd. is an investment counseling firm that provides traditional and alternative solutions to high net worth individuals, foundations and endowments, first nations and trusts. More information about CC&L Private Capital Ltd. can be found online athttp://www.cclgroup.com/cclprivatecapital/about_us.aspx.
