In the wake of the economic downturn that pummeled markets and investor accounts, one would think financial advisers would have learned that forging and maintaining extensive contact with their clients is critical to keeping and finding new business.
But according to a poll by SEI, a provider of investment processing, fund processing and investment management business outsourcing products, 62% of financial advisers don't communicate with their clients on a regular basis and acknowledge this flaw is their greatest failing when it comes to providing service to investors. The results were released April 5.
Perhaps more concerning is the fact that only 42% of advisers queried said they asked one-quarter or fewer of their existing clients for new-client referrals, making it even more difficult to replace the customers they're sure to lose over time.
"Frequent and meaningful communication, delivered in a variety of ways, is the best method to build lasting trust between advisers and clients, which ultimately leads to stronger relationships," John Anderson, head of practice management for the SEI Adviser Network, said in the report. "Yet advisers remain stymied by the task."
"Whether they're communicating with clients or prospects, it's the same story — advisers should be more proactive," he said. "The best way to get ahead in today's competitive landscape is to spend more time in front of clients and prospects, providing valuable information."
The survey results provide an interesting anecdotal addendum to last month's survey of high-net-worth and ultra-high-net-worth clients by Spectrem Group of Chicago, which found that nearly 40% of investors with a net worth between $1 million and $5 million said they expect a call back from their adviser within two hours or else they would consider making a change and finding another financial professional to service their accounts.
To increase the frequency of their contact with clients, some advisers have turned to social media sites and tools to introduce themselves to potential new clients and keep tabs on the ones they already have.
But despite the popularity of Facebook, Twitter and LinkedIn, only one in five advisers surveyed said they connected with at least one new prospective client last year, a sign that most advisers still aren't comfortable with the social media platform and that some broker-dealers are still banning them from using the sites because of either technological or compliance and security issues.
"Most advisers naively think they can run their practice simply by keeping their current clients happy," said A. J. LaVallie of Advisers Group of Chicago LLC.
"The reality is there's a hole in the bottom of every adviser's bucket, and it has to be filled with new clients and assets. The down market was a huge wake-up call for advisers that keeping clients is only half of the equation. Successful advisers are proactively reaching out to prospects and converting them."