Communication - a key factor in client retention

April 26, 2023

Lots happening to kick off 2023 but a couple of stats from US based financial software company, YCharts, in particular caught our attention; according to a survey they conducted in December 2022, 21.8% of US clients have already changed adviser since the start of the pandemic, with a further 25% seriously considering the change. 88.2% of clients stated their advisors’ communication style and frequency is a factor for consideration when deciding to retain their services, and 89.7% when deciding to make a referral. 47% of clients wish their adviser communicated more frequently with them!

Our own client surveys here in Australia paint a similar picture; Australian clients consistently rate their adviser’s communication in the bottom two out of nine KPIs – with insufficient frequency and lack of personalisation, proactivity and clarity driving their ratings. (FYI – the other lowest-rating KPI is the annual financial review process).^*

Of particular concern for the Australian advice sector, given the unprecedented events of the past three years, is that client communication frequency has actually dropped since the start of the pandemic. Currently, only one in four Australian advisers report communicating with their best clients ten or more times per year. This figure is significantly lower than the 33% recorded in our 2019 analysis.

To add further weight to the case for more communication, 55% of clients are aged over 60 years with 48% already retired and from the comments they provide during surveys, it’s clear they have a very vested interest in understanding how recent world events (Covid, Ukraine, cyber-attacks, faltering banks, threat of recession, et al) are impacting their financial plans – and how their adviser is navigating this landscape for them.^*

Given the current climate, we suggest it would be well worth the time and effort for advice firms to review their communication programs for 2023. An effective communication program can increase client retention rates, increase referral numbers, and increase client’s understanding and appreciation of the advice services they are receiving. There are several factors to consider during such a review:

Our most recent analysis of Australian advice firms (Future Ready IX^**) reveals practices that have 10+ touchpoints per year with their “best” clients achieve a higher level of profitability (+43%) when compared to their less communicative peers.
How often do you contact your “A” (top tier) clients per year? And “Other” clients per year? “Contact” can be an email, newsletter, phone call or invitation to a special event etc. We note the increasing use of videos – these are great for educating clients on more complicated topics and can be posted on your website with links sent via email.
The perennial question – can you over communicate and risk clients getting tired of communications? Given the ongoing relationship between adviser and client, this is not as high a risk as you might think (see above stats about advice clients wanting more communication). Why not let the clients decide for themselves and provide an opt-out option? This is easily achieved with the software available today.
Personalised and relevant content. While plan performance will obviously be top of mind for clients, it may not be the sole purpose of the client’s financial planning. Does your communication tap into their other drivers as well?
Communication should be written in plain English with minimal technical jargon and acronyms. Clarity of communication provides the client with meaningful insight and appreciation for the services you are providing. Visuals such as graphs and charts can be a simple yet effective method for getting your message through.
Sourcing the right content is not as challenging as it once was, with many licensees providing approved material for their authorised representatives to utilise. Alternatively, there are a number of third-party outsourcing options now available to owners.
Turn to your own client base for inspiration and content – what have been the more commonly asked questions by clients over the last month? We know several advisers who conscientiously track these questions and include a generic response in their broader communication to all clients.
Does your CRM hold the information necessary for you to build and maintain your client relationships? Have a process in place to ensure your CRM is regularly updated so it’s current and accurate at all times. (Our Future Ready IX research indicates that less than 10% of Aussie practices are holding enough of this type of data.)
Create a calendar for your communications including; what’s going out, to whom, when and how. Allocate responsibility for implementation to a staff member and have them report back to management on feedback, compliments, complaints, open and click-through rates, areas of interest and so on.
Include an objective client survey in the communications calendar. Do you truly know how satisfied, or not, clients are with your services? The best way to find out is to ask them in a confidential, anonymous manner, with ratings benchmarkable to the marketplace. Just one in four Australian practices are currently paying their clients the courtesy of asking for their feedback.