Advisers Gain Clients, Boost Communication Efforts

In a survey of financial advisers by Cerulli Associates, 63% of advisers said the market has caused clients to postpone retirement plans, and 57% said clients are stilling planning on retirement but with lower expectations. A survey released earlier this week from Spectrem found a similar result about the retirement plans of high-net-worth 60-year-olds (see “More Affluent Boomers Revamp Retirement Plans“).

Despite the toll the market downturn is taking on clients, advisers continue to grow their business. More than half (63%) of advisers report gaining clients; 28% neither added nor lost clients, according to Cerulli. IRA rollovers or the sale of business, have continued to provide opportunities—even in a down market, normal life events present opportunities for advisers, the report said.

Where are these clients coming from? According to the report, most new clients (55%) are clients dissatisfied by other advisers, and 21% are clients who did not previously have advisers.

Adviser Response

Because of the market downturn, many advisers have increased communication efforts and changed client portfolios to more conservative investments. They also plan to increase financial planning services. “A focus on non-investment advice can help ground client relationships in turbulent times,” Cerulli said. The report also said that if an adviser’s value proposition is primarily based on providing investments, client relationships can be jeopardized by a challenging market. In fact, advisers reported investment performance as the number one (44%) reason for losing clients.

When asked how they anticipate their practices will change in the next 12 months, the most popular response (by 61% of advisers) was that they would offer more comprehensive financial planning. The trend toward holistic planning goes hand in hand with a greater focus on fee-based compensation and independence, the report suggested. Advisers plan on heavier use of fee pricing (31%) and alternative investments (35%).

When asked how recent market conditions have changed their client communication, advisers (83%) were most likely to respond they were making more outbound phone calls. Research from Spectrem suggests this is the most important loyalty sign from advisers (see “Call of Duty: Returning Client Calls Most Important Loyalty Sign” and “Millionaires Questions Adviser Performance“). Advisers are also spending more time on incoming calls (59%) and conducting more in-person meetings (52%). Eight percent of advisers report no meaningful change in communication, according to the report. Probably unsurprisingly, advisers who saw the most client growth were also advisers making more client phone calls and conducting more in-person meetings.

As far as client portfolios, more than half of surveyed advisers (57%) said client portfolios have become more conservative, Cerulli data show. There is a disparity between fee-based and commission-only advisers: Half of commission-only and fee-only advisers report a shift to more conservative investments; fee-based and fee-and-commission mix advisers show a larger shift, with 61% and 70%, respectively, reporting a move to more conservative investments.