5 Tips For Increasing Retention: Encourage Lifelong Clients

5 Tips For Increasing Retention: Encourage Lifelong Clients

Converting prospects is important. However, it’s only half the battle for long-term success: You still need to nurture lifelong clients. 

This isn’t simply a would-be-nice thing. They’re essential to a firm’s survival. In fact, it’s no exaggeration to say that they are the bedrock of a healthy firm. 

Long-term clients can also be a tremendous asset through word-of-mouth promotion and new referrals. So, if your retention numbers are underwhelming, we’ve got tips for aiming higher.

What’s the Value of Lifelong Client Relationships?

The headline above may elicit some eye rolls. So, if you already know the answer forward and backward, we apologize. 

Nevertheless, it’s an important question to ask. The most important step toward achieving any goal is defining its benefit. 

So, before we get to encouraging long-term clients, let’s take a look at why it is a good idea. The first reason is a no-brainer: Any business with steadily-returning customers will be more stable and profitable. 

It’s true for the manufacturing industry—and it matters more for service-based businesses like the financial industry. A number of customers may buy another product from an appliance company, even if their last one was a disappointment.

Advisors don’t have that luxury. When you’ve known a client long enough to consider them a friend, you might be forgiven for a mistake. It can take years to reach that point, though. 

Until you do, every misstep could potentially be your last within that relationship. Don’t let this worry you needlessly, but it factors into the larger point: Long-term clients don’t have to be won again. 

Of course, wise advisors don’t take them for granted. A lifetime client has to be earned, but they’re worth the effort. In the long run, that relationship can yield much more than just profits. 

For instance, sometimes they can teach you things; life lessons your CFP instructor never covered. The more they trust you, the more some will confide, imparting stories and wisdom that benefit you as both a planner and a person.

You can’t beat their referrals, either. As many as 70% of millionaires will probably refer others to their primary advisor. This client group may seldom seek referrals.

A very select group may even be willing to provide a testimonial (at least in print). That’s absolute marketing gold. 

So How Do You Encourage Client Retention?

As promised, what follows are tips on getting clients to stay long-term. We’ll begin with the simplest first.

1. Value your clients.

The last thing you want anyone to feel like is a number. So, make every meeting a valuable experience. Stay professional, but keep reviews detail-oriented and personal. 

In other words, try to demonstrate that you appreciate their trust individually. A yearly letter and Christmas card are nice, but they’re not enough, by themselves. 

When clients come in to see you, be ready to share insights that empower and excite them about your portfolio management. If there’s a milestone in their lives like a new job or childbirth, ask how things are going there, too. 

People can tell the difference between a thoughtful visit and canned, cookie-cutter presentations. You’d be surprised what even the ones who seem perpetually hunched over their phones appreciate, at times.

2. Communicate diligently, clearly, and effectively.

In other words, don’t just be attentive. Be upfront about your actions, as transparent as possible, and as available as you can remain during business hours. 

Over 50% of people who’ve left a firm did so because their advisor never reached out to them proactively. It’s okay to be brief, as long as you’re polite and friendly about it. 

3. Encourage realistic expectations.

This doesn’t mean spouting doom and gloom. However, playing cheerleader to the point of encouraging people to bank their life’s savings on a might-be never leads anywhere good. 

Instead, consciously plan every interaction to nurture metrics-based expectations. This ties in with #2: You can’t just be honest, alone. They have to see and understand that you act with integrity. 

Saving clients from disasters is great. However, if they don’t know that you do, you’ve missed out on a massive value-add. So, be upfront about encouraging realistic expectations—and why you do it.

What Else Works?

In some cases, you may be covering bases 1-3 well and still not meeting your retention goals over a given period of time. This is the point at which you might want to consider calling for backup.  

An Outsourced Chief Investment Officer (OCIO) may be just the help you need. Before we cover how, let’s consider why: Adding the salary, bonuses, benefits, et cetera for a new employee isn’t always feasible. 

Outsourced CIOs can be contractors that work for fees rather than wages. You can list them on a meet-our-team page, but there’s no parking space to provide.

At the same time, unless someone is a multi-talented prodigy, you may not want to make a principal your CIO, either. Between financial planning, estate planning, and the rest, there are a lot more hats to wear (link to blog: Improve Time Management by Partnering With Outsourced CIOs) than just managing assets.

 Sorry: We’ve digressed. As we discuss how an OCIO can help you retain clients, let’s get back to the list.

4. Possibly provide peace of mind.

These are concerning times. So, share what we believe can be the best, most metrics-based reassurance you can with clients. We believe that having a CFA Charterholder on your team sends a strong, positive nonverbal message about risk management, too. That’s one of many ways in which an OCIO on your team can help.

5. Maintain solid, informed analyses.

The financial winds can shift profoundly within an hour. Even in less volatile times, basing plans on up-to-date investment research is vital. Unlike a traditional CIO, who may only support one firm or mandate, an outsourced CIO may support multiple firms or mandates, likely requiring them to stay even more current on markets and the economy.

We have a much deeper article on OCIOs here. We could share further, but it would be easiest if we could converse with you. 

So, if you’d like additional details, please contact us for more information.

CPS eBook Reasons to Outsource

Cornerstone Portfolio Research (“Cornerstone”) is an SEC-registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training.  This publication should not be construed by any consumer or prospective client as Cornerstone’s solicitation or attempt to effect transactions in securities, or the rendering of personalized investment advice over the Internet. The statements in this publication are the opinion of Cornerstone regarding Outsourced Chief Investment Officer (“OCIO”) services.  These are not personalized recommendations and you should consider your own criteria when choosing an OCIO.
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More about the author: Thomas Balis

Thomas holds a Bachelor of Science in Business from Ohio State and has since earned the Chartered Financial Analyst® (CFA®) designation as well as the Accredited Portfolio Management Advisor (APMA®) and Chartered Mutual Fund Counselor (CMFC®) certifications.