In today's rapidly evolving financial landscape, the role of financial advisors extends
With that in mind, my firm conducted our latest Advisor-Client Communication Survey, gathering insights from nearly 800 clients of financial advisors about what kind of communication they want from their advisors.
One of the survey's most dramatic discoveries? Seventy-five percent of clients either considered switching or did switch advisors in 2023 — up from 48% of respondents who told us the same thing in this survey
The findings can help advisors understand what clients expect today; improved communication could elevate overall client satisfaction so that advisors can achieve higher retention and referral rates. (See the
Communication is key in tough times
Our survey revealed a significant relationship between the frequency of advisor communication and clients' level of confidence in their financial plans — particularly in times of economic uncertainty.
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Advisors know that turbulent market conditions can sow seeds of doubt among investors. Yet clients we surveyed who received regular updates from their advisors exhibited higher levels of comfort with their financial strategies, even in the face of potential economic downturns. Overall, 38% of respondents expressed that they would feel very
Notably, however, given the same scenario, those who received infrequent communication from their advisor displayed less confidence in their financial plan. Of respondents who were infrequently or rarely contacted (every four to six months or less), just 22% said they would be very comfortable with their financial plan
Advisor communication and held-away assets
Clients entrust their hard-earned assets to financial advisors. But exactly how much? We found that 74% of advised clients in our survey also
Among respondents who indicated a desire for frequent communication from their advisors, a staggering 85% personally managed a portion of their investments. By cultivating transparent and consistent communication, advisors stand to not only strengthen client relationships but also potentially increase AUM by bridging the gap between advised and self-managed assets.
Failure to communicate is too common
Direct conversations with clients are among the most important touch points for communicating crucial information about their investments. However, our survey found that in a typical conversation with their advisor, 64% of the content
Infrequently contacted clients reported even lower comprehension levels. On average, just 59% of the material covered in a typical conversation with their advisor resonated with these clients, decidedly lower than the 71% level for frequently contacted clients. This decline indicates a pressing need for advisors to rethink their communication strategies.
By leveraging a diverse array of communication channels — from email updates to detailed reports and one-on-one meetings — advisors can bridge the comprehension gap and empower clients to make informed decisions.
The bottom line
In an era defined by unprecedented market volatility and evolving client expectations, the need for effective advisor-client communication has never been greater. Our findings showed that poor communication practices lead to three consequences for advisors:
- Clients have less confidence in their financial plan.
- Clients are less likely to
provide their advisor with referrals . - Clients will consider engaging the services of other wealth advisors.
By prioritizing frequent and proactive communication strategies, advisors have the opportunity to not only enhance client satisfaction and retention but also drive better outcomes for their clients' financial futures.
