Why Frequent Advisor Communication Matters: What Your Clients Told Us
Welcome back to the YCharts Advisor Pulse, where you can stay updated on the most important trends in the market, economy, and financial advisor space, with key takeaways to help improve your practice.
Did you know? 3 out of 4 advised clients switched or considered switching advisors in 2023. This is just one of the many insights from our latest Advisor-Client Communication Survey.
In this edition of the YCharts Advisor Pulse, we’re pulling back the curtain on some of the key findings from our survey. We sought to uncover what clients expect from their advisors, how improved communication could elevate their overall satisfaction, and communication best practices that advisors can implement to achieve higher retention rates.
Download the full survey: 2024 Advisor-Client Communication Survey
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The Link Between Communication Frequency and Client Confidence
Communication is critical to client confidence, retention, and referrals. Only 38% of survey respondents expressed feeling very comfortable with their financial plan in the event the United States enters a recession. 42% felt somewhat comfortable, and 6% were not comfortable.
Notably, those who experienced infrequent communication (every 4-6 months or less) from their advisor displayed less confidence in their financial plan during potential economic downturns. Of respondents who are infrequently or rarely contacted (every 4-6 months or less), just 22% are very comfortable with their financial plan, in stark contrast to the 71% among those who receive frequent contact (monthly or more) from their advisor.
Frequency & Personalization Are the Key to Client Retention and Referrals
Approximately 8 out of 10 respondents agreed that increased frequency and/or personalized communication with their financial advisor would increase: confidence in their advisor, retention of their advisor’s services, and the likelihood of recommending their advisor’s services to family members or friends.
Younger clients–whom we defined as between ages 30 to 44–and those with more than $500,000 under management agreed at an even higher rate that increased frequency and/ or personalized communication would ring true in all three of these areas.
Additionally, word-of-mouth is a driving force for advisors in acquiring new business. The top three factors that influenced clients’ decisions to enlist the services of their financial advisors were:
An advisor’s existing client base is one of the best ways to attract new business, given the overwhelming majority of surveyed clients agreed that increased frequency and/or personalized communication would boost the likelihood of recommending their advisor’s services to family members or friends.
Elevating your communication can lead to greater client satisfaction, leading to new business thanks to positive word-of-mouth generated by your current client base.
Overcoming Barriers to Address Decreased Client Comprehension
Direct conversations with clients are among the most important touch points for communicating crucial information about their investments. However, our survey found that only 64% of the content in a typical conversation with their advisor resonates with clients, down from 70% in our prior year’s survey.
Notably, clients who were infrequently contacted reported even lower comprehension levels during these discussions. On average, just 59% of the material covered in a typical conversation with their advisor resonates with infrequently contacted clients, below the 64% average and far less than the 71% for frequently contacted clients.
Advisors may want to leverage a multifaceted communication strategy to ensure clear understanding and alignment with recommendations and portfolio strategies. Through a combination of email updates, detailed reports, and personalized one-on-one meetings or calls—the top three outlets to improve client comprehension— advisors can work to improve client understanding and empower informed decision-making.
Your Financial Perspectives Matter to Clients
Clients prioritize communication with their advisor and highly value their insights into the market, economy, and financial education. They specifically seek their advisor’s perspectives on Investment Opportunities (52%), Market Trends and News (48%), and Interest Rates/Economic Insights (43%).
When it comes to receiving perspectives from their advisor, email is the preferred communication channel (61%), followed by phone calls (41%) and one-on-one meetings (38%).
Regarding one-on-one meetings, 38% of respondents now engage with their advisor virtually, marking a significant increase from the 20% reported in the prior year’s survey results.
Download the full 2024 Advisor-Client Communication Survey to dive deeper into how adapting to clients’ changing preferences, like utilizing platforms such as Zoom and Google Meet, can enhance communication effectiveness and free up more time in your schedule.
Improving Your Communications Strategy
Explore new communication channels and engaging topics
Our survey revealed that many respondents seek information from financial blogs, podcasts, and social media and are interested in a variety of topics.?
Try out different communication methods to better connect with clients. For example, a podcast covering market trends and news might resonate with one group of clients, while a blog covering the latest tax planning strategies could appeal to older clients nearing retirement.
Implement the “champagne vs sparkling water” analogy
It would be time-consuming to send a personal note to every client over any period of time. But serving those higher-value clients “champagne” (a lot of personalized communication) shows how much you value your relationship with them. Other clients might not warrant as much personalized contact, but would still appreciate “sparkling water” every now and then. This strategy aligns your communication efforts with the value of each client in your book, while positioning yourself as a valuable resource to everyone.
Commit to a cadence
As new clients join and existing clients’ preferences change, maintaining a consistent communications strategy requires ongoing effort and continuous improvement.
Define a cadence for client outreach that enhances current efforts while remaining achievable. For instance, consider goals like posting a weekly insight on LinkedIn, sending a bi-weekly newsletter via email, publishing a monthly market update blog, or scheduling quarterly calls with high net-worth clients.
Thanks for checking out this edition of the YCharts Advisor Pulse. Look for our next post in May, and in the meantime, start a free trial to test-drive YCharts.