Proactively Addressing Advisory Pitfalls Is Key to Client Retention

By Vestmark Inc., Resources

Vestmark Blog Pitfalls Key To Client Retention 2880x1000

Losing a client can be a major blow. When a client fires an advisor, the losses can compound: costs already incurred working with that client, lost future business from referrals, and even reputational harm from negative online reviews can deepen the injury to an advisor's practice.

Furthermore, when a client leaves for what, in hindsight, seems like a preventable reason, this makes overall net growth hurdles that much higher.

To avoid these types of situations, it’s helpful to understand why clients leave advisors in the first place.

According to research, clients rarely leave their wealth manager only because of poor investment returns – and in fact, that’s not typically even in the top five reasons. An April 2023 survey from Morningstar concluded that the top reasons for a client leaving an advisor come down to the quality of an advisor’s advice and their services, cited by 32% of respondents, followed by the quality of the client-advisor relationship, cited by 21% of respondents, and the cost of services, cited by 17% of survey participants. A mere 11% of clients left their advisor because of underwhelming investment returns.

Viewed from another perspective, more than half of clients fired their advisors for preventable reasons.

These pitfalls boil down to a misalignment between a client’s expectations, and the services and advice advisors are delivering in the relationships. If advisors are losing business because of a mismatch, how can they reconfigure their offering so that clients are satisfied? The answer involves improving the quality of financial advice and services, and enhancing the client-advisor relationship – and addressing these concerns requires one thing advisors rarely have enough of: time.

First, advisors need time to listen to and understand their clients – not just when it comes to what they’re looking for in their portfolios, but also their overarching financial and personal goals. Only by spending time with clients can advisors strengthen their relationships and deliver the personalized investment advice that enables them to meet their goals.

But being able to spend that valuable time with clients requires reducing the amount of time spent on other business tasks, like portfolio management.

Let’s take a closer look at the top two ways advisors can increase retention by spending less time on backend operations and more time on their clients.

Improving the Quality of Financial Advice and Services

Advisors who suspect that the quality of their financial advice and services may lead to lost clients will want to reevaluate their solutions and reassess how they’re framing their offering. There are important steps any firm can take to address their solutions, through a mix of technology and investment expertise.

For firms offering relatively commonplace investing options, there are ways to differentiate and personalize your offerings—and these solutions don’t necessarily mean your firm will have to reposition itself away from the financial planning and non-investment related services you currently highlight.

By relying on a partner that offers a variety of direct indexing strategies, third-party SMAs, pooled funds and ETFs, advisors can extend new services with alpha-generating capabilities to their clients, without worrying about how they’ll support their offering. A high-impact solution, like Vestmark VAST, can help personalize their investment services without sacrificing precious time and resources.

Generating tech-enabled investment alpha with index-level risk, cost effectively and at scale, is an immediate differentiator. The right tool can handle and scale complex tasks, including account set up and maintenance.

Meeting client goals faster because of potentially improved after-tax returns, or building a portfolio that reflects the values of an individual client, is a demonstration of the robust quality of advice and services advisors can now offer.

Maximizing the Client-Advisor Relationship

Clients hate feeling like a number. They don’t want to feel like their advisor is so busy that questions or a request for additional information are seen as an inconvenience or an intrusion.

As we mentioned above, time is the biggest challenge for advisors to overcome in pursuit of these more impactful client relationships. Today’s advisors are increasingly frustrated with the lack of time they have to spend with their clients – in fact, nearly one-third (28%) of financial advisors say they do not have enough time to spend with clients, according to the J.D. Power U.S. Financial Advisor Satisfaction Study from April 2023.

Clients turn to financial advisors for personalized investment and tax strategies; they expect advisors to construct portfolios aligned with their values and investment preferences, all while helping them attain their goals. Regardless of the size of their account, they also want to minimize tax obligations and have enough flexibility to modify their portfolio as markets shift.

Before VAST was available, these tasks took an inordinate amount of effort, which pinched the time advisors could dedicate to clients. Today, however, that’s changed.

VAST allows advisors to save time by automating and outsourcing time-intensive tasks that have value to clients. Using Vestmark’s technology and services gives advisors extra time in their day—dividends that can be reinvested in client-advisor relationships, financial planning, estate planning or other tailored services.

Being Proactive Is Key

Proactive personalization is a surefire differentiator for advisors. In an industry of average, solutions like VAST give advisors scalable, cost-effective tools for customizing portfolio offerings, enhancing tax optimization, improving the quality of financial advice and the overall client-advisor relationship.

To learn how VAST can help you exceed client expectations and keep you on the path of growth, schedule a demo today.


Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses.

By Vestmark Inc., Resources