Searching For And Keeping Clients

Wealth management practitioners having trouble keeping their address books filled with loyal customers

By Christopher Weems, Associate Editor

Clients are becoming a scarce asset for financial services professionals, according to recent research. This is not because the number of people with money is dwindling, but because the number of individuals and institutions looking to become wealthy off the wealthy is increasing dramatically.

Professional financial advice is now readily available from insurance companies and lawyers in addition to traditional wealth management practitioners. Also, a rapidly growing segment of the populace is now building and utilizing their own knowledge to make decisions regarding their money.

A recent study of high-net-worth ("HNW") individuals, concentrating primarily within the Pacific Northwest, conducted by Northwestern Trust found that less than 30 percent of respondents rely on professional advisors for financial/investment information. Nearly half that number say that they rely on the Internet. However, over 47 percent of HNW individuals in the "new wealth" 18-35 age group say that they are Internet-reliant for financial advice. "Friends and associates" are almost as popular as professionals in this age group as well.

Another study, conducted by Phoenix Investment Partners, found that over a third of the nation’s leading financial advisors believe that it is more difficult to retain clients than it was five years ago.

The study found that outside influences and unrealistically high financial expectations are causing many clients to move from advisor to advisor.

Over a quarter of the financial advisors surveyed said that their clients second-guess them more than five years ago. The reason most often cited for the second-guessing: contradictory information gleaned from the media and the Internet. Forty percent of respondents said that television shows or reports on investing have a negative influence; a third responded that financial Web sites have affected the advisor/client relationship in a negative way.

"Professional advisors fight a daily battle with investment prognosticators and pundits in America’s "infomedia" culture — a wealth war for the hearts and souls of their clients," said Jack Sharry, president of Phoenix Investment Partners’ Private Client Group. "It is investors who are at most risk of losing in this war."

Advisors tended to agree that the easiest to retain clients are those who have more experience in money matters and investing and who think with a disciplined, long-term outlook.

The study also found that professional advisors are taking aggressive measures to win the war for clients. Thirty-six percent have increased face-to-face or telephone contact with clients. They are using technology as their ally as well. Over 90 percent are using online tools in some fashion to foster a better relationship with their clients. Sixty-one percent guide clients to preferred sources of Web-based financial information and over have use e-mail as a way to communicate regularly with clients and to disseminate financial information.

Over sixty percent of advisors are utilizing advisor-specific sites on the Web for business-building and to increase their own knowledge of relevant issues.