Financial advisers are in danger of losing significant portions of their client base if new approaches to retention and lead generation are not implemented, according to a CoreData survey.
CoreData’s Keys to Growth report, which surveyed more than 1,500 advised and non-advised consumers in September, found that as many as 30 per cent of Australians who currently have a financial adviser are at risk of ending that relationship.
Frequency of contact with clients was listed as a major factor in the level of flight risk, with the report segmenting advised consumers into ‘bonded’, ‘firm’, ‘loose’ and ‘at risk’ categories.
“Many Australian advisers are making the fundamental mistake of not keeping in regular contact with their clients,” said CoreData head of advice, wealth and super, Salvador Saiz, commenting on the report’s findings.
“Markedly improving client retention is as simple as picking up the phone and scheduling in a meeting, but we see that many advisers, especially those with high proportions of clients who are in danger of leaving are failing to do this.”
The longevity of an existing advice relationship does not guarantee retention, the report stated, with “close to one third of those classified ‘at risk’ [having been with] their current adviser for the past 10 years”.
The report found that ‘trust’ and ‘rapport’ are considered more significant decision-making factors than fees, with two in three ‘bonded’ clients indicating they would not switch advisers if they were offered the same service for less money and 44.4 per cent of ‘at risk’ clients saying they would switch to an “adviser they could trust”.
At the same time, the research indicated there is significant upside for advisers in the untapped advice market, with two in three Australians over 18 years of age currently unadvised.
“There is a huge opportunity for financial advisers to target the large market of unadvised Australians, and making the most of this opportunity is not difficult,” Mr Saiz said. “The top things that an advice seeker wants are help setting their financial goals, and ability to demonstrate expert advice on investment strategy, super and tax.
“Most advisers already possess these abilities, all they need to do is get the message out there.”
While a majority of unadvised respondents did not know which adviser they might choose should they opt to enter a professional advice relationship – which “close to half” indicated they intend – Commonwealth Financial Planning topped the list of dealer groups “likely to be used”, followed by AMP Financial Planning.
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