Clients Are More Loyal Than One Might Think

More than half (52%) of investors surveyed this year have only ever worked with one advisor, while a quarter of them have voluntarily changed advisors once, and 17% have moved twice, according to a new survey by Dynasty Financial Partners.

The firm released its annual Dynasty Connect Survey, conducted in July in conjunction with Absolute Engagement. The survey was based on responses from 1,000 investors who currently work with financial advisors and have a minimum of $500,000 in investable assets.

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Some of the reasons cited for seeking a new advisor included investment performance (37%); advisor moved, changed firms or retired (35%); or they met a new advisor who impressed them more (30%). Only 6% cited “my spouse/partner passed away and I didn’t have a strong relationship,” which is often reported as a top reason people leave their current advisor.

When investors were asked what would cause them to change today, investment performance was the top reason, at 47%. That was followed by a change in service levels (41%), advisor moves/changes firms (39%) and a change in fee structure (33%).

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Overall, 70% of respondents said they were “very satisfied” with their financial advisor. But the survey found younger and newer clients were less satisfied. These groups were also more likely to change advisors, as were those with less investable assets.

“Major life changes, such as marriage, divorce or a move are also impetus for change,” Dynasty said in a statement. “Newer clients initiate break-ups more often, which suggests the need for a longer honeymoon period between client and advisor to build trust and lasting engagement.”

Forty-one percent of respondents said their adult children do not work with their advisor but may in the future, and 34% said they don’t and likely won’t in the future.

When investors are choosing an advisor to work with, they focus first on being understood, with 59% citing this as the deciding factor. That was followed by investment strategy or performance (51%), technical expertise or knowledge (47%) and “experience in working with people like me” (46%).

The top characteristic investors would look for in an advisor today was having access to a broad array of investment options, cited by 64%. Others want an advisor with a specific professional designation (52%), access to the latest technology (50%) and who charges fees based on assets, not commissions (46%). Only 20% of clients said it was important for the advisor to work at a large firm.