Client loyalty not leading to referrals

Clients say advisors are not engaging in all aspects of their financial lives

Investors are generally loyal to their financial advisors, but this isn’t necessarily leading to referrals, a new survey suggests.

Environics Research Group Ltd. conducted the survey of advisor clients for fintech Systelos Inc. Both firms are based in Toronto.

The survey finds only 12% of respondents say they have fired an advisor, and just 6% say they were not loyal to their advisor.

In spite of this apparent customer loyalty, only 47% of clients say they have recommended their advisor to a family member.

“Saying you are loyal to your advisor and being confident enough to recommend them are clearly two different things,” says Jad Chehlawi, founder of Systelos, in a statement. “This uncovers that deep down inside, investors feel like something is off but don’t know what they need to fill the void.”

The survey suggests a couple of reasons why a high degree of client loyalty may not be translating into referrals. For one, 74% of clients say that their advisors “are not engaging … in all aspects of their financial lives”.

Specifically, only 19% of clients say they are getting tax planning help from their advisor, 16% say they get insurance advice, and, 10% say their advisors are helping with legal affairs, such as their wills.

The survey also finds 65% of clients want to share decision making with their advisor, but the majority (77%) can’t track their advisors work in real time, creating real barriers to collaboration.

The survey’s findings confirm that advisors need to revisit how and where they create value, Chelawi says.