5 communication best practices for enhancing client retention

When it comes to retaining clients, regular client communication can prove an asset. But communication without value for the client can be a hinderance rather than a help. What are best practices for client communication?

A survey by YCharts, a client proposal and investment analytics platform, is highlighting some communication best practices that advisors can use to achieve higher rates of client retention.

According to the study:

• In case of recesson: Clients who receive infrequent or rare communication from their advisor have a confidence level of only 22% in their financial plan, should the U.S. were to enter a recession. This is compared to 71% of those contacted frequently who feel very comfortable with their financial plan, if a recession were to occur.
• Frequent contact, market perspectives: 47% of clients with over $500,000 under advisory prefer more frequent contact from their advisor, citing a monthly cadence. These clients appreciate their advisor’s insights, too; an overwhelming 98% expressed interest in receiving their perspectives on the market and economy.
• Client comprehension: Comprehension of advisor communication has decreased since the previous survey published by YCharts in early 2023, the survey said. Only 64% of conversations resonate with clients, down from 70% in YCharts’ last survey. Clients who are “rarely” contacted understood only 54% of what their advisor covers in a typical meeting, in contrast to the 71% comprehension rate among those who are “frequently” contacted. Advised clients personally manage a portion of their investments, yielding opportunities for advisors.
• Retention, referrals: 85% of high-value clients believe that increased frequency and/or personalized communication could significantly enhance confidence in their advisor. And 88% indicated that this would sway their decision to maintain their services, while 89% suggested it would affect their likelihood of recommending their services to family and friends.

How clients prefer to meet

The survey also highlighted how clients prefer to meet with their advisors. Presently, most clients express a preference for either exclusively in-person or virtual meetings, with only 1 in 5 indicating a desire for a mix of both. And regardless of how they prefer to meet, just 5% of respondents indicated they are satisfied with how they currently meet with their advisor.
Breaking down the preferences further, 41% of clients ages 30-44 prefer virtual meetings exclusively, the survey added. And among those who have more than $500,000 in assets under management (AUM), that figure rises to 43%. In contrast, 49% of clients aged 45-60 prefer in-person meetings exclusively.

Communication best practices

In addition, the survey shared some methods that advisors can use to enhance communication with their clients. Among the suggestions:

1. Explore new communication channels and engaging topics. Most respondents receive market information from their advisor or their investment account site/portal, the survey said. However, many respondents also indicated gathering information from financial blogs, podcasts, and social media.
2. Experiment with new communication methods to better resonate with clients. For instance, a podcast covering market trends and news might effectively reach one group of clients, while a blog covering the latest tax planning techniques may strike a chord with older clients who are approaching retirement.
3. Serve some clients champagne, others sparkling water. Higher-net-worth clients want to hear from their advisor more frequently. Adding urgency, higher-AUM clients surveyed also switched or considered switching advisors in the past year. Advisors’ most important clients deserve the highest level of service, but that can be challenging to maintain, the survey pointed out. Enter the “champagne or sparkling water” analogy. It would be time-consuming to send a personal note to every client over any period, the survey explained. But serving those higher-value clients champagne (a lot of personalized communication) shows how much advisors value their relationship with them. Other clients might not warrant as much personalized contact but would still appreciate sparkling water every now and then. “This strategy aligns your communication efforts with the value of each client in your book, while also positioning yourself as a resource to everyone,” the survey said.
4. Prioritize knowing your clients and their goals. Since its first survey, YCharts said that it has learned that clients’ priorities can fluctuate. In 2022, clients’ number two priority was their advisor’s accessibility/availability to them. This time around, clients did not rank accessibility/ availability in the top three, and “financial advice given” slid into third place.
   Not all clients are the same, the survey pointed out, and “regardless of whether you serve some clients champagne and others sparkling water, it pays to get to know each person in your book and understand what is most important to them.”
5. Commit to a cadence. An advisor’s communication style was also a factor for retention and referrals among an overwhelming majority of respondents. As new clients come in and existing ones’ preferences change, a consistent communication strategy requires ongoing effort and continuous improvement, the survey said. To create accountability for increasing touch points, advisors should define a cadence for client outreach that not only improves current efforts but is also achievable. Example goals might include posting a weekly insight on LinkedIn, emailing a bi-weekly newsletter, writing a monthly market-update blog, or calling each high-net-worth client once a quarter.

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