Client Experience-Centric Advisor Practices Have a 93% Higher Median Client Size

Client Experience-Centric Advisor Practices Have a 93% Higher Median Client Size

In response to competitive pressure and heightened fee awareness, advisors are reframing their value proposition to focus on client experience


December 2018, Boston. New data from global research and consulting firm Cerulli Associates finds that the intangible upsides of providing exceptional client experiences (e.g., increased trust) also manifest in measurable advantages for the advisor’s practice, primarily a higher median client size, lower attrition rates, and the ability to move upmarket.

The research finds that practices that focus on the client experience have a 93% higher median client size compared to the industry average of more than $500,000. In addition, client experience-centric practices have lower involuntary attrition. On average, 34% of advisors’ asset outflows are a result of clients passing away, moving to another financial advisor, or transferring assets to a direct/online provider. Among experience-centric firms, however, this type of involuntary attrition accounts for 24% of asset outflows.

“According to our research, 65% of financial advisors will experience fee compression in the next five years and 42% attribute it to the growth of digital advice competitors. In response to this competitive pressure and recognition of heightened investor fee awareness, practices are migrating away from measuring their value based on their investment expertise, which can more easily be commoditized. Instead, they are beginning to think more holistically about the nonfinancial impact they can have on their clients.”

“Advisors can harness the power of their client experience to increase retention, reduce attrition, and generate a strong referral system,” states Marina Shtyrkov, research analyst at Cerulli. “To do so though, advisors need to restructure their thinking—and their processes.” Of all advisors surveyed by Cerulli, only 30% strongly agree that their practice goes above and beyond to make clients feel special, and that it has a repeatable, consistent client experience.

“Advisors are adopting a combination of technology-driven client segmentation, intergenerational engagement within a team-based model, client appreciation, and holistic perspective to deliver an enhanced client experience,” explains Shtyrkov. “For now, experience-centric practices are in the minority—but practices that adopt and invest in a client-centric mentality will likely cement their value proposition and engender lasting loyalty from clients.”

Also included in Cerulli’s latest report, U.S. Advisor Metrics 2018: Reinventing the Client Experience, are detailed analyses of advisor market sizing, attributes and practices, client relationships, broker/dealer support, investment decisions and product use, and practice challenges and growth opportunities.

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