Probably the most contentious issue in the financial services industry is the issue of clients moving advisers, or moving to different product suppliers.  Advisers and suppliers alike disparagingly refer to competitors as “twisters” and “churners”, with the overt insinuation that they have behaved unethically for moving a consumer to new products or relationships.

Interestingly, one rarely hears the industry talking about the customer motivation for moving firms or products though.

It is simplistic to assume that customers move only because they obtained a slightly cheaper price elsewhere.  It may be true that trimming a minor percentage in costs is a motivator for some, though it would not be true to suggest that this is the primary reason customers move in the main.  If we accept that financial advice and financial products are considered complex, time-consuming, and a downright drag for most consumers, then it follows that they are not likely to go through all the hassle of switching everything to save a few dollars a month.

So rather than vent about “twisters and churners” the question that any customer-centric professional services firm should be concentrating upon is:

“What makes our customers say goodbye?”

If I am permitted to be a little cynical for a moment, it is worth noting that replacement business is only called churning or twisting when it is going away from you. That is, when you are losing a client it is appropriate to label the competitor as unethical; yet; when it is coming to you and your firm is picking up the client from your competitor that is not twisting it seems.  A slight hypocrisy that seems to be conveniently ignored most of the time.

Inevitably when there is little organic growth in the industry competition for existing industry customers lifts in intensity, and there are advisers and firms alike who deliberately set out to take existing customers away from other industry participants as a menas of growing their own business.  I would wager that this tactic exists in most business sectors most of the time, so it hardly seems aberrant behavior.  Of course, it DOESN’T seem to exist as an acceptable business tactic in the “Professions”.

Perhaps the financial services sector’s general behavior in this respect is evidence that financial advice not truly a profession at all as yet.

Of course as we all know, one of the defining hallmarks of a profession is this simple concept of “putting the customers interests first”.  So let’s do that.  Let’s look at a superb piece of data that tells us what actually motivates customers to decide that despite the complexity and hassle factors, they are going to move firms and products.

Despite the fact that this research is focused upon financial planning clients, there are lessons for all financial advisers here.  The primary lesson is price is not suggested as a key reason for leaving an advisory firm.

Let’s be brutally clear here; the 2 standout reasons why clients move is because they lose trust in the advisory firm and they wanted more personal advice.  Clearly there is a backlash effect at work as well, in that when performance suffers then  clients become dissatisfied.  Well, that seems fair enough and we have to cop that one on the chin as that would be the same in any industry: if product or service does not perform satisfactorily then clients will become dissatisfied and leave.

For all that though, there is little doubt that maintaining trust and delivering personalized advice are the two key battleground issues for retaining clients.

This is where financial advisers have to win their own war for client support.

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