Client retention a key concern during wealth transfers

The 2024 Natixis Global Survey of Financial Professionals revealed that 46 per cent of advisers worldwide believe the Great Wealth Transfer represents an existential threat to their business.

While $84 trillion will be passed from one generation to the next globally in the next 20 years, according to Cerulli Associates, locally, the Productivity Commission has pegged the number at about $3.5 trillion by 2050.

According the Natixis report, the concern for advisers is around retaining the client relationship following an inheritance.

It revealed that advisers are able to retain the client relationship 72 per cent of the time when a spouse inherits assets; however, when children inherit, “asset retention is a 50-50 proposition”.

As such, advisers reported utilising a number of tactics to increase their chances of retaining clients, the most common of which is simply long-term relationship building (76 per cent). Additionally, 81 per cent said they had actively included clients’ heirs into their wealth planning discussions.

Advisers also reported offering ancillary services, such as a trust (54 per cent), personalised services, such as networking (47 per cent), financial boot camps for the next-generation heirs (33 per cent), and implementing unified managed accounts (UMAs) for clients, in order to assist with retention.

In an effort to appeal to younger clients, six in 10 (59 per cent) survey respondents said they had actively hired younger advisers to work peer-to-peer with “next-generation heirs”.

Who’s got the time?

“If the first principle of future-proofing a business is keeping the clients you already have, the second is finding more clients. That can be easier said than done,” the report said.

“In fact, the biggest impediment to winning new clients isn’t how advisers differentiate themselves with investment prowess. It isn’t their service offering. It isn’t determining their best acquisition opportunities. It is simply finding the time to pursue prospects.”

Given advisers have such limited time available, with the average adviser spending the majority in meetings with clients (23 per cent), managing clients (20 per cent), or managing investments (16 per cent), it is unsurprising that they are struggling to find the time to actively seek new clients.

As such, the report found that advisers were spending an average of just 9 per cent of their time on prospecting and 5 per cent marketing.

In order to free up some of their time, the report found that advisers have turned to technology, such as customer relationship management systems (48 per cent) and artificial intelligence (37 per cent), to improve their efficiency and help automate routine tasks.

Advisers have also started using non-traditional methods of prospecting, with more than half (51 per cent) having one team member dedicated to prospecting. Similarly, 51 per cent indicated using social media to attract new clients, while 42 per cent anticipate that AI prospecting tools will emerge.