The New Demographics

Diversification And Performance Leading Reasons Investors Seek New Financial Advisors

Client loyalty is tough to gain and easier to lose; discovery and proactive communications hold the key to greater retention

A new report from Cerulli Associates provides the latest trends and developments in the U.S. retail and institutional asset management marketplace. Access the complete report here.

March 20, 2024, BOSTON—Affluent investors cite diversification (38%) and attractive performance (25%) as the two most common reasons for seeking new advice relationships, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition. Advisors will need to proactively address client concerns related to these issues or risk clients jumping ship.

Clients can be quick to find a new financial advice provider when presented with the stellar performance record of an investment at a time when they are feeling underwhelmed by the performance of their current provider. However, Cerulli maintains this could be averted with enhanced client communication.

“Client retention could be as simple as explaining the short-term performance of a diversified portfolio versus a specific investment—but without ongoing proactive communication, by the time the advisor is aware of a client’s discomfort, it may be too late,” says Scott Smith, director.

Maintaining Client Loyalty

To assuage client fears, advisory practices must prioritize ongoing discovery and relationship building as a key element of their client experience. Increasing portfolio values and progress toward goals must be accompanied by the desire to consistently investigate the evolution of clients’ dreams, concerns, and fears.

“The responses in our research underscore the difficulty in maintaining client loyalty,” says Smith. “Advisors must balance their desire to offer comprehensive solutions with the potential to overwhelm clients with too much information or too many choices. Even when achieving this balance, advisors face the threat of being left behind for a provider that happens to encounter a prospect at a crucial inflection point,” he concludes.




About Cerulli Associates
For over 30 years, Cerulli has provided global asset and wealth management firms with unmatched, actionable insights.
Headquartered in Boston, Cerulli Associates is an international research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.


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