Eighty-seven percent of financial advisors are feeling optimistic about their ability to grow their businesses and acquire new clients throughout 2013, according to Russell Investments’ latest quarterly survey of financial professionals.
When considering business development goals for 2013, 48 percent of respondents to the survey indicated they aim to acquire more than 10 clients or households, and another 30 percent are targeting seven to 10 new clients.
Seventy-six percent said they would likely receive client referrals reactively, while 54 percent said they would prospect for referrals through current clients and 43 percent said they would win clients through professional networking.
“The root of success in generating referrals or proactively asking for them is in engagement with current clients,” said Kevin Bishopp, a director of practice management at Russell Investments, in a statement. “Investors put trusted relationships at risk when making referrals, so it’s essential that a client understands their advisor’s offering and expertise.”
Two-thirds of advisors pointed to referrals as the reason they believe prospective clients are interested in meeting with them, along with their dissatisfaction with the service of another advisor (65 percent of advisors). Forty-two percent said it was because investors no longer wanted to manage their own money.
Russell’s "Financial Professional Outlook" survey found that 75 percent of advisors are optimistic about the markets. Thirty-two percent believe their clients are also optimistic about the capital markets over the next three years -- the highest proportion since the March 2011 survey.
“Many advisors are finding it easier to acquire new clients than it was just six months ago, as investors’ willingness to participate in the market is bolstered by strong recent performance,” said Bishopp.
In addition to acquiring new clients, most advisors reported fairly high levels of client retention. The majority of respondents (55 percent) said they lost only one to three clients in 2012, while only a quarter of them (26 percent) lost four or more clients. In many cases it was for reasons beyond their control: a client’s death.
Bishopp said the danger is that advisors may not keep assets after they have been transferred to their clients' beneficiaries.
“When thinking about client acquisition, it’s also important that advisors consider establishing relationships with their clients’ children and heirs,” said Bishopp. “If they can demonstrate their value and engage these emerging prospects, they can put themselves in a strong position to continue to manage inherited assets and drive referrals amongst the next generation of investors.”