Financial planners bleeding active clients

According to a new report from Investment Trends, financial planners are losing active clients in greater numbers than they are attaining new ones.

The Investment Trends 2017 Adviser Product Needs Report, which is based on a survey of 459 financial planners, found that for every two new clients added in 2017, planners are losing approximately three active clients.

Of the clients lost, only a third said that leaving their planner was an active decision. The remaining two thirds dropped from being ‘active clients’ because planners were not seeing them each year.

Active clients were defined as clients who met with their financial planner at least once annually.

This trend is not limited to 2017. Investment Trends found that individual planners had on average 147 active clients in 2014, compared to 123 in 2017.

Investment Trends research director, Recep Peker said that the loss in active clients reflected that planners do not have the efficiencies in place to reach all their clients, leading them to fall off the research company’s definition of ‘active.’

He believed that the challenges facing planners limited their ability to provide the required levels of advice. According to the report, 61 per cent of surveyed planners said that compliance burdens were a key challenge and 42 per cent cited building efficiencies into their business processes as a difficulty.

“Planners’ top challenges of compliance burden, new client acquisition, and building efficiencies in the planning practice show no signs of abating. This is impacting their ability to expand the provision of advice, despite the growing consumer demand for advice from financial planners,” Peker said.

The funds under management held by each planner had also dropped, going from an average of $46 million in 2014 to $40 million in 2017.