How to build client loyalty

By Thane Stenner, Rod Bower, Rory O’Connor | July 9, 2007 | Last updated on July 9, 2007
5 min read

(July 2007) How important is client loyalty to your practice? If you work with the high-net-worth population, then client loyalty is a make-or-break issue. If clients remain loyal, your practice will thrive. If not, it will wither and die. It really is as simple as that.

As anyone who’s been in this business for any length of time knows, it is exponentially more difficult to attract new clients than it is to keep old ones happy. This is particularly the case in the HNW practice, where the prospecting process can be lengthy, and the pressures from outside competitors can be enormous.

No, it’s not always possible to make every client who walks into your office a client for life. But that surely must be the goal, which is why we find the results of a recent survey so interesting.

Earlier this year, U.S.-based Spectrem Group asked a number of wealthy Americans a very simple question: What was the best way for a financial professional to gain their loyalty? Simply returning phone calls was cited by 90% of survey respondents as a critical consideration in deciding to stay with a particular advisor. Other important factors included providing an alternative contact if the primary advisor isn’t available (cited by 80% of respondents), providing good investment returns (80%) and working to keep management fees and expenses fairly priced (73%).

Almost as surprising was what survey respondents said did not work. Only 27% believed that advisor support for causes and charities that the client participated in would help generate loyalty. Twenty-five percent said remembering birthdays and anniversaries would help. A mere 11% said presents or “fringe benefits” such as tickets to cultural or sporting events had any impact on their loyalty.

We’re willing to bet that many advisors were shocked at these answers. Simply put, professionals seem to be thinking the wrong things about loyalty, and failing to understand what loyalty means to HNW clients. With that in mind, here are some tips on how to re-focus your efforts and build client loyalty in terms that clients understand.

Take care of the basics First things first: The most important finding of the Spectrem survey is the importance of what we call “the basics” of client service.

It simply doesn’t matter how well you know the financial markets, how savvy a stock picker you are, how broad your knowledge of complex financial strategies. None of it will matter if you can’t make clients feel that they are the most important part of your day. Keep this goal in mind as your practice grows, and the demands on your time become more pressing.

Establish a basic client response system As part of your efforts to provide outstanding service, you’ll need to establish a client response system that puts clients first. One simple way to do that is to drop what you’re doing and take client calls when you receive them. But for obvious reasons, most advisors find that impractical.

We suggest leaving call backs until a designated time of the day (say, between 1:00 p.m. and 3:00 p.m.), or to establish a simple 24-hour callback guarantee. If for whatever reason you truly cannot return a client’s call, then delegate that responsibility to a senior member of your team, and tell your clients that you’ve made that delegation, either in person or in a “FYI” e-mail or voice mail. Whatever you decide to do, the key is to set a standard, and communicate that standard to clients.

Simple advice, but it will go a long way to making sure a client doesn’t cross the street to a competitor out of frustration.

Train team members to take a “service first” attitude By the same token, it’s important to make sure your team members share your commitment to absolute client service. In practical terms, team members need to know that serving clients in a timely fashion is their number one job responsibility: pursuing new business, filling out paperwork, or general office duties all come second place to answering the phone and fulfilling even the most basic client requests.

Hire for service as well as skills The best way to ingrain a culture of service within your practice is to hire for it. The next time you bring on an additional team member, make sure you consider their service qualifications as well as their other skills. In our practice, we consider client service skills a primary consideration for every position, rather than something that’s “good to have.”

That service experience need not be with HNW clients, nor does it need to be in the financial services industry. But at the very least, by hiring people who are as capable in front of a client as they are in front of a computer, we can ensure a high standard within our office.

Be cautious with events and gifts As the Spectrem survey makes clear, client loyalty can’t be bought with presents and freebies. Don’t get us wrong: if you want to send a client a gift, or organize a “thank you” dinner for A-list clients, go ahead.

These actions probably won’t harm your standing with clients. But they are unlikely to generate the kind of goodwill and loyalty that you’d expect. Bottom line: your time and your resources are likely much better spent elsewhere.

Educate about investment performance If there was one cause for concern in the Spectrem findings, it’s the connection that many clients continue to make between investment returns and loyalty. While it’s probably not possible to eliminate investment performance as a benchmark for judging advisor value, it is possible to screen clients who are particularly sensitive to performance out of the practice.

By educating clients exactly what we can do about performance — and what we can’t — we can at least be judged fairly.

Client loyalty isn’t something that just happens — it must be earned little by little, with every client interaction. The next time a client calls you, don’t consider it an unwanted interruption to your busy day. Consider it a prime opportunity to build the most important competitive advantage you will ever have.

This article first appeared in the May 2007 issue of Advisor’s Edge Report.

Thane Stenner, Rod Bower, and Rory O’Connor are senior investment advisors with Stenner Investment Partners of GMP Private Client, a private family office group. The views of the authors do not necessarily reflect those of GMP Private Client. This article is for information only. GMP Private Client is an affiliate of GMP Securities, a subsidiary of GMP Capital Trust and a member of the CIPF. For more information visit


Thane Stenner, Rod Bower, Rory O’Connor