Why Do Clients Change Advisors?

According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home.

According to our on-going research, fourteen percent of clients say they have changed advisors in the last five years.

Of that group:

  • 24% say they were approached by another advisor who seemed to offer something more/better
  • 35% say they were dissatisfied with the relationship and sought out a new advisor
  • 40% say they left for some other reason, which could have included things from moving out of the area to the advisor leaving the business

Whatever the percentage of clients and whatever the reason, clients who leave can teach us a lot about how to make our businesses great. They offer the world’s greatest learning opportunity. And one of the best ways I know of to tap into that opportunity is through an exit interview.

So why do clients change advisors? The real answer is ‘it depends’ but finding out will help you succeed in the long-run.

What Is An Exit Interview?

An exit interview is an interview that takes place with a client who has recently left your business. It can be delivered as a survey but is, more typically, a telephone interview. Live interviews allow you to get past general statements (which have limited value) and focus on what really matters. The interviews can be conducted by you or your team or outsourced to someone with expertise in this area.

You might have visions of conducting an exit interview and watching as your client realizes the error of his or her ways and begs to come back. In fact, the goal of an exit interview is not to change the mind of that client but to gather insights on if or how a different outcome might have been achieved. I’d suggest that those clients who leave have a lot to teach us, even if those lessons come from just 2-3 people each year.

The Critical Characteristics of Good Exit Interviews

There are five things to keep in mind when it come to effective exit interviews.

  • Interview the right people. You can’t please everyone, and realizing that is a big step forward in maintaining your sanity. As a result, you don’t want to interview every client that has left, but those who can help you improve. If a client leaves and you break out the champagne, this isn’t a client that will teach you a great deal about your business. However, if a client leaves and it was even a mild surprise, then use that opportunity to learn more.
  • Know your objective. I mentioned this earlier, but it bears repeating. An exit interview isn’t about convincing the client to come back. Just having that thought in your mind might lead you in the wrong direction and make the situation worse. You not only need to be crystal clear on your objective, but you need to communicate that objective to past clients. You’re making a promise that the interview is being done entirely to make your business the best it can possibly be.
  • Make it a conversation. Whenever possible, speak to clients by phone to allow you to get below the surface. It’s tempting to accept a client response to a question without going deeper. If a client responds, for example, that they ‘felt a change was needed’ it gives you very little. In a conversation you can dig deeper and ask what you could have done differently. Some clients may not be able to meet by phone, in which case having an online poll available can be an important back-up.
  • Make it worthwhile. Remember that the client has already walked out the door, so you’re relying entirely on their good nature (and your history together) to participate. Consider a charitable donation or a gift card as a way of saying thank-you.
  • Recognize the role of human nature. Most of us will do whatever we can to avoid discomfort or conflict (or maybe that’s just me). This fact can make it very difficult for some past clients to provide you with open and honest feedback or suggestions. For that reason, you may want to consider outsourcing the process to a trusted third party. There are pros and cons to either approach:
    • By assigning the process to someone internally, you’ll minimize the costs involved and you know that person can be trusted and has a deep understanding of the business and the client.  The potential downsides include finding someone who can handle a potentially difficult conversation and the fact that clients may not be comfortable criticizing someone directly involved in the business.
    • By assigning the interviews to an outside firm, you’ll increase the cost. However, in this situation, clients will have the option to remain anonymous and may provide more open and honest feedback.  The reality is that we can be naturally defensive and that gets in the way of a meaningful conversation.

If you’re considering outsourcing the interviews  you could approach a coach or consultant, with whom you work, to do the interviews. The key is finding someone who will be highly credible and knows your business (or the industry) enough to ask good probing questions. Whomever you choose, keep the interviews to five to ten minutes and stick slavishly to that timing.

The Process

The process associated with exit interviews is relatively straightforward. Craft a letter that you will send to clients who have left, approximately two weeks after they have gone. In that letter, outline your request for 10 minutes and, critically, why you feel this is important. Acknowledge they don’t have to invest the time, reinforce that you would deeply appreciate their insights and then make it clear that this is not about trying to change their mind.

The Questions

Exit interviews should follow a generally defined structure, with respect to the questions you ask.  This creates some consistency across interviews. However the real magic is in the probing questions that go deeper into the client responses and it’s difficult to script what those might be.

Consider the following:

  • When you left was it because you were actively seeking a new advisor or because you came across someone who seemed to offer something that was closer to what you needed?
    • If they were seeking another solution:
      • What was it that made you feel you needed to move on?
      • Is there anything your advisor/we could have done differently that would have influenced your decision?
    • If they were not seeking another solution:
      • What was it, about what was being offered, that was particularly compelling for you? (Go deeper on service, offer, relationship etc.)
  • Is there anything you think that your advisor/we could do differently to provide an even better level of service to their/our clients?
  • If you were me, what would you change about the business?

Let’s face it, we could all go a very long time without another ‘learning opportunity’. However, when they present themselves we’re wise to listen.

Thanks for stopping by,

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