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Client Retention in a Down Market

Find out how education and excellent customer service have helped this company to survive and thrive.

By Ayo Mseka

In today’s volatile investment climate, client retention can be a daunting task for many investment advisors. During the Million Dollar Round Table Annual Meeting held earlier this year in California, James Silver, CLU, ChFC, with Silver Investment & Retirement Services, explained some of the steps his company has taken to retain the lion’s share of its clientele.

Advisors should focus on the downside because in an up market, most portfolios should perform well.

Client retention cannot be accomplished overnight, stressed Silver. “Rather,” he said, “it is a long-term process that has two key components—education and psychology.” His firm spends an “inordinate” amount of time with clients trying to ascertain their risk tolerance and suitability. It gives a brief historical explanation of returns and expectations, illustrating how the use of equities is one way consumers can beat inflation during retirement.

The firm uses a portfolio developer software by Morningstar, which enables it to show sample portfolios for conservative, moderate and aggressive investors, as well as the current portfolio as a comparative analysis. The allocations in all of these portfolios are not cut in stone, however. As he noted, “either through my suggestion or the client’s, tweaking of each model can be made, which will satisfy each client.”

Advisors should focus on the downside because in an up market, most portfolios should perform well, he added. His company tells its clients that they would rather sacrifice money on the upside to ensure that the downside is protected. This education process, he stressed, “serves as a tool that offers full disclosure to the client, enables you, the advisor, to be seen favorably and should comply with all compliance requirements.”

The high-touch system
Silver also told his audience not to be afraid to tell their clients to buy what is right, not what is hot. They can have all the high-tech gizmos available, but if they do not have the high touch to go along with it, the proper balance does not exist. The high touch is critical because “part of the job of any advisor is to extend an arm for a client to hold onto because the ride may be a bit bumpy,” he said.

His firm also does something that may seem extraordinary at first: It encourages clients to call to discuss any item. And they certainly do—seeking advice on subjects like mortgage refinancing and the most effective way to buy a car. Clients also ask the firm to sit down with their children to explain how basic investing and compounding work.

In addition, his company sends its clients a general market update letter that serves to educate and calm excess anxiety. Also, on October 1 of each year, it sends required minimum distribution letters to every client over the age of 70 and helps them fill out all forms so they will be in compliance with Treasury Department statutes. This task may be labor-intensive but is quite rewarding. As he pointed out, “it is amazing how much additional business we are able to generate each year because of this one item. Over time, once they see you care and you exhibit the high touch necessary, soon all IRA assets should come under your domain.”

The value the firm places on its business is how much of the business it can retain, he concluded. “It is a combination of education, psychology and high touch that will allow us to continue to grow as we move forward.”


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