Valuable, compelling and differentiated offerings fuel organic growth.

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‍A universal truth.‍

Research reveals that most advisors deliver a less than compelling and differentiated experience.

1. 14% say it's great with an NPS 0f 89
2. 43% say its ok with an NPS

Yet clients that do say their advisors deliver an ideal advice experience are exceptional advocates with an average Net Promoter Score of 93.

NPS 93

The advice attributes that make an experience ideal.

1. The advice is comprehensive
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We know these attributes are highly valued by clients because when their advisor delivers on all of them clients are exceptional advocates with NPS of 93.  

And this is what clients say about advisor performance for each individual attribute.

Advice is comprehensive

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The research identifies a clear gap between what clients want and what most advisors deliver.
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But what does that have to do with organic growth?

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Not surprisingly, the answer is everything!

The narrative on organic growth rates is usually about the average.

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‍Yet this can be a misleading stat because for most advisors’ organic growth is muted or even non-existent.

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Instead, organic growth is highly skewed.

10%

Only 10% of advisors generate meaningful organic growth.

Research from McKinsey & Company reveals that 10% of advisors realize significant organic growth in adding 28 new households a year.

This drops precipitously to 12 new households in the next decile and all the way to 7 in the next quartile.

Factoring in attrition this means most advisors realize little to negative organic growth.

6%

These findings are validated by Tiburon Strategic Advisors research that revealed 6% of RIAs captured 76% of net flows.

1 + 1 = 3

There is clear connection between the quality of advice and organic growth.
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A little over 10% of clients say their advisor delivers an ideal and high value (NPS 93) advice experience.

Roughly 10% of advisors realize significant organic growth.

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Advisors that deliver a compelling, differentiated and highly valued advice experience are driving the most organic growth.

But what about high retention rates?

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‍Don't they signal a highly valued experience?

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The answer is not necessarily.
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Retention only indicates a client hasn't left and it doesn’t have on its own, any predictive value.
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Instead data shows that attrition risk is very real. 

75%

Research from YCharts found that 75% of clients either changed advisors or considered changing advisors in 2023.

This is an increase from 49% from 2020-2022.

And there is other data that supports the contention that client loyalty may not be as strong as many think.

Retention risk with Millennials

36% & 70%

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2023 J.D. Power research revealed more than one-third (36%) of Millennials with more than $1 million in investable assets say they are likely to change firms in the next year.

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And 70% of affluent Millennials have a secondary advisor.

Loyalty does not equate to value

Another indication that retention does not equate to a highly valued experience is that loyalty - a measure of retention - is not correlated with advocacy i.e. Net Promoter Score.

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And the data holds true for satisfaction as well.

Satisfaction f(x) Expectations

‍Satisfaction is inherently tied to expectations.

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A client’s satisfaction can evaporate, and quickly, when expectations change.

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And while clients may not be able to articulate exactly what a great experience looks like, they unmistakably know when they experience it.

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So high satisfaction and retention rates could represent high value relationships or it can be masking embedded attrition risk.

So why do clients fire their advisor?

Morningstar research revealed the top two reasons clients fire their advisor.

1. The quality of the advice

2. The quality of the relationship‍

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Not surprising, right? It’s like saying you stopped going to a restaurant because the food was bad, and the service was surly.

Is Financial Planning the answer?

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Yes...but no.

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Research revealed that 1/3 of clients with financial plans say their advisor doesn't understand them

‍This is a fundamental disconnect as a shared understanding is to critical to delivering comprehensive advice.

Crack the code to organic growth.

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‍Deliver a valuable, compelling and differentiated offering.

The fuel for organic growth.

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