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Retention starts with firms being honest about who they can serve – and who they cannot

By Libet Anderson

(Originally published on, March 2021.)

Most everyone has heard the oft-cited statistic that it’s five times more expensive to gain a new customer than to keep an existing one. Whether that calculation is 100% accurate may be debatable, it speaks to a larger truth: Customer retention is crucial for any successful business.

This is a critical point for everyone in our industry to remember because we could see a recruiting surge take place at some point over the next two quarters. Due to the pandemic, financial professional movement slowed in 2020 – especially during the first part of the year.

But as vaccines get distributed more widely, the economy will likely begin to rebound, which should jump-start recruiting activity.

Retention is the winning formula

Ahead of the coming recruiting shakeout, firms must understand that retention and recruiting are inextricably linked. Indeed, the best way to keep financial professionals starts at the very beginning by recruiting the right ones in the first place – and that comes from a firm having an appreciation of their strengths and weaknesses.

For example, in today’s world, most boutique firms will tout their unique culture or access to the leadership team. And while these things are—and should be—important to financial professionals, they are no longer differentiators.

The more critical consideration for firms is whether they can provide financial professionals everything they need based on their business model. In other words, which type of financial professionals are they equipped to serve well and, just as important, which ones are they not?

Coming to terms with these questions in the months ahead will help determine who ‘wins’ the upcoming recruiting battles because it’s not about how much headcount or assets firms gather during this time. Instead, it will be about how many of those financial professionals are still in the same place five, 10 or 15 years from now.

Two-way street

Notions of ‘fit’ are, of course, a two-way street. If financial professional attrition costs firms money, the stakes are even higher for the financial professionals themselves, many of which cannot afford to suffer the type of client exodus that often accompanies a poor transition decision.

Therefore, they must ask themselves a slightly different variation of the same questions: Which firm can best help them support their clients and further their business goals?

But because this year has tested firms’ ability to meet the moment and evolve, financial professionals looking to move this year have a unique opportunity to make a performance-based decision.

For instance, how quickly has a firm adjusted to the remote-work environment? Do they offer e-signature and other tools that make it easier to serve clients that do not want to meet in-person?

Also, what about its communication model? In the absence of national conferences and regional meetings, “all-hands” calls or general email have become tiresome and irrelevant for many financial professionals. Does the firm provide useful information by targeting communications, outreach and programs (i.e., webinars) based on a financial professional’s business?

Obviously, financial professionals must consider more than this, but thinking about how a firm has adapted in the face of one challenge offers a window into how they will handle future ones. In an industry where one of the few constants is change, that’s an important consideration.

Firms can easily shave thousands each year off their marketing and recruiting budgets by just keeping their own financial professionals happy – a crucial point as margins continue to get thinner.

But that process starts well before onboarding a single soul, beginning with a firm’s recruiting efforts, where the focus must be on playing to its strengths and minimizing weaknesses. Otherwise, financial professionals will flee eventually, and when they do, the damage could have a domino effect, impacting all key stakeholders.

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