So long, farewell: Why do clients leave their financial adviser?
Netwealth research has uncovered the top reasons why advised clients stop seeing their financial adviser.
The report, conducted in partnership with cultural insights agency The Lab, studied 450 Australians aged 18 and over to understand what prompts them to end an adviser relationship.
Netwealth found that while clients’ perception of value increases over time, this doesn’t prevent them from leaving their adviser.
The most common reason why clients stopped seeing their adviser was due to the expense or cost (43 per cent), which comes amid rising cost-of-living pressures in Australia.
Average ongoing fees charged per client stood at $5,500 per annum in 2024, Investment Trends found, a 17 per cent jump from $4,700 in the previous year. In comparison, advice fees were at $3,450 in 2016.
This was followed by clients wanting to manage finances themselves (36 per cent), “learning all I could from that adviser” (29 per cent), and not feeling like their finances were large or complex enough to have an adviser (23 per cent).
Less common reasons included clients saying they weren’t receiving value from their adviser (17 per cent), clients being unsure on the quality of their adviser (14 per cent), and clients stopped paying for the services and lapsed (10 per cent).
According to Netwealth, clients leaving their adviser can be summarised in two key points: their perception of value changing over time, alongside their financial literacy and confidence in their ability shifting, such that they desire to “do it themselves”.
Unpacking this further on a Netwealth webinar, Jonny Hanratty, group strategy director at The Lab, said: “[Clients are] always reconsidering decisions about expenditure. They’re always changing their priorities as they go through life.
“Interestingly, when we asked about reasons for leaving, we see cost, of course, rising up, and that has a lot to do with value and a sense of independence, that ‘I’ve learnt all I need to know’ as being key barriers to continuing with a financial adviser.”
Hanratty explained that clients saying they’ve learnt all they need to know is actually a product of clients overestimating their financial know-how and self-sufficiency, also known as overconfidence bias.
He added: “So addressing these misconceptions early can help advisers guide clients to make better, more informed decisions about their money, and again, prove out the value of the financial advice that they’ve initiated.”
The group strategy director previously spoke about how advisers could enhance their client acquisition strategy by better conveying the value of advice on a webinar last year.
This can include advisers communicating the tangible financial benefits of advice where possible, while also framing outcomes in terms of the emotional benefits, rather than keeping investment performance as the focal point.
“It’s very much about assurance over the long-term that the adviser is going to stick with the client and help them execute and adapt the financial plan,” Hanratty said.
AUTHOR
Jasmine Siljic
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