Almost three-quarters (72%) of advisers say they are ending relationships with more clients than usual, finds NextWealth.
Termed ‘offboarding’, during 2024, two thirds (66%) of advisers have identified clients they plan to part ways with and well over half (58%) say their offboarding is set to increase over the next 12 months.
The findings are part of a new guide from NextWealth called ‘Getting onboard with offboarding: A positive approach to client servicing and offboarding’. It was supported by HUB Financial Solutions (part of Just Group) and Vanguard and sets out to offer a practical guide for advice firms exploring how to get the best value from client relationships.
Heather Hopkins, Managing Director of NextWealth comments: “Advisers are grappling with the need to demonstrate fair value to clients who may have simple requirements, such as a small pension pot or ISA alongside their sense of obligation and loyalty. Almost half (46%) of those we surveyed said they felt a sense of obligation to clients, which means taking the decision to offboard them is a tough call to make.”
The top five reasons for offboarding clients include:
1. Clients’ needs have changed or they no longer require advice.
2. Clients do not meet requirements for providing ongoing services (e.g. not engaging with review meetings).
3. Increased advice fees are unaffordable to some clients.
4. Clients do not fit within the firm’s target client profile or service proposition.
5. Mutual agreement with clients that the services provided do not represent good value for the clients’ needs.
Dominic Holmes, Business Development Director, HUB Financial Solutions (part of Just Group) comments: “The report confirms what we’ve been hearing from advisers. Many feel a deep personal connection to the generations of customer families that have helped them build their advice business, so taking the decision to offboard is extremely hard. However, tech solutions are available that can help mitigate the need for firms to simply abandon clients, so I’m confident that there is a bright future for meeting the needs of both advisers and clients.”
Segmentation
NextWealth’s research found that firms that have a defined a target client profile, or who have segmented their client bank, are more likely to have offboarded clients. 58% of those that have segmented their client bank have offboarded clients. This is 21% more than amongst those who have not segmented their client bank (37%).
Doug Abbott, Head of UK Client Group at Vanguard comments: “Growing regulatory pressure, including through the Consumer Duty, is making adviser firms examine in detail who their clients are, what they really need, and how that aligns with what they offer. This is leading both to firms adapting their business propositions, and to some firms shifting their focus to the client group they feel best able to serve.”
Heather Hopkins continues: “Now more than ever firms need to regularly gauge what help is available to them to understand which pathways for clients and their business can lead to the best, most valuable outcomes. We hope the insights shared from other firms’ experience in this guide will support advisers in considering how to establish or improve experiences in client servicing and offboarding.”
Getting onboard with offboarding: A positive approach to client servicing and offboarding is available to download free from the NextWealth website.
