Published on Jan 28, 2026 • Updated on Oct 26, 2026
This article was written by Adem Tumerkan
Content Strategist, Dunham | 2025 ThinkAdvisor Luminaries Award Winner | 2026 Wealthies Finalist, Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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Most financial advisors put plenty of effort into bringing new clients through the door. Keeping those relationships strong deserves the same attention.
Because signing a client is the beginning of the relationship. What happens afterward determines whether they have a reason to stay.
Keep in mind that the first two years are critical. Studies show that 25% of clients leave within the first 1-2 years of working with an advisor. The good news? Client retention improves over time - meaning the longer a client stays, the more likely they are to remain loyal.
So how can you improve client retention and reduce turnover?
Well, it starts with understanding why clients leave and implementing strategies to keep them happy.
Client attrition has remained a thorn in the side of financial advisors – especially in the first few years.
For instance – did you know that according to a study1 from Etrade Advisor Sales in 2019 – the average percentage of clients that leave during a given year is 20% within a year. And 25% within one to two years?
Or - put another way - roughly one-fourth of new clients may leave within the first two years.
Figure 1: FA-Mag, 2019
The good news is that as time goes on, retention rates also rise (meaning the average client generally sticks around longer).
Thus, the first two years are pivotal for a financial advisor.
Further evidence2 has shown that 80-90% of financial advisors seem to fail and close their firm within the first three years of business – implying that roughly 10% of financial advisors even succeed over time.
So why do clients leave?
Top Reasons Clients Leave:
The good news? These issues can be preventable.
| Client concern | What it can look like | Advisor response |
|---|---|---|
| Infrequent communication | Clients hear from you only at review meetings or after they reach out | Agree on a communication schedule and contact clients proactively |
| Advice feels disconnected from goals | Conversations focus on returns while personal priorities go unaddressed | Document client goals and connect recommendations to those goals |
| Unclear value for fees | Clients understand what they pay but struggle to explain what they receive | Review the planning, service, and ongoing support included in the relationship |
| Unexpected portfolio losses | Clients are surprised by volatility or misunderstand their portfolio’s risk | Explain potential losses before downturns and revisit expectations during reviews |
| Planning needs go unmet | Clients need help with retirement, estate, tax, or family decisions beyond investments | Identify service gaps and coordinate with qualified specialists where appropriate |
These concerns give you a starting point. The next step is building a client experience that addresses them consistently
Here’s how you.
It's essential for clients to reach out to you with their questions or concerns, but that should not be the only form of communication. While being responsive is crucial, proactive outreach is equally important.
For instance – according to a 2019 Y-Charts Report3 – three-out-of-five clients (80%) under 50 believe that more frequent, more personalized contact with their advisors would give them more confidence in their financial plans (whereas over 50 was more split).
Further, 75% of clients want their advisor to send them personalized updates.
In fact, in the same report, respondents ranked a “deep understanding of their goals” (60%) and “client communication” (59%) far above actual portfolio performance (47%).
And most importantly - the same holds true for referrals. One of the most powerful asset-gathering tools an advisor has, referrals hinge on communication. Nearly 9 in 10 clients say style and frequency matter when referring an advisor - no matter their AUM.
Thus, the key takeaway here is:
While portfolio performance and allocation matter, many clients want a financial advisor who offers more value.
This is why holistic (interconnected) financial planning is important – it hits more ways to improve client goals.
And there’s a big demand here that isn’t being met.
For instance, the Spectrem Group published a report4 in 2021 that broke down the services investors received, valued, and desired (aka what they wanted vs. what they could get).
Some highlights were:
Many clients today are seeking a comprehensive range of financial services and support, from investment management to estate planning and tax strategies.
Holistic financial advisors can play a vital role in meeting these needs and filling essential service gaps (this is why using a TAMP can help).
Put simply, if you can’t offer these key services, clients may start looking elsewhere for a financial advisor who can
That said, returns still matter. They’re essential for keeping clients content and helping their wealth grow.
However, demonstrating the overall value you bring throughout the client relationship can help them stay committed through the inevitable ups and downs on their journey to reaching their financial goals - wherever those may lie.
Clients don't typically leave because of one bad quarter. They leave because they were blindsided.
Market volatility is inevitable. Black swan events - sudden, unpredictable disruptions like COVID - are part of the investment landscape. What separates advisors who lose clients during downturns from those who don't is how well expectations were set before volatility arrived.
Practical steps:
Establish a clear, documented long-term strategy that explicitly anticipates market downturns - before they happen
Communicate regularly about market trends and how they relate to each client's specific goals
During volatility, reach out first — don't wait for clients to call you anxious and uncertain
Remind clients of their goals, their timeline, and the preparation you've built into their plan
The advisor who calls during a market drop to contextualize it is the one clients remember. The one who waits for the client to call is the one clients leave.
The first two years are the highest-risk period for client attrition, which makes onboarding and early communication especially important.
Practical steps:
Set expectations for communication frequency, reporting, and review meetings
Schedule proactive check-ins during the first 90 days
Document client goals, concerns, and preferred communication style
Review the client’s plan before market volatility creates anxiety
Make sure clients understand the full value of the relationship beyond portfolio returns
The goal is to make new clients feel guided before they feel uncertain.
Clients are more likely to stay when their advisor is involved in the decisions that matter most outside the portfolio.
Practical steps:
Discuss retirement income planning before the client is ready to retire
Help clients prepare for estate, trust, and legacy decisions
Review tax-sensitive planning opportunities
Support charitable giving and family wealth conversations
Revisit the plan after major events like job changes, inheritance, divorce, business sale, or health changes.
The more an advisor is connected to the client’s real financial life, the harder that relationship is to replace.
Client retention is just as important as client acquisition.
Long-tenure clients refer more. They require less onboarding. They're more forgiving during inevitable rough patches. And they represent the stable AUM base that makes a practice's revenue predictable enough to invest in.
The first two years are where the battle is won or lost. Proactive communication, holistic service delivery, and expectation management during volatility are the three variables most within an advisor's control — and the three that research consistently identifies as the difference between a client who stays and one who leaves.
Why do clients leave financial advisors? Clients may leave when their advisor responds slowly, rarely reaches out, misunderstands their goals or risk tolerance, or focuses too much on investments. Poor performance and unclear value can also play a part. Clear communication and realistic expectations help clients understand what their advisor provides and what to expect from the relationship.
How can financial advisors improve client retention? Financial advisors can improve client retention by setting clear service expectations, staying in touch, and connecting advice to each client’s goals. Start with a clear onboarding process, record how clients prefer to communicate, and schedule regular reviews. Explain risks before markets become volatile, and revisit the plan as clients’ lives and needs change.
How often should financial advisors communicate with clients? Financial advisors should agree on a contact schedule with each client during onboarding. There’s no single schedule that works for everyone. Set expectations for review meetings, updates, and response times. Add personal outreach when market changes or life events affect the client’s plan, and use the channels each client prefers.
How should financial advisors communicate with clients during a market downturn? Financial advisors should reach out before clients have to ask, acknowledge their concerns, and explain how the downturn affects their plan. Review their comfort with risk, cash needs, time horizon, and any life changes before discussing adjustments. Avoid promising a recovery date. Help clients understand their position and choices rather than saying everything will be fine.
Financial Advisor Magazine / E*TRADE Advisor Services — Client Retention Report fa-mag.com
YCharts — How Can Advisors Better Communicate With Clients? ycharts.com
eMoney Advisor — Optimizing Service Expansion for Your Financial Practice emoneyadvisor.com
eMoney Advisor — Financial Advisor Client Communication That Maximizes Engagement emoneyadvisor.com
J.D. Power — U.S. Full-Service Investor Satisfaction Study jdpower.com
Bain & Company — Loyalty Rules! Chapter One bain.com
Kitces — Client Communication Matrix to Strengthen Relationships kitces.com
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax, or investment advice or an investment recommendation, or as a substitute for legal counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy, or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC.Trust services offered through Dunham Trust Company, an affiliated Nevada Trust Company.
