Published on Jan 28, 2026 • Updated on Jul 27, 2026
This article was written by Adem Tumerkan
Content Editor, Dunham | 2025 ThinkAdvisor Luminary Award Winner | 2026 Wealthies Finalist — Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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Most financial advisors focus on acquiring new clients, but keeping existing clients is just as important.
Why? Because high client turnover can:
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.
Clients leaving have 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.
So, here’s how you can increase client retention and build long-term trust.
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.
The most common reasons are poor communication, advice that feels misaligned with their goals, unexpected portfolio underperformance, and fees that don't feel justified by the value received. Most of these are preventable with proactive relationship management.
The highest-risk window is the first two years. Research shows roughly 25% of clients leave within the first 1–2 years of working with an advisor. Retention rates improve significantly after that threshold.
Communication. According to the Y-Charts Client Communications Survey, clients rank a deep understanding of their goals and regular personalized communication above portfolio performance as the top drivers of loyalty and satisfaction.
Clients who receive trust services, estate planning, and tax guidance alongside investment management have more of their financial life connected to one advisor relationship — making it significantly harder to leave. Research shows demand for these services far exceeds supply, creating a direct retention and differentiation opportunity.
Reach out proactively before clients call you. Contextualize performance against the long-term plan, reinforce the strategy you established before the volatility, and remind clients of their goals and timeline. Clients who feel informed and anticipated stay — clients who feel blindsided leave.
Long-term clients refer more frequently, cost less to serve, and provide more stable revenue. High early attrition creates a growth ceiling where acquisitions offset departures rather than compound. Solving the first-two-year retention problem changes the entire financial trajectory of a practice.
Research suggests 80–90% of financial advisors close their firm within the first three years — meaning roughly 10% survive long-term. Client retention is one of the primary variables separating practices that stabilize from those that don't.
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.
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