By The Editors Of Wealth Advisor

“I’ve never seen so many people proactively looking for and asking for help ever in my life.”

So said one very experienced investment advisor commenting on the abundant prospects now more open than ever to consider taking on a new wealth advisor.

In fact wealth advisors may rarely see another golden opportunity as now to bring in valuable new business, clients who may just stick with you for years to come.

A new study found that nearly half (49 percent) of advisors surveyed experienced growth in their client bases in the past year, and 41 percent reported increases in their client base of greater than 10 percent. About half (47 percent) of the advisors surveyed said that they thought the economy had a positive impact on their clients’ level of satisfaction with their services, noted the research by Scottrade Advisor Services

“The growth experienced by many RIAs appears to have been driven by multiple factors, and new clients were a leading source of growth,” said Chris Moloney, Scottrade chief marketing officer and executive director of customer intelligence. “…Nearly a third of RIAs (31 percent) reported ‘breakaway’ investors as their top source of new clients.”

Now, with the financial meltdown largely behind us, we are beginning to see evidence that many wealth managers are indeed picking up new clients and assets, in droves.

Tapping Client Dissatisfaction

The natural question is: were clients so upset at their poor returns that they turned against their advisors or were there other, underlying reasons. Our informal research, gleaned through many conversations with advisors and clients suggests that certain clients were shocked at the depth of their losses, which seemed to underscore a long-simmering discomfort with the fees they were being charged. However, other factors were at work, which should serve as lessons in client retention to even the most experienced advisors.

Here are some of the questions clients were asking themselves as they considered “losing” their advisors:

• How come you misread economic trends? Why didn’t you see the big picture? I don’t expect miracles in times of economic crisis. But you are the financial expert, you could have moved some things around that could have minimized the negative impact on my portfolio.
• Why didn’t you effectively communicate to me how you were working to preserve my assets during these difficult times? It is not enough to tell me that these are hard times for everyone. I know that other advisors were showing their clients different options for rebalancing their portfolios, at least for the short term. I needed to see that effort and understand what alternatives to consider, instead of being told “let’s stick with the game plan.”

According to the advisors surveyed, dissatisfaction with their previous firm led many investors to seek out new advisory services. Poor performance (51 percent) and the desire for more personalized attention (61 percent) were the primary reasons clients gave for switching to a new advisor.

• Why did you miss some obvious tax-saving moves? Incredible as it may seem, some advisors just never advised their clients of the benefits of tax-loss harvesting.
• Why have you not been clear in discussing risk? “Make it real for me,” says one California investor. “Say things like: ‘if this stock misses its earnings, its share price could drop by half.’ Let's be super-clear about what the possible bad things are. Assume that I don't read the prospectus. This data I need you to tell me.”

Now Is Time For Major Marketing Push

So how do top advisors tap into all this affluent investor discontent and gain new clients? Many are going back to some proven methods or taking advantage of new technology and trends.

Many are pursuing more aggressive marketing and sales initiatives. According to the recent survey, thirty-six percent of advisors turned to marketing to help grow their businesses. Twenty-six percent developed new sales material, and more than one-third (36 percent) created or enhanced their firms’ Web sites.

Reinstitute investor seminars. They have become hot again. Affluent investors are hungry for new ideas and personalities. WME has heard that some wealth managers are promoting and giving education seminars and are attracting wide attendance.

Try some new techniques including audio conferences, webinars and social networking. Even traditional advisors have come to see the light of reaching new clients in new ways. Many top firms are sponsoring audio conferences and webinars and are having their senior advisors as speakers. Numerous advisors have joined networking groups such as Linked In that reach out to the high net work clients, among others.

Stress diversification to new prospects. One top wealth manager says his clients are coming from some investment firms, where portfolio strategies might not have been tailored for them. Also some reformed do-it-yourself investors, whose undiversified strategies during recent stock market upheavals resulted in large losses, are picking up on the diversification theme.

Talk about your track record. With the recent market turmoil, investors are looking for more credibility and transparency from their investment advisors. Many investors have become disappointed with the investment results achieved by their advisors. Their performance doesn't look like anything they were shown in the presentation made by the advisor when they signed up. Perhaps it's because the track records shown to them in the presentation were not actually achieved by the advisor directly.

Seek new business from referrals but try a more timely approach. Mention to your top clients, friends and business associates that new research shows many affluent investors unhappy with their advisors. Point out that if they have such friends or contacts you would be willing to try and offer a positive advisor experience. What’s more you could offer to review the discontented investor’s portfolio at no charge, as kind of a second opinion.

Final Thought

The financial media is widely reporting large swings in affluent client movements. The days when the high net worth would stick by their long-time, “trusted” advisors appear to be over. The meltdown of once rock-solid financial institutions and the rise and fall of numerous “Bernie Madoffs” have pushed more affluent investors to seek new solutions through new relationships. Now is the time to call together your management and client relationship people and map out a robust effort to gain your share of the newly-available affluent prospects.