Are Your Clients Disengaged? You Might Not Even Know It

Advisers often worry about clients leaving, but what if the real problem is the clients who stay?

According to Morningstar's recent behavioural research, just 6% of clients surveyed had stopped working with their financial adviser. However, a staggering 94% showed signs of disengagement. These clients continue using your services, however, they're no longer growing with your practice, referring new clients, or fully trusting your guidance. Worse, they can become a hidden compliance risk.

So, what Causes Disengagement? The research identified a series of seemingly minor behaviours, adviser "faux pas", which slowly erode the adviser-client relationship. Many of these behaviours are common and often unintentional, yet clients find them deeply frustrating:

• No breakdown of fees (55% experienced this)

• Taking more than a week to complete tasks (70%)

• Using jargon without clear explanation

• Recommending investments without discussing personal values

• Not going into detail about recommendations

• Asking clients to complete long forms (77%)

• Failing to provide holistic advice

  
  

These behaviours don't always drive clients away, they significantly reduce their likelihood to refer you, continue with your services, trust your advice, or consolidate assets under your management.

So, what is the true cost of these small mistakes? Clients will rarely confront these issues directly. Instead, they become passively disengaged, still on your books, but no longer engaged, satisfied, or compliant. As the researchers put it: "A disengaged client may be just as bad (or worse) than a lost client."

How to Re-Engage Your Clients?

Here are five practical ways to keep clients engaged and feeling valued:

1. Explain financial jargon: Never assume clients understand industry terms. Provide simple definitions and relevant context.

2. Be transparent about fees: Break down your fees clearly and explain the value each component provides.

3. Align advice with client values: Use structured tools or meaningful conversations to uncover what truly matters to your clients.

4. Explain your reasoning: Don’t just present a recommendation. Walk clients through how you arrived at it and how it connects to their goals.

5. Set expectations: Let clients know how long things will take and when they can expect updates. Consistent communication builds trust.

   
   

Small oversights can quietly erode trust. But with small, intentional adjustments, you can turn disengaged clients into your strongest advocates.

Which of these behaviours are you most focused on improving this financial year?

Avoiding the small mistakes that cause big consequences.pdf

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