What Advisors Learn From Clients Who Leave Other Firms

A 2023 Morningstar study challenged one of the biggest assumptions in the financial-advisory profession.

Contrary to conventional wisdom, clients rarely fire their advisor because of investment performance. Instead, the most common reasons were the quality of financial advice and services (32% of responses) and the quality of the advisor relationship (21%). Cost ranked third, while investment returns accounted for just 11% of responses.

Those findings confirmed what many advisors had suspected for years. But they also raise another question. What do advisors who actually inherit those clients hear after the transition?

I asked several advisors whose practices have grown largely through referrals and clients leaving other firms. While each advisor had a different perspective, their answers revealed remarkably consistent themes.

Clients Don’t Leave Because of Performance

Every advisor I spoke with made essentially the same observation. Poor investment returns are rarely the catalyst. Instead, clients gradually lose confidence in the relationship.

As Marshall Rathmell, certified financial planner, certified public accountant, personal finance specialist, and managing member of BCR Wealth Strategies, put it: “Most new clients don’t come to us because they’re unhappy with investment performance. They come because they’re looking for a more proactive and attentive relationship … People are increasingly looking for peace of mind, not just portfolio management.”

That echoes Morningstar’s conclusion that relationship quality matters more than returns for most departing clients.

Communication Isn’t a Courtesy, It’s the Product

The most common theme I heard was communication. Kathleen Kenealy, CFP, certified private wealth advisor, and founder of Katapult Financial Planning, says new clients often describe feeling as though they were managing the advisor relationship themselves. “They rarely heard from their advisor proactively; calls and emails went unanswered, or they felt like they were managing the relationship instead of the other way around.”

Morningstar reached a similar conclusion, noting that many clients assume that if they haven’t heard from their advisor, nothing is being done on their behalf. Advisors may be working diligently behind the scenes—but if clients don’t see that work, they often don’t perceive the value.

Clients Want Advice That Connects the Dots

Investment management has increasingly become a commodity. Clients expect more financial planning. Jared Weinerman, chartered financial consultant, behavioral financial advisor, partner at Impact Financial Planning, says clients often arrive because they have never experienced true comprehensive planning. “Planning that coordinates investments, retirement, taxes, estate planning, insurance, education needs, and cash flow analysis creates a deeper understanding of the full picture and helps to solidify relationships throughout the process.”

In other words, clients aren’t necessarily looking for more sophisticated investments.

They’re looking for an advisor who understands how every financial decision affects every other one.

Expertise Means Nothing if Clients Don’t Understand It

Chelsea Mieczkowski of Better Planning sees another pattern. Clients often felt intimidated rather than educated. “They may sit through meetings thinking, ‘I don’t get this,’ but feel uncomfortable saying it out loud.”

Her approach is intentionally different: “I focus on translating technical strategies into plain English and ending each meeting with simple, clear next steps.”

That observation highlights an uncomfortable truth for many advisors. Clients rarely judge us by how sophisticated our strategies are. They judge us by whether they leave meetings feeling more confident than when they arrived.

The Real Lesson

The Morningstar research identified three underlying drivers behind client departures: insufficient attention to the personal side of financial planning, failure to communicate value, and mismatched expectations established early in the relationship. The advisors I interviewed describe those same issues in more human terms. Clients want an advisor who:

• Returns calls.
• Explains things clearly.
• Understands their entire financial life—not just their portfolio.
• Reaches out before there’s a problem and takes ownership when there is one.

Investment performance still matters, but it isn’t usually what determines whether clients stay. Relationships do.