The sudden, unprecedented leap in client departures
that RIAs are suffering is understandable but largely indefensible
Eliza De Pardo
Published Date
Sure, a $10 trillion business, with aging clients and advisors in an M&A boom, will see slippage, but running accounts on autopilot represents a betrayal that any firm should avoid.
The RIA business, now worth around $10 trillion and growing, has one unfavorable statistic that stopped me in my tracks -- the percentage of clients since 2021 who have walked away from their wealth manager.
Advisors have long counted their clients as a reliable asset and a sure bet, right?
Sorry to break it to you, but the longstanding industry expectation for unwavering, sticky client relationships is categorically being tested. This one is best not to ignore.
New data indicates that client defections jumped from 2.5% in 2021 to 3.6% at the end of 2023, a 44% increase. See: Michael Kitces asks Eliza De Pardo if the $1.5 million RIA revenue threshold is a wall that ends the honeymoon; Short (inconclusive) answer: Yes, but...
The typical firm lost 31 clients last year, according to research by The Ensemble Practice titled “Pulse of the Industry 2024.”
This is an unusual result, spanning all advisory firm sizes and service models. We just haven’t seen retention levels challenged… until now.
Indefensible betrayal
For some firms, client losses may, in fact, be worse than what the data reveals. One hypothesis suggests...
