2 Ways to Build Strong Client Relationships

Don’t wait until a financial crisis to shore up your client relationship.


As behavioural researchers, we often get asked questions like:

  • How can I prompt clients to refer me to others?
  • How can I prevent lost returns or market volatility from affecting my client relationships?
  • How can I convince my client to follow my advice?

Although each of these questions has its own nuances, at their core, they have one thing in common: They pertain to building a strong relationship with clients.

Once an advisor has a strong relationship with their clients, many of these problems seem to resolve themselves. Even for those that require a bit more coaxing, the solid foundation of a strong client relationship will make ongoing interventions much more successful.

The problem in modern-day financial advising is that many advisors wait until a financial crisis to dedicate time to their client relationships—only then do many advisors play the role of financial counselor or coach by helping clients manage their emotions. At this point, it might be too late. Research shows that lost returns are among the top reasons advisors get fired. Also, research has found that satisfaction with advisors followed market fluctuations.

In other words, you have to do the work to build a strong client relationship before a crisis. Unless you’ve done that prep work, when markets go awry, your client relationships may already be suffering.

What Behavioural Finance Insights Can Teach Us About Client Relationships

So, how do you build stronger client relationships? To start, let’s consider what breaks them.

In our research, we asked investors who had cut ties with an advisor in the past why they fired their financial advisor. The exhibit below shows the top six reasons why investors fired their financial advisor, and the percentage of responses that pertained to each category.

Once we dug into each of these categories, we uncovered two key areas advisors can focus on to prevent these issues from popping up in their practice, and to mend or build strong relationships in the process.

How to Build Stronger Client Relationships

Based on our research, there are two powerful areas advisors can improve on to strengthen relationships: building understanding and building trust. Below, we provide research-backed insights advisors can use to improve both.

Building Understanding

To understand an investor, advisors must begin by helping the investor understand themselves. To an extent, advisors must help investors discover their own needs and goals.

To better understand a client, advisors must ask good questions and then listen. This sounds simple, but it isn’t.

  • Start with an icebreaker question—there are loads of promising ones out there. Regardless of which one you use, pay attention to how this question affects your client’s mindset. Small tweaks in wording can make a difference in how they think about their financial goals.
  • Remember that the client should be talking most of the time. If it takes a moment for them to answer a question, that’s OK. Don’t jump in to fill the silence—let the client fill it themselves.

Sometimes it’s hard to help a client dig deeper during discussions, but it’s essential to really getting to know a client.

  • Don’t be afraid to lean on ready-made checklists, exercises, or tools to guide discussions.
  • Repeat this process regularly. Many advisors only do this during onboarding but, as clients change, their needs change.

Building Trust

Trust is about vulnerability, and for an individual to feel comfortable with vulnerability, they need to believe in the intentions and behavior of the other party. To develop trust with a client, start by putting those intentions and behaviors on display. This is still about building understanding—but now, it’s about helping the investor understand you.

Building trust starts with open and honest communication that makes the financial planning process clear and accessible to clients.

  • Help your clients understand the services you provide and how they can be used in their personal situations.
  • Be proactive about reaching out to clients. Remember, out of sight is out of mind. While you’re at it, try using different communication channels to meet clients where they are.
  • Keep clients updated on both the actions you take with their account and what market insights mean for them.

In our research, investors consistently cite an advisor acting in their best interest as a top source of trust. Unfortunately, many clients may not have a good idea of what the term “best interest” means.

Discuss your commitment to the best interest standard by defining what it means for your relationship with the client and their money. A few possible topics to address:

  • How do you get paid?
  • What happens if the client accepts your recommendation?
  • Show a breakdown of any costs/fees.
  • Detail how often you will be monitoring their investments.
  • State how often you will be meeting with the client.




Since its original publication, this piece may have been edited to reflect the regulatory requirements of regions outside of the country it was originally published in. This document is issued by Morningstar Investment Management Australia Limited (ABN 54 071 808 501, AFS Licence No. 228986) (‘Morningstar’). Morningstar is the Responsible Entity and issuer of interests in the Morningstar investment funds referred to in this report. © Copyright of this document is owned by Morningstar and any related bodies corporate that are involved in the document’s creation. As such the document, or any part of it, should not be copied, reproduced, scanned or embodied in any other document or distributed to another party without the prior written consent of Morningstar. The information provided is for general use only. In compiling this document, Morningstar has relied on information and data supplied by third parties including information providers (such as Standard and Poor’s, MSCI, Barclays, FTSE). Whilst all reasonable care has been taken to ensure the accuracy of information provided, neither Morningstar nor its third parties accept responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis or context of the information included. Past performance is not a reliable indicator of future performance. Morningstar does not guarantee the performance of any investment or the return of capital. Morningstar warns that (a) Morningstar has not considered any individual person’s objectives, financial situation or particular needs, and (b) individuals should seek advice and consider whether the advice is appropriate in light of their goals, objectives and current situation. Refer to our Financial Services Guide (FSG) for more information at morningstarinvestments.com.au/fsg.  Before making any decision about whether to invest in a financial product, individuals should obtain and consider the disclosure document. For a copy of the relevant disclosure document, please contact our Adviser Solutions Team on 02 9276 4550.

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