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Client retention 101: How to build lasting customer relationships

Posted on 28 Nov 2023

In a challenging economic environment, where the cost of living rises and disposable incomes are limited, financial services and insurance products are often the first to be cut when people review their budgets.

In these challenging circumstances, it’s more important than ever for financial service providers (FSPs) to nurture strong client-advisor relationships and foster customer loyalty.

This article offers practical advice to FSPs on how they can improve client retention and thrive in the market, despite the tough conditions they face.

More than just a struggling economy

Undoubtedly, the current economic climate is one of the main reasons why FSPs are struggling to keep their customers, but these businesses face various other stumbling blocks too.

For instance, changes in the policy wording or the addition of exclusions to financial products create uncertainty for FSPs and their clients, which can negatively affect client retention. The hiring of new, inexperienced advisors, who seem out of their depth when advising clients, is another issue some FSPs must contend with.

How to improve customer loyalty

To maintain a loyal customer base, FSPs should review their current practices – where are they falling short when it comes to their clients? How can they employ strategies, practices, tools and soft skills to improve client retention?

1. Understand your clients’ diverse needs

The key to successful client retention lies in understanding the diverse needs of different clients. A one-size-fits-all approach will do little to encourage loyalty. Clients don’t want to feel like they’re just another policy number; they value personalised attention and financial solutions tailored to their unique needs.

To really get to know their clients, their needs and risk appetite – and build lasting relationships with them – FSPs must take steps such as actively listening to clients, segmenting their client base, investing in comprehensive client profiling and conducting regular needs assessments to review the client’s existing financial plan.

Prioritising a personalised approach helps establish trust and nurtures loyalty among clients, ensuring they receive the attention they deserve.

2. Compliance is key

In the financial services industry, reputation and trust are paramount. Clients want to entrust their financial well-being to transparent businesses that prioritise their best interests. FSPs that adhere to regulations and ethical standards cultivate a stronger industry reputation, instilling greater confidence in clients compared to those who deviate from the rules.

By maintaining their compliance, FSPs demonstrate a commitment to client protection. This fosters a positive perception in the market, where trust is essential for long-term client relationships. Clients feel more secure partnering with FSPs that prioritise their financial welfare and operate within the bounds of established rules.

FSPs looking to enhance their compliance should collaborate with their compliance and business practice consultants to review their operations, identify potential issues and implement solutions to address these problems.

3. Embrace the Treat Customers Fairly Outcomes

In a climate where financial trust can be fragile, it is crucial for FSPs to maintain ethical practices and uphold the Treating Customers Fairly (TCF) principles. By adopting a customer-centric TCF approach, FSPs can build a positive reputation and enhance their long-term client retention.

From a practical standpoint, this means FSPs should invest time in thoroughly explaining how financial products work to clients, including detailing fees, risks and potential outcomes. It is vital to ensure that clients fully understand the ins and outs of a product, and the advice given should be suitable and according to the customer’s circumstances. Moreover, FSPs should be open and honest about financial trends in the market, refrain from making unrealistic promises and avoid aggressive sales tactics.

Does the FSP’s products and services meet the needs of the customer? If not, the FSP needs to stand back and advise the client to seek the help of another financial service advisor. FSPs should also ensure that their clients do not face unreasonable post-sale barriers when they want to change a product, switch providers, submit a claim or make a complaint.

4. Communication is a must

Maintaining regular communication with clients is vital for retention. In the current economic climate, characterised by constant changes, clients may face fluctuations in their financial situations or products may not perform as expected.

To address this, FSPs should proactively reach out to clients through personalised emails, newsletters and phone calls, providing timely support, updates and relevant financial advice. It is crucial for FSPs to respond promptly to customer queries, as a failure to do so can have a detrimental effect on customer retention.

Effective communication showcases a commitment to clients’ well-being and strengthens loyalty. Additionally, through consistent information sharing with customers, an FSP can effectively demonstrate the true value of its services.

5. Empower clients with financial education

A well-informed client is a satisfied client. FSPs can differentiate themselves by offering financial literacy workshops, seminars and online resources. Educating clients about the intricacies of financial products and investment strategies empowers them to make informed decisions. This fosters a stronger sense of confidence and loyalty towards the FSP. Clients will view the FSP’s advisors as experts they can turn to for assistance with their financial queries and needs, and they’ll likely refer these advisors to their friends and family.

Enhanced financial education empowers clients to collaborate with their advisors in formulating their own financial mission and vision statements, enabling them to set realistic goals and expectations. This understanding helps clients recognise the significance of maintaining their long-term financial objectives, even in the face of economic slumps and market setbacks.

6. Offer exceptional customer service by training staff

Outstanding customer service and going the extra mile to exceed clients’ expectations will set an FSP apart from its competitors – a must in the current economic environment. Train your employees to be responsive, empathetic and knowledgeable. Listening to clients’ concerns and addressing them promptly will make customers feel valued, builds trust and fosters a sense of security.

Take extra time and care when training new employees, especially inexperienced advisors. The FSP owner can employ several measures that help empower new advisors while still preserving client relationships. For example, integrate specific training sessions and workshops into their onboarding process; implement shadowing programmes pairing new advisors with experienced counterparts; introduce new advisors gradually to clients; ensure alignment with the FSP’s core values, principles and conduct; and provide oversight as a safety net for clients.

7. Provide holistic financial planning

Many clients in South Africa seek comprehensive financial planning that addresses both short-term needs and long-term objectives. FSPs should offer a range of services, including budgeting assistance, insurance coverage, retirement planning and investment solutions. By providing holistic financial planning, FSPs can become trusted partners throughout their clients’ financial journeys.

8. Embrace fintech

Financial technology (fintech) is revolutionising the way businesses operate in the industry, and FSPs who embrace technology, particularly technology that enhances the client experience, will be a step ahead of their counterparts who do not.

User-friendly mobile apps, online account access and interactive tools can streamline communication and transaction processes, making it easier for clients to engage with their finances.

Fintech can also automate certain mundane, administrative processes, freeing up time for advisors and support staff. This enables them to focus on more important, customer-centric activities, such as meeting with clients to review and discuss their finances or addressing their queries or complaints.

Benefit from fostering stronger client bonds.

There is no denying the fact that retaining clients in a challenging socio-economic climate can be an uphill battle for FSPs. However, by understanding clients’ needs, offering transparency and ethical practices, providing holistic financial planning and empowering clients through financial education, FSPs can create lasting relationships.

Embracing technology, maintaining regular communication and delivering exceptional customer service will further strengthen client retention efforts. By implementing these practical strategies, FSPs can navigate the dynamic South African market and thrive in retaining their valued clients.

By Danielle Wasserman, Masthead Compliance Officer and Practice Management Consultant


A national supplier of risk management services to independent financial advisors and other licensed financial service providers (FSPs). Established in 2004, we help our clients overcome their risk management challenges so they can grow and thrive in an increasingly regulated industry. Providing professional guidance and practical support, our team of specialists is passionately committed to delivering tangible solutions.

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Masthead is a level 1 B-BBEE contributor.

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