Pitfalls that make you lose clients – Part 2

07 April 2021 Myra Knoesen

Keeping clients for life can be every bit as challenging as finding them. Justin Kuepper, an experienced active trader and personal retirement accounts manager said it is crucial that advisers are able to spot and avoid common pitfalls otherwise, they will lose clients. 

Kuepper provides a list of pitfalls that he believes is how financial advisers lose clients.

Pitfall No 1

Kuepper says the first pitfall to avoid is confusing the client.

“Imagine going to a doctor who tells you that you are suffering from the coronavirus, which afflicts 20% to 30% of all adults in the country. You may leave the office a bit confused, and probably worried. A second doctor diagnoses you with the second most common form of cold and prescribes rest for your condition to improve. Which doctor would you prefer to see?” Asked Kuepper.

“Financial terms like alpha and beta should be ingrained in the minds of every financial adviser, but most clients have not read finance books or studied for the CFP exam. Rather than providing advice in complex financial terms that clients do not understand, try to convey value based on benefits and attributes that the client understands.” He says.

Pitfall No 2

Kuepper says the second pitfall to avoid is being unclear about the separation between friends and clients.

“Relationships can cause issues down the road; it may be difficult to manage a friend's or family member's nest egg and meet expectations. This can be avoided by maintaining a clear separation of personal and professional relationships. Advisers should not comment on the physical appearance of a prospective client or discuss potentially controversial topics such as religion or politics. It is important to respect boundaries and avoid delving into personal issues (other than finances, of course),” said Kuepper.

Pitfall No 3

Kuepper says the third pitfall to avoid is making the purchase hard to sell.

“In most cases, buying a car is considered to be a confusing, high-pressure and unreasonably long process that involves a hard sell early on. The immediate hard sell makes customers uncomfortable and discouraged — or worse. Financial advisers make these same mistakes when making a hard sell early on by pitching clients on products during their very first meeting. In general, people respond better to being pulled into an opportunity than they do to being pushed into it. Accomplish this by using a first meeting to establish a relationship; the second meeting can be used to discuss products,” Kuepper continued.

Pitfall No 4

Kuepper says the fourth pitfall to avoid is to be a ‘know it all’.

“Being a strong character and leader does not mean you are infallible. You may think you are always right but there are situations that call for not providing the "right" answer. After all, do you really want to answer the question: “Where is the market headed?” Financial advisers that practice self-awareness tend to experience the greatest success in their practices. By being aware of their performance-specific weaknesses, they can improve upon their skills over time and avoid making costly mistakes. Advisers should focus on listening (instead of talking), remaining neutral and sticking to proven principles,” Kuepper said.

Avoiding common missteps

Kuepper concluded by saying the bottom line is that financial advisers operate in a difficult industry where it is easy to make mistakes that can lead to client attrition.

“By avoiding these five common missteps, advisers are more likely to develop a successful practice with a loyal client base.”

Bookmark and Share


Quick Polls


The next year or two will continue to be a turbulent one with regards to regulatory change. Do you think…


What we need is less regulation not more
The industry has overwhelmed itself with its own excessive regulation
The industry is bracing itself to deal with the regulatory changes, and brokers and insurers need to stay well informed of the effects of these changes
fanews magazine
FAnews June 2021 Get the latest issue of FAnews

This month's headlines

Broker and insurer collaboration should not be a one-way street
Running on outdated systems… There's risks
Policy wordings with respect to COVID-19
Death or divorce... how best to split assets
Ethical investing… principles and moral codes
Portfolio positioning will serve investors well
Subscribe now