Client Twisting: Why clients move
Sales & Marketing for Professional Services & Strategic Issues

Client Twisting: Why clients move

August 29, 2022

by Tony Vidler  CFP logo   CLU logo  ChFC logo

why financial planning clients leave the financial adviserClients move firms.  It is just a fact of life.  When they leave us most times we blame someone else…we call it “twisting” or “churning”. The immediate inference is the client only left because somebody else – who is less ethical – took perfectly good business and moved it for no reason other than their own gain.  Twisting becomes the acceptable explanation as to why a client left a wonderful adviser (good person!) and great products or plans to head somewhere else (bad person!).


This is probably the most contentious issue in the financial services industry: clients moving advisers, or moving to different product suppliers.


Advisers and suppliers alike disparagingly refer to any such shifts where another adviser is being the result of “twisters” and “churners”, but interestingly, one rarely hears the industry talking about the customer motivation for moving firms or products though.


It is simplistic to assume that customers move only because they obtained a slightly cheaper price elsewhere.  It may be true that trimming a minor percentage in costs is a motivator for some, though it would not be true to suggest that this is the primary reason that customers move in the main.  If we accept that financial advice and financial products are considered complex, time-consuming, and a downright drag for most consumers, then it follows that they are not likely to go through all the hassle of switching everything to save just a few dollars a month.


It is just as untrue and simplistic to assume that “the other adviser” who helps a client shift is doing something wrong.  Oftentimes in my experience they are actually doing a much better job for the client than the incumbent adviser who has barely been in touch and hasn’t engaged in a full review of detailed advice for many years.  Then there is the vexed issue in insurance and lending lines where a product that was the leading edge maybe only 3 or 4 years ago is no longer fit for purpose due to changes in the clients own circumstances or product innovation from other institutions.  In those situations a professional adviser should be proactively looking at replacement on the basis of whether the existing products are actually still fit for purpose in comparison to other choices the consumer has.  In fact fiduciary duty and regulatory intent deamnd that professional advisers adopt that mindset.


So rather than vent about “twisters and churners” the question that the industry should be concentrating upon is:

“What makes clients say goodbye?”


If I am permitted to be a little cynical for a moment, it is worth noting that replacement business is only called churning or twisting when it is going away from you. That is, when you (or the institution) are losing a client it is appropriate to label the competitor as unethical; yet; when it is coming to you, and your firm is picking up the client from your competitor, that is not twisting it seems.  That’s good service…or great advice…or great marketing…it’s just fine!  This hypocrisy is conveniently ignored most of the time within the industry.


Inevitably when there is little organic growth in the industry then competition for existing industry customers lifts in intensity, and there are advisers and firms alike who deliberately set out to take existing customers away from other industry participants as a means of growing their own business.  I would wager that this tactic exists in most business sectors most of the time, so it hardly seems aberrant behavior in financial services.  That is; it is a normal activity of virtually every commercial sector.  It is yet to be deemed an acceptable business tactic in the “Professions” however.


This all leads me to propose that the professions – and the financial services sector – are putting their own interests ahead of the consumers when they allege that replacing business is unethical or poor commercial practice.  It is a protectionist move on the part of incumbents.

One of the defining hallmarks of a profession is this simple concept of “putting the customers interests first“.  So let’s do that.  

Let’s be brutally clear here; research consistently shows that the 2 standout reasons why clients move is because they lose trust in service provider (whether that be the advisory firm or the product provider) and they wanted more personal advice and service.  I reckon we can almost take it as a given that the majority of consumers do not have much in the way of brand lyalty to institutions, and in some cases the attitude is overt resentment (e.g. banks).  So consumers aren’t staying with institutions generally because they love them and feel loyal to them. They stay because it is hard to move. 

Advisers helping them overcome that dificulty of navigating institutional change when it is in the consmers best interest to switch providers are doing good work I’d suggest.


Clearly there is a backlash effect at work as well, in that when product performance produces disappointment then clients become dissatisfied, and that is just as true for lending or risk clients as it is for financial planning or investment clients.  Well, that is fair enough actually and we have to cop that one on the chin as that would be the same in any industry: if a recommended product or service does not perform satisfactorily then clients will become dissatisfied and leave.  As consumers ourselves that is what we would do, so we shouldn’t ignore the fact that our clients will too.


For all that though, there is little doubt that maintaining trust and delivering personalised advice are the two key battleground issues for retaining clients.  To do this successfully means lifting the communication levels and maintaining a constant presence in the clients mind.  These are two things that the advice sector has been fairly casual about for a very long time, and consumers are now letting you know that these things matter because if you don’t deliver on them they will walk.


This is where financial advisers have to win their own war for client support.  Because that other adviser…the twister?  Usually they are simply a more trusted source of advice or service.  The client is already fundamentally dissatisfied to some degree but didn’t necessarily see an alternative course of action until someone else appeared tht they trusted to get them what they do want.  So the other adviser is not really the problem: if we had done our work well the other adviser wouldn’t get a look in.


Client twisting?  If it happens regularly or there is a reasonably high proportion of your clients being twisted then one has to accept that actually we probably deserved to lose them, because in a sense we already had lost their support and confidence anyway.  We had lost them before they actually said goodbye to us….so maybe it isn’t the twisters fault at all.  Maybe it is our own; and I reckon tht is more true for institutions than for advisory firms.


You might also be interested in this related article:

The 6 P’s Of Sustained Peak Performance
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