Financial advisors are receiving high praise from their current clients, yet they’re finding it tough to bring in new ones. A recent report by Cerulli Associates reveals that while 80% of clients are happy with their primary financial advisor, more than half of advisors (55%) find it challenging to attract new clients. This issue is even more pronounced among wealthier clients, with satisfaction rates climbing to 88% for those with over $5 million to invest.

One major hurdle is the confusion about fees. Many people who don’t have an advisor think financial advice costs too much. Even among those who do have advisors, there’s a lot of misunderstanding about how fees work. Surprisingly, one in four clients doesn’t fully grasp how their advisor gets paid, and one in five wrongly believes they’re not paying anything at all.

This lack of clarity can make potential clients wary. Noah Serianni, an analyst at Cerulli, emphasizes the importance of being open about costs. He suggests that advisors should consistently communicate, be upfront about any big changes to a client’s investments, and clearly explain all fees involved. For many wealthy investors, knowing exactly what they’re paying for is even more crucial than factors like demographics or past performance.

Interestingly, more affluent individuals are now willing to pay for financial advice. In 2023, 59% of high-net-worth individuals said they’d pay for advice, up from 45% in 2015. To attract these clients, advisors might consider offering flexible fee options, like one-time planning sessions. This approach allows potential clients to try out services without committing long-term.

In summary, while current clients are pleased with their advisors, bringing in new clients remains a significant challenge. By being transparent about fees and offering flexible service options, advisors can build trust and appeal to those hesitant about seeking financial advice.