“In 2009, the average advisor managed about 200 household relationships and today that number is closer to 150. On the surface, it might seem that the trend of having fewer clients is a cause for concern for the wealth management industry,” said Patrick Kennedy, co-founder and chief customer officer at the investments data and practice management analytics firm. “But, in fact, advisors are choosing to deepen their client relationships with fewer clients. They are choosing quality over quantity.”

PriceMetrix said its latest data suggests that “deeper” client relationships frequently contain retirement accounts, with 74 per cent of the retail wealth relationships analyzed in 2015 having included a retirement account, up from 69 per cent in 2011. This, the firm said, also points to a growing tendency for clients to consolidate more of their wealth with fewer providers, as well as being an indicator of faster growth.

The presence of a retirement account is “usually indicative that the financial advisor is the primary wealth advisor to the client ,” Kennedy told Family Wealth Report. Indeed, advisors who logged the highest levels of growth in 2015 have retirement accounts in 80 per cent of their client relationships, compared to 69 per cent of relationships for those who grew the least, the data shows.

“From our perspective, we see that several advisors are deliberately reducing the number of client relationships that they service, which in turn improves the quality and depth of the service they can provide to existing clients,” Kennedy said. Meanwhile, as the industry has evolved toward more of a “holistic” wealth management model, “the nature of the offering makes it more attractive for clients to consolidate more assets with one provider,” he added.

Asked about the benefits and drawbacks for clients who choose to consolidate more of their wealth with fewer providers, Kennedy said: “generally, advisors would like to be providing a higher level of service to fewer clients.” The result, he said, is higher satisfaction, lower client turnover and faster growth.

“One could argue that a business with fewer clients would face more risk if a client were to leave, but the fact is that clients are less likely to leave an advisor who has fewer relationships,” he said. “From the client’s perspective, having one advisor who understands your situation thoroughly and can effectively address more of your needs has huge advantages.”

The data is drawn from 7 million full-service financial advisors at North American wealth management firms. The average client represents around $750,000 to $1 million invested, on a total household basis.

“For all the reasons above, if you are the primary advice giver, and more likely to be servicing/addressing multiple financial needs, your relationships tend to be larger, and your client retention rates tend to be higher,” Kennedy said. “Higher client retention is directly correlated to faster growth, since the advisor can spend even more time on the clients they have, rather than prospecting to replace the assets of those that have left.”