Client engagement defines the deepest and most profitable relationships between advisors and clients, according to a new study released Thursday.

The study by Toronto-based Advisor Impact gathered feedback from more than 1,000 Canadian investors, all of whom worked with a financial advisor and made or contributed to the financial decisions in the household.

“The data is clear and compelling,” says Julie Littlechild, president of Advisor Impact, an Accretive 360 company. “Engagement defines the highest standard for client relationships, describing clients who are not only the most satisfied and loyal, but who provide the vast majority of all referrals. Client engagement is, as a result, the single most powerful business development tool available to financial advisors today.”

The study suggests that engaged client relationships are characterized by a deeper connection (the quantity and quality of contact and the scope of the relationship differ) as well as by the extent to which an advisor is positioned as a leader and to which the advisor partners with clients through feedback.

The study’s key findings include:

  • 66% of clients are very satisfied, 84% are loyal and 69% are comfortable referring, while only 20% of clients indicate they have provided a referral in the last 12 months.
  • 81% of engaged clients rate value for money as strong compared to 14% of disgruntled clients.
  • while 94% of engaged clients say advice is somewhat important or critical, even disgruntled clients agree. nearly 70% of disgruntled clients say that advice plays an important role in helping them reach their goals.

The study also finds that two forms of business risk emerge for advisors. The first is the risk that the 20% of clients who have considered leaving actually do so. The second is that the advisor does not tap into the substantial opportunity for growth that exists today, including the hundreds of referrals that are slipping through the cracks.

Littlechild points out that engagement is a two-way street. “Engaged clients are thrilled with the client experience and among the most satisfied clients. At the same time, they give back through referrals, which has an obvious positive impact on growth for the advisor.”