The stock market crash and resulting Great Recession have tested wealth managers' business models, along with everything else financial. Let's start with the fact that there simply is less wealth to go around. The 2009 World Wealth Report from Merrill Lynch Global Wealth Management and Capgemini Consulting, released in June, showed that so-called ultra-HNWs—those with $30 million or more in investable assets—were hit the hardest by the recent downturn, losing 23.9% of their assets.

Before you pull out your violin, consider that a far less recondite target market, your "normal" HNWs with at least $1 million to invest, didn't fare particularly well either, losing 19.5% of assets. Additionally, the HNW population in the U.S. has dropped by 18.5%, and now totals just 2.5 million people.

Given this challenging state of affairs, how can advisors retain the clients they still have? And what can they do differently to grow their businesses?

For one thing, they have to keep the business they have. Industry insiders have been talking all year about money in motion because of both advisors' and clients' changing allegiances. In fact, according to the Capgemini report, more than 25% of wealth management clients were dissatisfied enough to withdraw a portion of funds from the firm. One thing a wealth manager must keep top of mind is how to keep money still, comfortable and under management.

Increasing responsiveness is key. Ileana Van der Linde, a principal at Capgemini and one of the key authors of the report, says its crucial for wealth managers to raise their game. She issues a stark warning: "If firms can't show the exact value of portfolios, clients will switch to firms that can." As a case study, she mentions a HNW client with $25 million in assets at an unnamed but well-known financial institution. The client asked her private banker the value of her portfolio. The firm took over 10 days to prepare an answer. As a result the client moved the $25 million. "This seems so basic, but not every firm has robust reporting capabilities," she says.

Capgemini identified several disconnects between clients' and advisors' understanding of what services are important for retention. Online access was considered "very important" by 66% of clients, but only 33% of advisors. The other major gaps were in perceptions of statement and reporting quality (63% of clients vs. 39% of advisors, a 24-point difference), and risk management and due diligence capabilities (73% of clients vs. 54% of advisors, a 19-point gap).

If it's clear what drives clients away, it's also clear what helps them stick: high-quality service, excellent communications, transparency and, of course, performance. Trust is important too. The perverse and lasting stain Bernie Madoff left on advisors' reputations is the nightmare haunting both clients and advisors. Think about it—his retention rates were amazing, a fact pointed out recently by a well-known wealth manager who has a home in Palm Springs.

"Bernie is the master at what I tell my advisors to do-to create trust to such a complete level that it's unthinking," he said. "The difference ...[is] you live up to that promise and maintain the trust. And when people get older and want to simplify their lives, you're the one they trust with their money." Dying husbands would tell their wives to leave everything in Madoff's hands, he says. Ultrahigh-net-worth clients felt no need to diversify assets to other advisors.

BUILDING TRUST THE FISHER WAY

Retention is arguably the most important statistic that captures client satisfaction, argues Ken Fisher, but there is no standardized public disclosure of retention rates. Fisher, CEO and CIO of Fisher Investments, explains what he believes drives this number: "short term stock mark performance. The biggest driver remains stock market volatility," he says.

But stock market performance is, to a great extent, beyond an advisor's control, as clients brutally learned over the past year. Fisher, whose most recent book, How to Smell a Rat, just hit The New York Times best-seller list, offers many ideas related to trust and communications. Some, such as separation of advice and sales functions, are not always feasible for a small firm. Others are, including his unique solution for establishing trust: "friend lunches."

Fisher explains what is involved: "We invite several clients to a lunch, someone from Fisher makes an introduction, says we are picking up the tab, and then bye, we are out of there." With no one from the Fisher staff present, clients can stay and talk as long as they want about what they want—including Ken Fisher and his firm. They are left completely alone. "This is one of the most powerful things," Fisher explains. "Leaving them alone in a room to compare notes is a trust statement. It tells them you trust them, which they don't believe. And this convinces them to trust you."