Posts Tagged ‘Assets’
Thursday, April 4th, 2013
Making Mutual Funds Perform in Your Portfolios
By Brian Livingston, Vice President, SIAFunds.com
Whether you are an IIROC or an MFDA advisor, you are most likely holding mutual funds in your client’s portfolio. Some of you focus heavily on Mutual Funds in your practice while others simply receive them as legacy funds when they assume a new client’s portfolio. According to research from the Investment Funds Institute of Canada, there was almost $850 billion invested in Canadian Mutual Funds as of December 2012, which was a 10.4% increase from December of 2011. In other terms, mutual funds and mutual fund wraps now account for about 30% of Canadians’ financial wealth. No matter what your exposure is to the industry, knowing how to properly handle your client’s Mutual Fund portfolio can assist in the value added proposition that you need to present to your current and potential new clients to help grow assets in your book of business.
In order to really grow your book as efficiently as possible, you need to be spending the majority of your time in client facing activities. So, if we want to continue on with this business efficiency, how do we find the time to do research and make sure your clients are getting into the best mutual funds? If advisors are honest with themselves, they usually do their initial due diligence and find out the risk profile of the client and then place them into some funds based on their risk profile but not necessarily based on market conditions or performance. Advisors then lock themselves into this mentality that those funds will suffice in all market conditions because they have them “diversified” with everyone ending up in similar funds. This method unfortunately fails to address changing market conditions, not to mention the fact that the funds they may be choosing could be underperforming relative to their peer group.
I was speaking with a mutual fund wholesaler recently who told me that his average client is working with approximately 25 different fund families, but not necessarily by choice. Often, an advisor will receive a portfolio from a new client and they include funds from a company that the advisor is not familiar with. But if the advisor moves the funds to a company they are familiar with, the client may end up having to pay a substantial penalty. So, how do we solve the various issues that advisors have with Mutual Funds? Whether it is being overwhelmed with thousands of choices, unfamiliarity with a company outside of our normal core group, moving the clients into different products based on market conditions, or finding the funds that are performing well right now, we need a solution to help answer these problems.
The good news is that there is a Canadian investment tool to help you answer these problems, save you valuable time from doing research, and help you pick the best mutual funds for the future changing market conditions.
SIAFunds.com was created to answer all of these issues and more. SIAFunds currently takes 35 of the largest fund companies in Canada and ranks the funds using relative strength technology from each company on a nightly basis from strongest to weakest to help you narrow down your investment choices. You can pick and choose the fund companies that you want, so you only work with fund companies that are relevant to your business. SIAFunds also helps with Asset Allocation rotation, Mutual Fund sector rotation (see screenshot below), and combined with their proprietary Equity Action Call tool, SIA has helped their clients avoid market disasters like back in 2008.
Mutual Funds have kind of gotten a bad rap over the last while, as they carry a much higher MER than ETF’s do. But, with a well-managed portfolio of mutual funds, advisors using SIAFunds have been able to successfully outperform the benchmarks and lower their drawdown risk while reducing their time spent on analysis. The chart below shows the performance of the mutual fund companies SIAFunds currently ranks, using a quarterly reallocation process.
*Data was calculated as of the close of March 31, 2013. Numbers above reflect the outperformance as compared to the TSX Composite benchmark.
As you can see, the 5-year numbers show that 97% of the fund companies SIA covered outperformed the TSX Composite benchmark and this includes staying fully invested in funds back in 2008, even though the Equity Action Call and the Asset Allocation model had our clients in cash back then.
With over three quarters of a trillion dollars invested in mutual funds in Canada, you need to be able to sit down with a potential new client, look at their funds and explain to them that you have a defined process to be able to help them through various market conditions and a clear selection process going forward for their funds. SIAFunds can help separate you from the herd, help you gather new assets, and help your current clients meet their investment goals. SIAFunds.com offers a free one-week trial to their service, so try it out for FREE and start redefining your investment process today.
Copyright © SIAFunds.com
Tags: Assets, Best Mutual Funds, Brian Livingston, Business Efficiency, Canadian Mutual Funds, Canadians, Current, Focus, Initial Due Diligence, Investment Funds Institute, Investment Funds Institute Of Canada, Legacy, Mentality, Mutual Fund Portfolio, Peer Group, Portfolios, Risk Profile, Value Added, Vice President, Wholesaler
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Thursday, December 20th, 2012
by Dan Richards, ClientInsights.ca
In the Oscar winning film Moneyball, baseball General Manager Billy Beane (played by Brad Pitt) challenged conventional wisdom by taking a data driven approach to acquiring players for the Oakland As. Central to his success was employing statistical analysis to identify the factors that contribute to winning teams and the players whose value was underrated based on those factors, replacing intuition.
Recently, Toronto software firm PriceMetrix released a report Moneyball for Advisors. Using its detailed database of performance by 35,000 advisors at a cross section of Canadian and US firms, PriceMetrix first looked at production in 2006 for advisors who’d been in the business for between 5 and 20 years. It then looked at production in 2011 for these same advisors – with a view to identifying advisors’ behaviour in 2006 that predicted production five years later.
Designed as a resource for head offices when recruiting advisors at competing firms, the report is also useful for advisors looking to maximize their future production. PriceMetrix looked at dozens of variables, before homing in on three that correlated with future production:
1.The source of revenue
It’s no surprise that production in 2006 was strongly correlated with production five years later, but PriceMetrix found that when it came to predicting future production, all income was not equal. Of the three forms of income – transactional, trailer and fee-based – fee revenue was far and away the most predictive of production in 2011.
2.The profile of client households
The second factor that predicted future production was the composition of books and the number of large vs small households. You could have two advisors with the same level of production but different household composition led to significantly different levels of future production. An above-average number of larger households (those with assets over $250,000) led to higher future production, an overweight of smaller households with assets under $250,000 led to lower future production.
3.The depth of relationships
The final variable that correlated with future production was the depth of client relationships; PriceMetrix used having the client’s retirement account and the number of accounts per household as the proxy for depth of relationships. The more frequently that an advisor held clients’ retirement accounts and had multiple accounts, the greater the production in five years time.
As you think about your own plans for 2013, consider how to factor the three variables of fee revenue, focus on larger households and multiple accounts into your priorities for next year. To read the full report on Moneyball for Advisors, go to http://www.pricemetrix.com/moneyball-for-advisors/
Tags: Assets, Baseball, Billy Beane, Books, Brad Pitt, Choices, Conventional Wisdom, Cross Section, Dozens, Driven Approach, Household Composition, Households, Intuition, Moneyball, Profile, Software Firm, Statistical Analysis, Surprise, Variables
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Wednesday, November 14th, 2012
by Dan Richards, ClientInsights.ca
I regularly hear from advisors who’ve implemented an idea they’ve read in my newsletter or heard at one of my talks and want to share their results.
But I’ve seldom heard of an outcome as dramatic and immediate as the one obtained by an advisor who translated an investment of 20 minutes into $2 million in new assets.
Focusing on your top clients
The concept that I discussed at that talk was dead simple: All advisors know they should pay special attention to your top clients. The challenge is how to do this.
One solution is to learn from sophisticated sales organizations like IBM. If you’re the account manager for IBM with responsibility for a major bank, you’ll spend two months each year preparing a comprehensive, 200 page plan outlining how you’ve going to maximize opportunity with that customer.
Of course, advisors shouldn’t spend two months preparing a 200 page plan for even the largest and most important client. But in my talk I did propose that for their top 10 to 20 clients, advisors invest 20 to 30 minutes to prepare a four page plan. And then I walked the audience through a four-page Client Opportunity Template, showing them what that plan might look like.
Identifying key opportunities
The first three pages of the template contain 13 categories of information on the client, from unmet needs and hot buttons to contact preferences and their network of family members, close associates and professional advisors. This is intended to summarize all of the relevant information about key clients together in one place.
The fourth page is where the focus shifts to action. On this page, advisors answer five questions about this top client:
1. Key issues / problems / challenges in dealing with this client
2. Key opportunities to add value to the client’s situation – how to drive their agenda
3. Key business opportunities with this client – how to drive your agenda
4. Top three priorities and goals with this client in the next 12 months
5. Planned activities to achieve these goals
Creating an action plan
After returning from the conference where I spoke, the advisor – let’s call him Jon — sat down with his two assistants and walked them through the Client Opportunity Template. They agreed to schedule two Friday sandwich lunches, booking two hours to establish action plans for their top 10 clients.
They set aside 20 to 30 minutes to develop the Client Opportunity Template for each key client; to use their time more efficiently, prior to the meeting one of Jon’s assistants partially completed each template with as much information as she had available.
One of the first templates they completed was for Jon’s largest client, Bob, who owns a number of successful fast food franchises and has accounts with several different advisors.
In 20 minutes, Jon and his assistants completed the background on Bob and identified key goals and actions for 2012. Here’s what the action plan with Bob looked like:
1.Key issues / problems / challenges in dealing with this client (if any)
The relationship while good could be deeper; at times, Jon feels that he’s viewed as a supplier rather than a trusted partner.
2.Key opportunities to add value to the client’s situation – how to drive Bob’s agenda
The multiple accounts mean that it can be challenging for Bob and his accountant to keep track of where they stand overall. As well, because there’s no-one coordinating the overall investment strategy, there is overlap in some positions and the accounts are not always managed in the most tax effective fashion.
3.Key business opportunities with this client – how to drive Jon’s agenda
Jon and his assistants agreed that their biggest near term business opportunity was to become Bob’s principal advisor and to consolidate some of the accounts held elsewhere.
4.Top three priorities with this client in the next 12 months
a. Help Bob better monitor total performance of portfolio
b. Help Bob and his accountant improve portfolio efficiency and after-tax returns
c. Increase Jon’s share of Bob’s assets
Making a plan happen
At this point, Jon had a clear sense of what he wanted to achieve. He then identified three things to make this happen.
First, in a meeting in January, he offered to have his assistant Mary each month compile consolidated performance of all of his accounts. Starting in February, a week after each month-end, Mary contacted Bob’s accountant to get all of his statements, then created an excel spreadsheet to track month-over-month performance and any portfolio changes; this was sent to Bob and his accountant within three days.
Second, Jon sought out opportunities to get to know Bob better. He discovered that the local business school from which Jon graduated hosts an ongoing breakfast and lunch speaker series with successful business leaders. One of those was a presentation by the chief marketing officer of a fast food chain that is a key competitor of the franchises that Bob runs. When Jon invited Bob to this talk, Bob changed a previous commitment to attend – and asked if it would be possible to invite two of his fellow franchise holders. The session took place at 5 pm and cost $25 – Jon invited Bob and his fellow franchise holders to dinner afterwards to talk about what they heard. When he offered to pay, Bob would have none of it and insisted on picking up the bill.
Finally, in June Jon arranged a meeting with Bob and his accountant to talk about duplication and overlap in the holdings in Bob’s accounts. He pointed to some areas where there was an obvious opportunity to make improvements, and offered to help coordinate and quarterback Bob’s investments.
They agreed to meet again in a week’s time; at that meeting, Bob told Jon that he’d decided to streamline the number of advisors he was going to work with going forward, and would be transferring $2 million in new assets to Jon as a result.
Not all stories will have an ending as happy as this one – but Jon’s experience is a dramatic demonstration of the benefits of focused, targeted and well thought through activity directed to your top clients.
If you’d like to get a copy of the four-page Client Opportunity Template, send me an email at firstname.lastname@example.org. Once you receive the template, amend to fit your practice and how you work. The goal here is quite simple – to develop the right format for you in order to focus activity on your top 20 clients – who knows, your story may have the same happy ending as Jon’s.
Copyright © ClientInsights.ca
Tags: 30 Minutes, Assets, Audience, Business Opportunities, Client Opportunity, Close Associates, Course Advisors, Family Members, Hot Buttons, Invest, Investment, Key Business, Problems Challenges, Professional Advisors, Sales Organizations, Unmet Needs
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Wednesday, June 27th, 2012
Last September, a veteran advisor contacted his retired clients with the suggestion that they meet. The meeting had one simple goal; to lay out detailed monthly cash flow forecasts for the period ahead matching funds coming in with cash going out.
The response was way beyond this advisor’s expectations. Clients who he’d had difficulty getting into his office suddenly made meeting him a priority. The response afterwards was generally relief. Even clients who had absolutely no concerns about cash flow expressed appreciation for his time and the peace of mind they felt as a result.
The good news was that most clients were fine although there were a few cases where income didn’t cover expenses. In those instances, he talked about the two alternatives; to curtail spending or reallocate some of their portfolio into investments which threw off more income. In one case, he agreed with a client that they would temporarily eat into capital with the proviso that they would revisit this in a year’s times.
At the end of each meeting he asked clients whether they’d felt it was time well spent. Without exception they said it was; retired couples were especially effusive. A number said they’d each been worrying about this but hadn’t known how to bring it up. Another client with assets of $5 million said that he’d been uncertain as to whether he could afford to offer to cover university tuition for his three grandchildren.
After hearing clients out this advisor mentioned that should they have family or friends in circumstances similar to theirs who might be interested in going through a similar process, he would be happy to meet with them also. He suggested that either their friends could call his assistant to book a meeting or if his clients called her with their friends’ name and phone number, she would contact them directly.
He started getting calls right away as clients talked to friends about the experience. He saw a particular bump in calls in early January as his clients got together with friends and family during the holiday season.
Tapping into hot buttons
Why was the response to these meetings so positive?
I’ve written in the past about the need to focus on client hot buttons. Many people in retirement have always worried about their finances. Historically, under spending has been a bigger problem than overspending (although it remains to be seen if this continues to be the case as boomers enter retirement, with their “I want it all and I want it now” mindset.)
With all the uncertainty about the economy and stock markets it’s understandable that clients worry; and particularly retired clients. The reason that this worked was quite simply that it addressed a preoccupation and concern for many retired clients, whether warranted or not. Quite simply, it gave them certainty, and clients love certainty, especially those getting on in years.
The exercise achieved two other things as well.
First, it provided context for discretionary decisions. In preparing cash flow forecasts, it provided a framework within which to make decisions on large items; buying a new car, the kind of holiday to take, giving gifts to charity or to children and grandchildren.
And second, it consolidated everything into one place, both income as well as expenses. The advisor asked clients to bring in their last year’s tax return as well as statements for any investment accounts outside of his firm. By putting everything onto one piece of paper, it clarified exactly where they stood, and in some cases opened this advisor’s eyes to accounts that clients held elsewhere.
As this advisor put it, ”There were two lessons for me from this experience.”
“First, seeing how much clients without a clear cash flow forecast were worrying; even those who had nothing to worry about.”
“And second, discovering how much some clients where I was positive I had all their money held elsewhere. There were a few Holy S… moments that emerged from this exercise.”
Making this happen
Like many advisors, this advisor had historically shied away from focusing on client spending. While he had provided cash flow forecasts to clients in the past showing income from dividends and interest payments, getting into conversations about expenses was a new experience for him.
He started by pulling down one of the many budgeting forms available online. As a point of reference for some clients who weren’t sure where to start, he used the 2009 Statistics Canada survey of household spending of Canadian households available.
Where clients asked for the budget documents beforehand, he sent them out in advance of the meeting. More often, he asked clients to bring their bank and credit card statements along to refer to if needed, and he worked through the budget along with his clients. Once he’d done about ten of these, he began compiling averages of his own that he used to give retired clients some perspective about their spending habits compared to other retired clients.
Something else that this advisor learned was to book longer sessions for those meetings. Initially, he scheduled normal one hour meetings, but after a couple of sessions in which couples had lengthy conversations about some line items, he moved to a two hour time block. Towards the end, for his smaller clients he had his assistant do the initial work to formulate their spending, joining in for the latter part of the meeting.
I fully recognize that getting into the details of client spending is not every advisor’s cup of tea. That said, I would point out that this truly does represent an opportunity to create peace of mind and to add value for your retired clients; and further, that if you don’t make this offer, there is always the risk that another advisor will.
Tags: 5 Million, Assets, Bump, Cash Flow Forecasts, Circumstances, Couples, Friends Name, Grandchildren, Instances, Investments, Last September, Matching Funds, Peace Of Mind, Phone Number, Priority, Proviso, Referrals, Suggestion, University Tuition, Veteran
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Wednesday, April 18th, 2012
by Stephen Wershing
Advisors who don’t seek client feedback don’t know what their clients want, they know what the advisor thinks they should want.
We all know that fiduciary is better than broker, and so naturally our clients would give us referrals because we are fee-based and not commission-based, right? Of course. And that’s why it’s a great idea to attract clients by talking about how we charge fees.
Well, that makes a lot of sense to most of us because we tend to talk about our marketing with other people in the industry and not with our clients and prospective clients. As it turns out, clients don’t like fees and they don’t like to be reminded of those fees. So, when Sullivan and Northstar surveyed investors on their reactions to different words we use in our marketing, for the 2012 update in their “Rebuilding Investor Trust” series, they found that 64% of respondents had a negative reaction to the phrase “fee-based.”
Since fiduciary is clearly better for clients, you might also be surprised to learn that in a survey done last year by Cerulli Associates, about 47% of 7800 households surveyed preferred paying commissions compared with 27% that would rather pay a fee based on assets.
Of course, if you had asked your client advisory board to evaluate your marketing you probably would have heard about this already. Who better than your best clients to help you understand the most important messages to communicate in your marketing? This is the group with the clearest idea of what is most valuable about what you do, and their language for describing it probably differs from yours. It is possible that your clients consider the fact that you are “fee-based” to be one of the more important things that distinguish you from other advisors, but I suspect they will talk more about what you do for them rather than how they pay you.
One of the biggest mistakes we make in marketing our practices is to dream up what we will promote and what we will emphasize without input of the people we are hoping to attract. Engage your clients in an ongoing conversation about your value, and you will find you have a much clearer idea of what to say to attract more clients like them. And you can work together to develop what they can say to other people to get you referrals.
Copyright © The Client Driven Practice
Tags: Advisory Board, Assets, Cerulli Associates, Client Feedback, Commissions, Households, Important Things, Investor, Investors, Marketing, Nbsp, Northstar, Phrase, Prospective Clients, Referrals, Respondents
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Wednesday, March 14th, 2012
How being an “additional advisor” can attract HNW clients
When it comes to winning new clients, historically most advisors have thought in terms of persuading prospects of the need to replace their existing advisors.
New research from the United States suggests that in today’s environment, an easier course of action might be to persuade those prospects that they should supplement the advisor or advisors they are currently working with. This is especially the case if you’re working at the top of the market, with high net worth investors with millions of dollars.
The trend to multiple advisors
An August report from Boston based Cerulli Associates indicated that about a quarter of American households who seek financial advice use multiple advisors. For households with assets of $2 million to $5 million, the percentage with multiple advisors is 33%. Of investors with assets over $5 million, 58% have multiple advisors.
One Cerulli analyst said: “Investors are taking the idea of diversification one step further and diversifying across firms and across advisors.”
The drive for multiple sources of advice has been driven by the financial crisis of the past three years. As Cerulli ‘s analyst put it: “Today, fear is outweighing convenience.” With that trend to multiple advisors, there is an increased push for quantitative measures of performance as well as a greater interest in understanding an advisor’s credentials, qualifications and knowledge level.
As a result of this shift, many advisors overestimate the extent to which they are a client’s primary advisor. When Cerulli surveyed advisors about a cross section of their clients, advisors indicated that they were the primary advisor 73% of the time; when those same clients were asked the question only 34% said that advisor filled this roll
Implications for action
There are some immediate implications from this trend, as well as some down the road.
When it comes to existing top clients, don’t assume you’re the primary or only advisor. Consider opening a dialogue about how things are going and also about whether they may have begun working with another advisor you’re not aware of.
With prospective clients, some advisors have historically had an “all or nothing” stance when it came to a client’s investments; a position that you might want to reconsider for the moment at least. You also need to rethink your conversations with prospects, positioning yourself as a supplement rather than a replacement. Finally, consider relaxing your account minimums; one advisor tells prospective clients that his normal minimum is $1 million, but that he’s willing to drop this to $250,000 for the first twelve months that he works with new clients, so they get to know him before making that big a commitment.
Finally, position yourself for the point in time when the pendulum shifts and convenience becomes more important than fear, leading to reconsolidation of advisors. Suggest to clients with multiple advisors that you’ll provide a monthly or quarterly summary of all their investments; what you manage as well as what they hold elsewhere. The opportunity to identify inefficient and overlapping holdings could help position you to be among the winners when that reconsolidation occurs. Iif you don’t make this offer, the risk is that another of your client’s advisors will.
Tags: 5 Million, American Households, Assets, Boston, Cerulli Associates, Convenience, Credentials, Cross Section, Diversification, Environment, Extent, Financial Advice, Financial Crisis, High Net Worth Investors, Knowledge Level, Prospects, Quantitative Measures, United States
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Thursday, February 9th, 2012
Do you know how sometimes there are things that drive you absolutely crazy and you just have to make your opinion heard?
Here’s one that is at the top of my list – “Firing” clients.
If you have followed my blog or have heard me speak at a conference, you know that I believe in client segmentation. In fact, I am one of the first business coaches or consultants to do segmentation with advisors. When I started this business in 1998, segmentation was a big part of my business. Clients used to send me sheets of paper containing a list of clients, assets and revenue and we would scan and convert these lists to an Excel file and sort them into A, B, C and D categories.
In 1985 when I was an advisor, our National Sales Manager did a presentation on segmentation and I sorted by client cards into books marked A, B, C and D and shifted my focus to the A and B clients and doubled my business over the next 12-months.
BUT, you should never “fire” a client! The growth of your business depends on the rate of satisfaction and the size of you client, personal and business networks – the higher your satisfaction rate, the stronger your business growth.
Your small clients have done nothing wrong. You chose to work with them. You made them a promise that you would help them with their investment or financial planning needs. They have paid you for the services you provided.
Today, we have a much more sophisticated way of segmenting clients. We now call our categories:
- Super Ideal
- Marginally Ideal
- Less Than Ideal
There are two types of clients who fall into the Less Than Ideal category – Good People and Bad People. Good People are pleasant to work with, profitable because they don’t take much time and are people who promote you to their friends and colleagues. Bad People are just the opposite – you cringe every time you see their name on call display, they upset your staff, they are rude and demanding and they constantly complain about your fees.
If the Good People are willing to accept a scaled back program and be 100% satisfied, then keep them. After all, if you can service three of this type of client in the same time as an Ideal Client and the total fees are the same, what’s the problem? If Good People are not willing to accept a scaled back program, they will decide to leave and it is their decision. The ideal solution, if you are in a large organization, is to pass these clients on to a new advisor who needs to build his client network. He will find gems within this list that you will never know about because you don’t give these people sufficient attention.
Bad People have to go. No matter what you do or how you do it, they will not be happy. Bad People represent less than 3% of your clients but cause 95% of your problems and stress. Have a face-to-face meeting with them and explain why you are suggesting that they find a new advisor. Pick up any transfer fees.
The Bottom Line:
Segmentation helps you to identify profitable vs. unprofitable clients and to structure service templates for each category to allow you manage client-by-client profitability.
Your success depends on the level of client satisfaction you are able to achieve. Stage client experiences that will lead your clients to give you a 9 or 10 score on The Ultimate Question – “How likely is it that you would recommend us to a friend or colleague?” People who score you 9 or 10, according to Fred Reichheld, a thought-leader in client loyalty and satisfaction and author of The Ultimate Question, are Promoters. Your goal should be to develop promoters within your client network. “Firing” clients (Good People) will take you in the opposite direction from achieving this goal.
If you “disengage” from unprofitable relationships, do it once in your career to free up capacity. Don’t do it annually as other coaches might suggest as it creates Detractors. BUT, make it a hard and fast rule to never again accept a less than ideal client.
Bob Simpson is President of Synchronicity Performance Consultants. Bob can be reached on his direct line at 905−502−0100, toll free at 866−646−6002 or by e-mail at email@example.com.
About Bob Simpson
Synchronicity Performance Consulting has been coaching financial advisors since 1998.
Bob Simpson, president and founder of Synchronicity has been involved, directly or indirectly in the financial services industry since 1981. He has been a very successful financial advisor with Nesbitt Thomson Inc., a major Canadian financial institution. Between 1981 and 1989, he built a business with more than $120 million in assets under management, was branch manager and SVP National Sales for Midland Walwyn and has been coaching financial advisors since 1998.
Tags: 12 Months, Assets, Blog, Business Clients, Business Coaches, Business Growth, Business Networks, Client Cards, Colleagues, Financial Planning, National Sales Manager, Satisfaction Rate, Segmentation, Top Of My List
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Wednesday, January 25th, 2012
30 minutes to secure your most important clients
Given that time is our scarcest currency, we all need to be cautious about taking on significant new commitments. The only exception is cases where there’s absolutely clear cut evidence of a substantial return.
Late last year, I spoke to an advisor about a 30 minute investment in formulating Client Opportunity Plans for top clients that has provided an overwhelmingly positive result.
The concept of these plans is simple: If you’re an account manager working for Procter & Gamble with responsibility for managing the Walmart or Costco account, every year you’ll spend 30 days developing a comprehensive, 200 page business plan for that account.
It clearly doesn’t make sense to spend a month developing a 200 page business plan for even your largest client – but how about 30 minutes to develop a four page plan? This advisor had attended a workshop in 2009, in which he’d seen the template for a four page plan for use with key clients, summarizing the client background, identifying opportunities and setting out specific actions.
In early 2010, this advisor and his team developed these plans for their top 20 clients – they took about half an hour each initially, with a further 15 to 20 minutes to update them a year later. As a result of these plans, his activity with top clients is more proactive and focused and both he and his clients are better off as a result. In this advisor’s view, the time he spends in putting together these plans is his highest return activity each year.
The first step is to concisely summarize key background on each key client. Here’s what the background portion of the plan template might look like, documenting client information in thirteen areas. Consider using this as a starting point for your own key client plans, modifying it to your own situation.
1. Current situation – a short summary of key trends on assets and revenues:
For 2009, 2010 and 2011, show revenue for each year as well as assets at the end of the year.
In addition, document how long you’ve been working with this client – and how you came to work together.
2. Financial priorities
Summarize this client’s top three financial issues and priorities.
3. Assessment of client satisfaction – how satisfied is your client on the key dimensions of your relationship
On a scale from 1 to 5 (where 1 is low, 5 is high), write down your assessment of how satisfied your client is on key dimensions of key dimensions:
- Performance of investments
- Confident that is on track to achieve goals
- Frequency of communication
- Quality of communication – feels listened to, key questions and issues are addressed
- Overall relationship
4. Plans in place – an overview of the written plans this client has in place
List the kinds of written plans this client has in place, whether they have been completed in whole or in part, when they were prepared, when they were last updated and who prepared them.
Among the plans to include are
- financial plan
- investment plan retirement plan
- estate /insurance plan
- tax plan
- cash flow plan.
5. Key gaps
Identify important gaps in this client’s plans and financial affairs.
6. Preferred contact – how does this client want to hear from you — and how often
Document the client’s preference in terms of contact via:
- Face to face
- Lunch presentations
- Evening presentations
As well, identify the frequency with which you used each of these methods to communicate with this client in 2011 – and your goal for each of these in 2012.
7. Your knowledge of the client
This section identifies gaps in your knowledge of the client. Rate your knowledge from high to low in terms of their financial situation (hopefully high), work situation, family situation, hobbies and interests, retirement plans and any health and personal issues.
Then identify knowledge gaps that you need to fill in the next twelve months.
8. Professional advisors
List the name and contact information for this client’s accountant, lawyer and other professional advisors. On a scale from 1 to 5, note whether you’ve met those professional advisors and the strength of your relationship with them.
9. % of Assets held
Approximately what percentage of this client’s assets do you hold? Where are outside assets held, what do they consist of and what is there approximate value?
What’s your history in terms of bringing on additional assets from this client? When was the last time that you talked to this client about this? Where clients hold assets with outside firms, have you offered to prepare a consolidated quarterly snapshot of all of their assets?
10. Relationship with heirs – where you stand in terms of your connection with your client’s spouse and family members.
List the name of each person who will receive a substantial inheritance from this client, starting with the spouse and including adult children. In each case identify whether you have their account currently and rank your relationship with them from 1 to 5, where 1 is low and 5 is high. Include any comments on your relationship with each of your key client’s heirs.
11. Past referrals provided
Record cases where this client introduced you to friends and family, including the date, the assets involved by the potential client referred and the outcome.
12. Close associates
List this client’s closest family members, friends and work colleagues. For each case, indicate whether at some point you’ve met them.
13. Past social activity
Here’s where you summarize cases in the past where you got together with this client socially. List the event or activity, the date and any response or feedback from the client. Based on that feedback, should you repeat this in future?
Capitalizing on opportunities
Once you have the background documented, next is a five step process to identify opportunities and formulate a plan to capitalize on those opportunities.
1. Hot buttons
What are the one, two or three issues that this client worries about the most – and that will motivate him or her to act. Opportunity Checklist – a quick summary of gaps in this client’s financial affairs.
2. Opportunity checklist
Here’s where you identify any things that need to be done to ensure the client’s basic affairs are in good order. Here’s a list that you could use as a starting point – for each of these, indicate whether there is work to be done on them in 2012, whether for the client or for family members.
- Cash Management Account
- Tax free savings account
- Critical care insurance
- Life insurance
- Long term care insurance
- Power of attorney
3. Key client opportunities for 2012
Write down the one, two or three key ways this client you can help improve the client’s situation in the next twelve months.
4. Key business opportunity for 2012
Identify the one goal with this client that would advance your own business in the next twelve months
5. Key steps for 2012
What specific steps are you going to take in 2012 to achieve these goals?
The last four years have tested many client relationships. Going forward, it will be critically important to be proactive and disciplined in managing relationships with your most important clients – a Client Opportunity Template such as this one can play a key role in making that happen.
Tags: 15 Minutes, 30 Minutes, Amp, Assets, Client Background, Client Opportunity, Commitments, Costco, Currency, Current Situation, Half An Hour, Minute Investment, Page Business Plan, Plan Template, Proactive, Procter Amp Gamble, Substantial Return, Walmart
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Sunday, January 22nd, 2012
Advisor Collaboration is now a week old and we have attracted almost 60 members. This week, we are discussing a blog that we posted last week – “What’s The Compound Growth Rate Of Your Business and What’s That Costing You?” We updated our spreadsheet on this blog by adding a new front page to hide most of the numbers so it is less intimidating. This week’s discussion is “What would you need to do differently to achieve and maintain a 20%+ compound growth rate for your business?”
Here’s the math behind building a 20% growth rate:
Business development is a major component of achieving above industry average growth. The two biggest drivers of growth are new assets from new clients (roughly 14% per year) and new assets from existing clients (roughly 7% per year). Investment growth, in normal years, nets out against lost clients and distributions. The good news is that new assets from new clients and existing clients are under your control and dependent on client satisfaction. You do, however, need some help from financial markets to achieve 20% growth, otherwise lost clients and distributions claw back your growth.
Studies suggest that approximately 60 – 80% of new assets from new clients come through client referral. So if you have a $50 million AUM business, (average new client = $500,000) here’s the math:
- $50 million business
- Target growth of 21% (for calculation purposes) = $10.5 million
New assets from new clients (14%) = $7 million (14 clients) made up of:
- Client referral (60%) = $4.2 million (9 clients)
- Business development = $2.8 million (5 clients)
New assets from existing clients (7%) = $3.5 million
The key driver for client referrals and new assets from existing clients is client satisfaction. If you are not getting 8 to 11% annual growth in AUM through client referral and 7% through new assets from existing clients, you may need to improve your relationship management systems.
A good rule of thumb is focus on things that you control. You can’t control financial markets so focus on delivering a consistently superior client experience to drive referrals and new assets from existing clients. Budget time for business development activities (growing your client, personal and business networks) and use it effectively. Build a plan and then focus on the process, not the results and the results will take care of themselves.
The major message we have heard from advisors this week is “Sure 20% growth is easy when you are small, but it is impossible when a book reaches $50 – $100 million and it is even tougher when it reaches $300 or $400 million.” Lack of capacity and the resultant drop in client satisfaction cause advisors’ businesses to plateau. A bigger business should grow more quickly (unless you have $300 million of which one client has $200 million) because you have a broader base of clients who can refer their friends or colleagues. Just use the numbers above and do the math for your business. You will probably need to make some changes to grow at 20% but you may gain some clarity to allow you to achieve this goal.
About Bob Simpson
Synchronicity Performance Consulting has been coaching financial advisors since 1998.
Bob Simpson, president and founder of Synchronicity has been involved, directly or indirectly in the financial services industry since 1981. He has been a very successful financial advisor with Nesbitt Thomson Inc., a major Canadian financial institution. Between 1981 and 1989, he built a business with more than $120 million in assets under management and was one of the first Canadian advisors to build a team.
Tags: 5 Million, 50 Million, Assets, Aum, Business Collaboration, Business Development, Business Target, Calculation Purposes, Client Referral, Client Referrals, Client Satisfaction, Compound Growth Rate, Distributions, Financial Markets, Front Page, Investment Growth, Major Component, Math, Relationship, Relationship Management, Spreadsheet
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