4 steps to strengthening your business foundation and growing your practice

Jun 30, 2014 @ 5:15 pm

By Paul Blease, Director of CEO Advisor Institute at OppenheimerFunds, Inc.

Building a foundation for future success
+ Zoom
Building a foundation for future success

Now before Ken begins looking at forming a team to both attract and retain a more sophisticated clientele, he needs to do a little housecleaning. If the underlying structure of the business can be best described as “controlled chaos”, it makes no sense at this point to bring in a team member, because the business will simply chew them up. Over the next four episodes we are going to walk you through a very systematic process to:

  • •segment and streamline your practice
  • •enhance your client insights and relationships
  • •dramatically upgrade your platinum and gold service levels
  • •leverage that new service model to attract more platinum level clients

The foundational underpinnings of any mature practice are a comprehensive and highly systematized wealth management and client service platform. In the next four articles we will focus on the client service component because it is currently Ken's greatest challenge.

The first step in strengthening your business foundation is to segment your business both quantitatively and qualitatively.

The key to successful client segmentation is to factor in both quantitative and qualitative elements, which exist in every business relationship. Though revenue will always be a critical component in determining the value of a client, we should not overlook the qualitative impact of factors such as referrals, attitude and future growth potential.

Not all relationships are created equal. Some people in your life take way too much time (relative to the value received), suck the energy right out of you, crush your attitude and deflate your team's spirit. Others leave you feeling energized, excited and positive, and your only regret is that you don't have more time to spend with them. Think of building a business in which you are surrounded by the latter. How much more “productive” would you be? What is the price you pay (not to mention the price your family, friends and team pay) when you surround yourself with the former?

1. Determine what characteristics would collectively define your ideal client.

  • • Current revenue - This is an obvious one and in most segmentation strategies.
  • • Future revenue - We believe this is critical because it reflects a more realistic “lifetime value” of a prospective or existing client. For example, you might have a young intern today who in a few years might be one of your most significant clients. You want to capture this variable.
  • • Time consumption - Handholding, decision-making process and how quickly they under¨stand and take action.
  • • Attitude - Positive, upbeat and low maintenance clients foster the same characteristics on your team (and vice versa, by the way).
  • • Center of influence - How consistently does that client refer highly qualified prospects to you?

2. Assign a numerical range that reflects performance (we use 1-3).

3. As a team, rate each client within your practice on each of your characteristics.

4. Do the math to determine each client's individual score.

5. Add up your individual scores and divide by the number of clients to determine your “average book score.”

Using our model of five criteria and a three-point scoring system, you would have a range of 5-15 (with 5 being a client from the netherworld and 15 being optimal). Here's the epiphany:

Not all businesses are created equally. You could have two businesses, each generating $2 million in revenue: one with the “level of difficulty” that would put you in an early grave and the other with a “level of difficulty” that would fulfill your wildest dreams. This process gives you a baseline from which to begin to build the latter.

Revenue does not happen in a vacuum. Working with particular clients, in a particular way, with a particular team generates it. Here are a few questions to ask yourself and your team:

  • •If you could wave a wand, what type of clients would you work with?
  • •Are your current business structure and systems capable of attracting and retaining clients of this caliber?
  • •Are your team's education and development sophisticated enough to add value to these clients?
  • •Is your practice demonstrably better than that of your peers, and can you articulate this in a compelling way?
  • •Is your service model so exceptional that your clients feel compelled to share their experiences with their friends and colleagues?

In future articles, we will review the additional steps necessary to enhance your client relationships, dramatically upgrade your service levels and leverage this new foundation to attract more platinum level clients.

These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the date of this presentation and are subject to change based on subsequent developments.

Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. 225 Liberty Street, New York, NY 10281-1008 © 2014 OppenheimerFunds Distributor, Inc. All rights reserved.


What do you think?

Related reads

Sponsored financial news

Upcoming Event

Apr 03


2017 Icons & Innovators

On April 3rd, InvestmentNews will honor this yearís Icons and Innovators recipients at our inaugural Iconís and Innovatorís Awards luncheon at the Essex House in NYC.These awards recognize financial advisers and industry... Learn more


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print