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How a uniform client service plan can help a fledgling firm grow

As industry competition continues to rise, advisers must take steps to grow their businesses quickly and sustainably

Feb 27, 2015 @ 12:01 am

By Drew Horter

Every year, many young and mid-career professionals make the move into the wealth management industry hoping to help individuals and families make the best financial decisions. While wealth management can be an exciting and rewarding field, few new advisers get the appropriate systems training, mentoring and coaching they need to be successful.

While working with more than 300 advisers nationwide, I've studied the best practices of the top 30-40 advisers to fine-tune our systems.

From this, we've developed a list of key standards and procedures all advisers who want to grow their businesses and assets should follow. Rising competition from larger players and robo services makes a uniform client-servicing plan more critical than ever. We believe advisers who follow these steps diligently will find their practices growing quickly and sustainably. Here is a brief sketch of what that takes:

Differentiating yourself

With so many advisers competing for assets, it's important for each adviser to have a unique value proposition for each prospect. Some advisers differentiate themselves through a wide range of marketable skills, including asset allocation investment strategies, an advanced degree or designation program such as an MBA or CFP, or an area of specialty like retirement or estate planning.

Others set themselves apart through soft skills. Relatability is a particularly valuable trait in the industry, as life experiences — such as caring for an elderly parent or going through a divorce — can help advisers better relate to clients and prospects.

Meeting prospects

With enough planning and a bit of creativity, advisers can meet 5, 10, or even 15 new prospects per month.

Many advisers we work with have found success holding educational and retirement seminars in neighborhood locations like local colleges, senior centers, libraries and restaurants. These workshops can cover an array of topics relevant to a given demographic. For instance, senior citizens may be interested in learning about Social Security and retirement planning. Regardless of the topic, an educational session can be a good format for advisers to establish themselves as credible experts and build relationships.

Other advisers offer incentives, such as meals and gift cards, for new prospects to help arrange initial meetings. This can be a good way for an adviser to meet potential clients one-on-one and demonstrate value. Special client appreciation events, where clients are encouraged to bring referrals, can also help lower the average marketing costs to attract new clients.

(Related read: 3 tips to help you zero in on the best client prospects)

Turning prospects into clients

Upon meeting new prospects, advisers must take several deliberate steps to turn those prospects into clients. That starts with the first meeting.

The primary purpose of any initial meeting is fact-finding. It's important to collect any information that might be relevant to the prospect's financial health, including brokerage statements, 401(k) statements, tax returns and other financial documents.

During this initial meeting — and before discussing the suitability of any investments — it's critical to determine a prospect's risk tolerance profile with a simple questionnaire. This isn't just a matter of best practices; it's required.

The second meeting should focus on evaluating the suitability of the prospect's current portfolio. People are often surprised to learn how their portfolios are actually constructed. For instance, risk-averse clients often find themselves exposed to inappropriately risky assets. Others discover their portfolios underperformed or suffered dramatically during challenging economic times. At this point, advisers should provide a third-party analysis as to why the prospect would benefit from working with the adviser.

(Also: A numbers-based approach to landing new clients)

Retaining clients

As hard as it is to attract new clients, it may be even harder to keep them. According to a 2012 survey by Paladin Registry and ByAllAccounts, more than 60% of affluent investors considered firing their financial adviser within the next year.

For this reason, it's important for advisers to consistently deliver high-touch client service. We recommend a “28 touches” system, through which advisers interact with clients for a minimum of 28 “touches” per year. This can be achieved through a combination of one-on-one meetings, newsletters, client appreciation events, birthday cards, phone calls or other communications. By being proactive and making frequent contact, advisers can solidify close, long-term relationships with clients.

Drew Horter is founder and chief investment officer of Horter Investment Management.

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