Outside voices and views for advisers

Seven business strategies for advisers in 2018

Future success depends on the client experience, your value proposition and technology

Dec 1, 2017 @ 11:05 am

By Mike Lover

The world is changing fast and you can't plan for everything. But you can implement sound strategies today to position your business for future success.

Indeed, careful planning is essential to sustained business success, and now is the time to develop your road map for the next 12, 24 and 36 months. Here are seven strategies to consider for 2018 that have the potential to set you up for future success.

1. Segment your clients to enhance scalability.

Organize and segment clients based on AUM, and calculate their profitability. How much time does your team spend on each client and, based on your hourly rate, which clients are the most profitable?

You'll also want to identify potential for each client. How much money do they hold away that could be brought to your firm? How many referrals do they make? Do you enjoy working with them?

(More: Why it's critical to improve the client experience.)

Hire a younger, less expensive adviser to serve less profitable clients. Implement a new fee schedule for incoming clients, including a new minimum fee. Develop a tiered service offering based on client segmentation.

2. Improve your new-client onboarding experience.

See if there are any steps in your process that could be eliminated. Analyze your onboarding experience from discovery to account funding and beyond to ensure efficient handoffs, inputs and outputs between business groups. Confirm that data can be entered once and then seamlessly integrated across all internal systems.

3. Broaden your value proposition by adding new services.

By offering more services and product lines, you can expand both the number of clients you're serving and the amount of services they're paying for. Next generation financial planning tools enable you to create a financial plan in just 10 minutes.

Easy-to-use software enables you to employ Monte Carlo simulations, Social Security optimizations, systematic stress tests and income maximization analyses. Research your competitors to see what services they offer that you do not. Compare the level of potential effort and cost versus the revenue potential.

4. Consider enhancing your investment management offering through outsourcing.

Outsourcing a portion of your money management can enable you to lower investment-related overhead costs and better scale your business. Evaluate the efficiency of your current investment process. Do you have the investment capabilities you want and need?

Calculate how much time you are spending on client relationships and prospecting relative to managing portfolios. Do you need to make any changes to better grow your business?

5. Help clients boost after-tax returns with tax harvesting.

Tax harvesting tools, which should be provided by your custodian for free as part of its technology platform, can help you and your client realize short- or long-term losses to offset gains throughout the year to potentially help increase after-tax returns. Capital losses generated for tax purposes can also extend beyond capital gains.

Your custodian's tax harvesting feature should quickly run and analyze different scenarios to determine the tax harvesting strategy that works best for a specific client's account. There should be no additional cost or paperwork.

6. Leverage technology to improve efficiency and enrich your client experience.

Seek opportunities to automate or outsource non-key business processes such as fee billing, scheduling and compliance. The more vendors you work with, the greater the risk of integration issues. Talk to your staff and peers. Attend industry conferences about new technology solutions. You may also solicit the advice of strategic partners like your custodian.

(More: Top 5 ways comprehensive technology boosts client engagement.)

Insist on an upfront vendor commitment to full integration and training. Once you've narrowed down your list of potential vendors to two or three key candidates, you may want to ask them for a limited pilot testing program to evaluate how the technology works with your existing systems.

7. Promote your fiduciary standard of care with clients and prospects.

Put a shining light on your role as fiduciary and build greater faith and credibility in your role as an adviser. Develop client-facing education materials that explain the fiduciary rule and its benefits. A smart marketing approach can help reinforce the value you bring to the relationship.

The financial services world is constantly changing, and current trends are accelerating these changes. As we enter 2018, now is a good time to make plans to set your business up for future success.

Mike Lover is senior vice president of key accounts at Trust Company of America.


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