Go beyond the call of duty – just not for everyone

Although some financial advisers are always thinking of ways to go above and beyond to provide extra services to clients, Paul Baumbach sticks to managing his clients' investments.

Although some financial advisers are always thinking of ways to go above and beyond to provide extra services to clients — from balancing checkbooks to sending housewarming gifts — Paul Baumbach sticks to managing his clients’ investments.

“We’re not superhuman,” said Mr. Baumbach, head of Mallard Advisors LLC, which manages about $75 million.

“There are only so many hours in the day,” he said. “We don’t position ourselves as a firm that does everything for clients.”

Mr. Baumbach’s approach illustrates the often tricky balancing act facing many investment advisers and registered representatives: trying to combine the meat and potatoes of their services — financial planning and investment management — with enough “extras” to retain clients and keep them happy. And while there are no hard-and-fast rules for determining how much of these extras are worth providing, or to which clients, practice-management experts agree that there are some basic guidelines to consider.

For starters, advisers should segment their clients according to their account sizes in order to determine which clients should receive more attention, said Sal Zambito, a senior vice president of business consulting for LPL Financial.

“Too often, we see advisers trying to provide the same service to everyone,” he said.

“It creates a real inefficiency in the business. If you’re doing too much for too many people, you’re not doing anyone justice, and you’re becoming inefficient,” Mr. Zambito said.

His recommendation, which he stresses is both art and science, is for advisers to place a numerical value on each client, based on assets under management — the more assets, the higher the number — and another number for how much they genuinely like working with the person. Add the two together, he said, and those clients with the highest figures should receive the most customer service.

Mr. Zambito recommends that advisers further group those top clients into three groups — A, B and C — and spend most of their extra time and money on A clients.

Along with segmenting clients by assets and the quality of their relationships, Stephanie Bogan, president of Quantuvis Consulting Inc., recommends that advisers take into account the earnings potential of each client. For example, an adviser may see a benefit in proving more services to a client with fewer assets but who also happens to be the grandson of a top client.

“This isn’t a cookie-cutter approach,” she said. “This allows them freedom and flexibility.”

Charles Cheever, a partner in the wealth management group of Choate Hall & Stewart LLP, agrees with going beyond the call of duty on those rare occasions when it can help build a client relationship. For example, he recently spent about 40 hours helping a newly widowed client buy a vacation home in Martha’s Vineyard.

“This is an investment in the relationship,” said Mr. Cheever, whose family office manages $2.2 billion in assets.

“You’re willing to do this because you don’t do these kinds of extra services every year,” he said. “It’s not all about the compensation; it’s an investment in a relationship that will last a long time.”

Gabriel Garcia, managing director of business consulting with Schwab Advisor Services, a unit of The Charles Schwab Corp., said that segmenting is “efficient and consistent,” but added that advisers should also determine the cost of providing varying levels of services to different clients to determine where to draw the lines.

Another suggestion for figuring out the level of specialized service to give clients is to break them into groups based simply on revenue that they bring in, said Maureen Wilke, founder of consulting firm Wilke & Associates Inc. She recommends that advisers offer the best services only to the 40 clients that bring in the most sales.

“I always suggest things that can be duplicated and that are tied to clients’ lifestyles,” Ms. Wilke said. “But sometimes, I think advisers go overboard … and then it doesn’t mean anything.”

Indeed, once advisers figure out which clients to lavish with extra attention, they need to make sure it is “authentic,” said Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network.

“If you can’t do it with authenticity, it’ll start smelling like fish, and people will be a little put off,” she said.

And some advisers make their own rules.

Randy Brown, chief wealth strategist of Briteline Wealth Management Group, said that he targets his elderly clients for extra services. For example, he meets with one elderly client twice a month to help her balance her checkbook.

“For me, this is a philosophy about helping elderly people,” Mr. Brown said. “When her husband died, I helped her with major financial decisions in his absence and really looked out for her.”

E-mail Lisa Shidler at [email protected].