The hidden reason why clients will leave you next year

The only constant is change in the financial services business. With the new year will come new reporting for clients as CRM2 kicks in from the client reporting perspective. Are you ready for CRM2 changes in your business? Working with advisors, the number one challenge that CRM2 brings is capacity. The number one practice management problem for financial advisors is lack of capacity to serve clients. This comes from the Book “Practice Made More Perfect”, Mark C. Tibergien & Rebecca Pomering Bloomberg Press 2011. Capacity for financial advisors include a shortfall of not enough ideal clients or too many clients. It is more than just time management, it is practice management. A simple question I have asked advisors in workshops across Canada for the last two years is “ When your clients see the fees, will they expect more from you and your team? “ Most advisors say yes. Then the hidden reason comes in the form of the second question” how much more will they expect, as they do not understand the value your fees deliver”. If you have 100 clients and they all will need or expect more planning, advice, communication or service, does that mean an hour or two from each client? This means 100 clients times 2 hours each is 200 plus extra hours next year. When they do not get the promise delivered, poof they are gone. Losing clients sucks, but losing relationships is even tougher, especially when you fail to deliver on expectations, or worse your value promise.

The problem is going to get worse

But the capacity problem is only going to get worse in 2017. Do you plan to work more hours next year? Do you want to tell your spouse and family to cancel holidays next year? If you are at capacity now, where will 200-300 hours come from? How will you deliver more and meet expectations, articulate and deliver your value? Problem, yes, big challenge, yes, ignored by most, yes. Until it becomes a problem, we tend to ignore things because we are too busy today to tackle the problem. It creeps up on us and hits us on a Wednesday afternoon, when an ideal client comes in and wants an updated comprehensive approach to their finances by the end of the week. It comes when a progress update meeting results in loads of paperwork that has to be completed and you are running out to your kid’s hockey game.

Is this a potential problem in your business? Losing clients sucks.

The only way to find out is to discuss your fees, and value delivered to your existing clients by building and maintaining a formal feedback process and having critical conversations around your value promise. Without feedback we cannot know what the client expectations are, especially if we have not discussed fees in dollar terms before, and what you deliver for the fees. Finding out that you are meeting and exceeding client expectations in the new world of CRM2 regulation will give you comfort knowing the only capacity issue you will have is how many new ideal clients you can manage next year. If you are meeting and exceeding expectations, and delivering a high value process, investors will beat a path to your door.


How will you manage your capacity?

Top advisors manage their capacity by taking more time off. They have the systems and processes in place with their staff to service clients and manage expectations. They have the processes to deliver comprehensive services and do regular feedback to meet and exceed expectations. They are great at delegating and building processes such as client checklists, service checklists and follow up checklists to meet and exceed expectations and have a way of articulating their value that clients understand. They have practised it, over and over and use it consistently to service their ideal clients. They focus their time and energy on the things that bring value to their ideal clients and delegate the rest. Then they take more time off. Remember, Wayne Gretzky did not sharpen his own skates.

Segment annually to manage your capacity

Top advisors also know that they cannot service ideal and non ideal clients the same. They know how to segment their ideal clients based on revenue delivered to the firm. Most advisors segment on assets or relationships, which is helpful, but the true indicator of segmentation is revenue delivered in the first year and ongoing revenue. Without these numbers, segmenting clients is like doing a puzzle without the picture on the box.

It starts with stronger conversations

A big part of the value advisors deliver is the conversations of value they have with their clients. Conversations to help clients understand their “why” and focuses on peoples values. As Roy E. Disney, quoted “when your values are clear your decisions are easy.” So how can you discover your core values?
Then focus on goals. In a recent workshop with financial advisors, I discussed their personal goals and got them to write down the number of goals they have. The average number of personal goals was about 7. Then I asked those advisors, how many goals do you typically get from an ideal client? The answer was less than seven, and the average was three.
Robo-advisors have difficulty with conversations. With stronger conversations, you will thrive in the new world of regulatory change, digital advisors, and confidently grow your business regardless of any disruption that comes your way. Have the critical conversations about your fees, your value, and your services. Put it into your value promise document and show your ideal clients what they get and what it costs, with clarity, transparency and empathy. This is what practice management can do for your business.

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