One of our newer contributors on Practically Speaking is Andy Steckiel. Andy is a senior product manager at SEI, responsible for strategic initiatives and identifying new services for advisors. He spends a lot of time talking with a diverse advisor base in his role, segmenting them by their commonalities, and packaging services to meet their unique needs. In today’s post, Andy looks at what he calls “right-sizing” service. As advisory firms continue to grow both in AUM and number of clients, we have to find a balance between underserving some of our larger clients and overserving some of our smaller.

Please enjoy Andy’s timely Practically Speaking post.   ---  JDA

In the early days of growing their businesses, advisors do whatever it takes to establish a client base. When you were starting out yourself, you may have poured countless hours and cups of coffee into making it work, and you likely didn’t focus on things like brand clarity and value proposition. Those fine points don’t matter when the mortgage payment is due! 

What is the right fit for you?After you made it through your first few years and started to gain momentum, your cash flow and confidence rose. You added staff. You began to enjoy success. But somewhere along the way, you may have acquired clients who didn’t fit your target market or who weren’t asking for all of the services you created.  Now that your business’s exponential growth has leveled off, servicing current clients can consume an increasing share of your time.  

If this sounds like you, your business is in the Emerging or Mature phase, as described in SEI’s white paper The Purposeful Advisory Firm by John Anderson and Raef Lee. You’re not in the early days anymore, and as Marshall Goldsmith’s best seller reads, What Got You Here Won’t Get You There.

How you spend your time should evolve with each new phase of your firm’s growth. 

Emerging Lifestyle Enterprise

Focus the right services on the right clients

As discussed on these pages many times, advisors too often limit segmentation to organizing clients by the value they bring, such as revenue, referrals, etc.  This brings focus to your top-revenue clients, but misses what can be a more effective and less common segmentation: creating distinct service models to meet each segment’s unique needs at a reasonable price. You may be used to doing EVERYTHING for a percentage of AUM. That’s a perfect model for complex high net worth clients, but chances are you have clients who don’t need that range of services. 

I’d like to suggest that it’s unnecessary and even wasteful to deliver the same full-service experience to every client. Why not aim to deliver amazing, right-sized service to each client segment, so they’re satisfied while your time is optimally valued?

To identify clients you may be over-servicing, try this simple, 3-step exercise:

  1. Use a sticky note to describe why each of your clients came to you in the first place, using the same language your clients would use. Then create ‘client groups’ by combining sticky notes with similar messages, such as “getting ready for retirement.” 
  2. On larger sticky notes, list the services applicable for each client group. The key is to list ONLY the services that meet the unique needs of each group – not necessarily the services you’re accustomed to delivering. Take your time on this step and be specific. To jump-start your thought process, consider this list of services our advisor clients commonly offer:
  • Investment Management
  • Tax Planning / Management
  • Comprehensive Financial planning
  • Modular Planning (e.g. major purchase, tuition, health care costs, etc.)
  • Small Business Advice
  • Real Estate Investment Advice
  • Quarterback across Accountants & Estate Attorneys
  1. Put your primary client group to the side – the one that needs your holistic services or that aligns to your niche. Analyze the rest of the groups, looking for shared characteristics or themes. Do you see a substantive commonality across many clients, such as high-earners in mid-career who need help balancing saving & spending? If so, consider crafting a targeted marketing message to that segment and testing it out with suitable prospects.

Taking back your time

Once you’ve completed step #3, view the remaining groups as an opportunity for getting time back. How might you do that? Here are a few approaches:

  1. If you have a junior advisor on staff, consider letting them focus on these clients. And if you’ve been thinking about hiring a junior advisor, perhaps now is the time.
  2. If you’re highly committed to your niche, consider bringing focus to your business by transitioning these clients to another local advisor. Remember that it makes sense to continue servicing someone related to a key client or who might be a strong future opportunity. 
  3. Consider establishing a partnership with another advisor to deliver non-core services, or outsourcing to a vendor. The outsourced financial planning or investment management markets have gained traction in recent years. 
  4. Consider defining a menu of à la carte services for which you charge a flat or hourly fee. You can also use it as a tool to convert leads into clients more easily and to tee up future cross-selling opportunities. 
  5. If you’re accustomed to delivering your “full service” by charging a percentage of AUM, consider establishing a minimum for investible assets, if you haven’t done so already. This helps ensure you’re properly compensated in this model and better sets client expectations.

Limiting the services you provide to some clients can be a challenging exercise for over-achievers who are delivering the same services to every client. If you’re struggling to identify opportunities to limit the services you’re offering, consider segmenting how you support clients. For example, you could pare back the number of scheduled one-on-one meetings, or set expectations for a less ambitious response time to client questions.

The bottom line is that how you spend your time directly affects your growth. You’ve made it to this point because you’ve found a way to deliver outstanding service to certain clients, but you can’t do that for everyone – no one can. Rather than delivering service that exceeds your clients’ needs, focus on right-sizing service for each client segment.


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