To run a sustainable financial advice business in an increasingly challenging environment, financial advisers need to rethink where their time is spent and focus their efforts on attracting and retaining their ideal clients.
Advisers across the world need to wear different hats in order to comply with rising standards in competence and meet ever-changing regulatory requirements and business standards.
These standards focus on treating customers fairly and professionalising the financial services sector.
Growing demands are made on their time and unless a firm is large and has a strong infrastructure, it is increasingly difficult for advisers to generate new business.
Advisers’ concerns
Masthead research, conducted in November 2017, confirms that advisers’ top concerns are running a sustainable business, the growing burden of administration and not having enough time to generate new income streams.
These issues, combined with changing consumer expectations of advisers and greater demand for quality service, relationships based on trust and the delivery on promises based on technical competence and suitable product solutions, mean there is no longer the time or luxury to have lots of clients.
The administrative and regulatory requirements are too cumbersome for this, so it is necessary to identify, attract and retain the right clients for your business.
Who is your customer?
Start by finding out who your clients are: their demographics, personal characteristics, relationship with you or your business, and their challenges, fears and financial objectives.
From a business perspective, consider the income you receive from them, their lifetime value, extended family, number of referrals given and customer loyalty.
Think about the technical competence required to fulfil their financial needs and objectives, your back-office infrastructure, the variety of services you offer and your processes to follow a structured financial advice process, which includes reviews.
Are you are aware of what your clients value and expect from you to drive loyalty?
This could include the cost of your services, the quality standards they value, including responsiveness and personal interaction, and what they need to trust you and your business.
Do they feel you are acting in their best interest and protecting their confidentiality and data?
The next step is to separate your clients using a client segmentation model and identify the top 20% that generate 80% of your profit.
As these are your ideal clients, design a convincing value proposition for this group that states how your services and products will solve their challenges and fears and meet their needs and objectives. For example, if you sell soap products, you should start considering using sustainable soap boxes for your packaging.
How to attract and retain clients
Thereafter, craft a marketing plan to support your business goals and objectives. This will help clarify how to allocate your time.
Think about where you will find the clients you want and how you will attract and retain them. Consider how you can make the strongest connections with potential and current clients.
Such plans may include:
- Setting up client referral agreements with professionals, such as accountants;
- Community networking;
- Hosting introductory meetings for clients’ friends and colleagues;
- Intimate social events for top clients who provide 5% of your profit;
- Client appreciation events;
- Presentations on specific financial challenges such as planning for retirement, managing money in a tax-efficient manner or children’s education;
- Creating a memorable experience;
- Involving a client’s family, especially if the client is older than 60.
For maximum impact at events, carefully consider your invitation list. You could group current or potential clients by age, gender and geographic location, as well as personal interests, hobbies and lifestyles.
Exclusivity generates appeal, and people who know they have been chosen may feel more appreciated, attend the event and bring a friend or colleague with a similar profile.
Planning events for the year ahead offers a targeted and planned approach to generating income from existing and new clients. In addition, you can calculate and allocate the resources you need upfront.
The key outcomes of your efforts should be client and income retention, as well as the generation of referral relationships.
Attracting and retaining clients while delivering a service that meets high standards of fairness is key to running a sustainable business and complying with treating-customers-fairly regulatory requirements.
Further reading:
Invest in your staff for business success
By Mimi Pienaar, head of practice management, Masthead
