Leo Pusateri is president of Pusateri Consulting and Training LLC in Buffalo.
Clients for a Lifetime
Remember how Scott asked earlier how he and his team could develop clients for a lifetime? This is easy if you create a system and take some time to "work" the system.
I've developed an exercise to help you evaluate your client successes. It's time to create another chart.
I suggest you start with your Top 10 clients and then extend it to your Top 25, then Top 50 and ultimately to your Top 100 clients. Your first column should show Rank. You can rank your top clients by assets under management or by category: insurance, tax, audit, financial planning, etc. List the percentage of your client's business in the area of expertise.
List Revenue as your next column. I prefer this approach for ranking purposes. Some advisors actually go deeper with profitability analysis. Remember, the deeper you can go, the better for analyzing client successes.
The next column is unbelievably revealing-Estimated Lifetime Value (ELV)-and I'd like to illustrate how the analysis works by using a dialogue I had with Scott last year. It went something like this:
"So, Scott, how long will you be in this business? 25 years? Great! Let's call your client Mr. Ideal. You are managing $1 million in assets, you have 100% of his assets under management, and you earn $10,000 a year in fees from this relationship. So, what will Mr. Ideal be worth to you over the next 25 years?"
Said Scott, "25 years x $10,000-let's see, that will be about $250,000."
I said, "No, not exactly, Scott. How else can Mr. Ideal grow with you? Give me five ways. Appreciation? Good, that's one. Capital additions, good that's two. Intergenerational wealth transference? Good that's three. Referrals, that's four."