Advice & Trust

The Undisputable Truth

Your time is limited, so working with ideal clients is essential.

It's simple math. A finite number of hours in the day translates into having only so much time to serve however many clients you take on. This being an undisputable truth, chances are you either have too many clients or you don't have enough ideal clients-or both. There is a "right" number of ideal clients for your business-the number that allows you to sleep at night, both because you have the time to do it and because you know you are doing the best you can for both your clients and your business.

You can't serve them all. So you have to decide which people to keep and which ones to let go, either to make room for more of the ideal clients, or to simply decrease your clientele to a manageable number so you can serve the ideal clients even better.

If you've come to this conclusion already, whether you're comfortable with it or scared about it, congratulations. You've faced a fact that can make a huge, positive difference for both your clients and you. It's all part of deciding to make your business all about them, the clients.

So when the time comes to thin the rows, separate wheat from chaff, raise the cream to the top (or whatever other euphemism makes the idea of letting go of hard-won clients easier), how can you begin this process with efficiency and grace? A letter is a simple, clear way to help people understand what you are doing.

Of course, sending a letter has its hurdles, the primary one being clearance from your compliance department. The other difficulty, knowing what to write, will be addressed here, in this article. Know that we've tried to make the message as compliance-friendly as we can, and you should work with your own people to ensure that it is acceptable.

Now that I've said my piece, what should you say?

Consider creating two different letters, which you'll send to different types of clients. First is the "Dear John" letter saying, essentially, that you're working in a different market niche-and they are not part of it. (Sound harsh? I suppose it could be, but if you remember that it is in their best interest to find an advisor who specializes in serving them and other people like them, you should be able to communicate this with some kindness.) You can also include a referral to another advisor, if there's someone in whom you have confidence.

The other letter is more of an announcement of coming changes and an invitation for clients to talk with you, their advisor, about what the new changes will mean.

In either case, you start by telling them the truth: Let people know that, in order to provide the best possible service to your clients, you are focusing on a core group who meet specific criteria. (Those criteria are what I call the Ideal Client Profile, which you can read more about and can be created or modified by going to www.bachrachvbs.com. The profile includes both personality characteristics, such as "enjoys delegating financial tasks," as well as financial factors, such as "has investable assets exceeding $250,000.") Including these criteria as part of the first letter could help recipients realize that they are not your ideal clients. It might be along these lines:

Dear Joe & Susan,

This letter is to announce that we have been examining how we can be of the utmost service and value to our ideal clients. Although we have appreciated your business and working with you, it has become apparent that we will no longer be able to serve your needs. We are enclosing a referral to a reputable financial advisor who may be better suited to your financial situation and advisory requirements. Also enclosed is our Ideal Client Profile, which details the type of client who benefits most from working with us. If you feel there has been some error or misunderstanding, please contact our office, either by calling 555-5555 or e-mailing us at [email protected]. Know that we wish you the best of success in your financial future.

Warm regards,

In the second type of letter, the tone is somewhat different, and you'll also request a personal meeting. This brief communiqué could look something like this:

Dear JoAnn and Tom,

As the result of examining how we can be of the utmost service and value to our ideal clients, we are excited to announce that we have made some important changes to our business that will positively affect you. Enclosed is our Ideal Client Profile, which will give you a sense of the kind of client who benefits most from working with us. We believe you may be that person. Please contact our office, either by calling 973-4520 or e-mailing us at [email protected], to schedule an appointment to discuss what great new effect this will have on you.

Warm regards,

Straightforward, yes? A little too direct for you? I can just imagine that some readers will be nervous about including criteria in a letter-Will my clients be offended? What if someone disqualifies himself or herself needlessly? Perhaps I can allay your fears by pointing out the following:

1. It's highly unlikely that anybody you would really want as a client would be offended by the truth. I realize things have been tough lately, and you may very well still be in survival mode, but take a breath. Think about this for a moment. Anyone who would feel put off by such a description either doesn't fit it or gets riled up over nothing. In either case, this is not a person you want as a client. The ones who fit the profile will feel special and be excited to work with someone who specializes in people like them.

2. It's more likely that a desirable client will ask you for clarification or else make a change to meet your criteria. A number of advisors have told me that when they shared their Ideal Client Profiles with people, some clients simply asked what they had to do to bring themselves up to snuff. Some brought their assets from other places in order to keep working with the advisor. Some have even been willing to write checks for the difference. For example, one advisor might say that a person's account must yield $8,000 per year to the advisor, and one person is close-let's say the account yields $7,000 a year-then that person could elect to simply pay the additional $1,000 outright. (I acknowledge that some people reading this article do not have that latitude due to licensing or company restrictions, but most financial advisors do have the ability to adjust the percentage that clients pay them based on their assets.)

It's All About Them

You should find that sorting through your existing client base goes smoothly as long as you remember that you are doing it for the good of everyone concerned: The ideal clients benefit because they will be getting improved service from you, and those who are let go will be free to pursue a relationship with a financial advisor who will regard them as ideal clients. Remember, it's all about them. Use the sample letters recommended here as a way to ease into the conversation of how and why things will change, and it should also work out to your benefit, too.