As a financial advisor grows, the practice reaches a point in which the practitioner may wish to consider developing ways to categorize his or her clients to identify profit levels on a per client basis. Even more important is identifying service levels associated with those same clients. It simply does not make sense to offer the same level of service both to a client who has placed small amounts of investable dollars with you and to another client who has invested millions. Therefore, methods need to be devised for identifying and then carrying out service levels that match the client’s needs and are cost-efficient for the advisor.

Some advisors have used a system consisting of such names as “platinum,” “gold,” “silver” and “bronze” as categories and then assigning assets under management (AUM) levels to each of those categories. However, this may not go far enough in fairly delivering services to those clients who may not exactly fall into one or another category. So how can a financial advisor develop a system of categorization that fits the unique characteristics of a diverse array of client types or service deliverables?

The first and most fundamental step is to analyze the client base. By creating a spreadsheet (for instance) that shows how many clients fall into different levels of AUM, fees or planning retainers, it may be possible to uncover breakpoints that can later serve as the criteria for categorization. Here is an example:

Figure 1 shows a comparison between identified client categories (platinum representing the highest AUM) and client count per category. This type of analysis can reveal some surprises. As can be seen, the silver category has the third-lowest investable asset numbers, yet has the highest client count. The platinum category, which contains the highest levels of invested assets, is barely in second place in client count. In this example, the financial advisory firm created these categories, but then split out of each category those clients who had managed accounts and separated them from those who had accounts placed through a brokerage firm (custodian).

The feeling was that fees from these two account types should be reflected in the service levels. While there does seem to be a correlation between the two account types, there is very little correlation between the AUM categories and the client count, which suggests that this firm needs to better understand where its clients are coming from and to focus on that sweet spot. As an example, the silver category above shows the highest number of clients for the firm, but is only third in the amount of potential fee revenue for that same firm. In other words, the amount of time and resources used by the firm to serve the needs of this group is likely to be much higher than in the other categories unless some way is developed to match the services to the client category.

This will be difficult, however, if the firm did not adjust service levels in the past and is now imposing those levels on existing clients, which could have the effect of losing clients who were enjoying higher levels of service. Thus, a line-in-the-sand approach might be warranted. This is where the firm decides to adjust service levels appropriately, but only for new clients. While this has a minimal effect on increasing net profitability in the near term, it may preserve the existing clients.

Another step in this process of client categorization is to find ways to deliver the appropriate service levels on a consistent basis. For this, a full-featured client relationship management (CRM) software is recommended. By full-featured, we are talking about a software platform that has the ability not only to categorize clients but to establish work flows and have other ways to ensure the delivery of consistent client experiences. While there are a few that approach this fairly well, two worthy of mention are Redtail ( and Junxure (

Some time ago I visited a financial advisor’s office, and while I was waiting in the reception area I noticed one staff member walking into a small conference room with a tray of items that included coffee, cookies, writing instruments and other items. I asked what the tray was for and the staff member told me they had developed a set of personal items that their clients like, put these items into their CRM and then made sure those items were available in the conference room when the clients arrived. This staffer mentioned to me that she once brought an iced tea into a client meeting for the client who joked, “What? No umbrella?” From that moment on, each time he returned for a client appointment, his drink always had an umbrella. He called the staffer his umbrella lady.

The point is that by using CRM to categorize the client and also to identify personal interests, the firm could ensure that the client experience was exceptional and noticed. It was also easy for the staff to deliver those kinds of touches. Granted, this is a small example. But if this extends to all types of service deliverables, then it can have a remarkable effect on the client’s perception of the firm and its services.

Sometimes, it is the little things that count. Having accurate records in a CRM can lead to the delivery of superior services as well as lead a client to think he or she is the only client you have. Taking notes and then placing those notes in the CRM for future reference, making promises and delivering on those promises ahead of time can simply add to the WOW factor.

The CRM can be used to ensure consistent delivery of services by automating work-flow task steps, assigning tasks to the appropriate people in the office and ensuring accountability for those tasks being completed correctly and on time. Redtail (for example) has a variety of ways in which a financial advisor can customize the client record to be able to deliver consistent client experiences. With Redtail, you can use the “Personal Interests” field or the “Keywords” field, or develop your own field to customize the database to fit the way you want to be able to retrieve information through a sophisticated search function. Moreover, you can then save those same search criteria in a “quick list,” which can then be used in the future to pull up an accurate list of clients based on the saved criteria.

Though this example is about Redtail, there are a number of other CRM applications that do similar things. Junxure, ProTracker, Salesforce, MS Dynamics, eMoney Advisor and Interactive Advisory Software are some of the better-known names. However, there are a slew of new products to consider as well. Evervize ( and Advisor’s Ally ( are two new solutions you may wish to check out along with the others listed here. The key is finding which CRM contains all of the features that match the needs of the financial advisor’s practice. Even more important is to use those features to create the highest levels of efficiency, productivity and net profitability.

David L. Lawrence, Ph.D., is founder and president of Efficient Practice, a consulting firm that provides financial practices, broker-dealers and independent firms with comprehensive, profit-driven efficiency consulting and resources. For details, visit