One of the lessons most successful advisors have learned is that they should seek out clients who are like them: people with the same values, goals and interests. People with whom they have a natural rapport. 

Some advisors do this by trial and error. Some do it consciously. Some ignore the advice outright—and set a course for burnout. 

But there’s a reason for taking that kind of approach when you realize how much time you actually have to spend with your clients. Time is the most valuable commodity you possess. To get the most out of your personal and professional life, it is imperative that you use your time as effectively as possible. 

That sounds obvious, but it can also be vague. So let’s put it in terms of tangible goals—perhaps you want to earn $1 million a year consistently. First you must figure out how much you need to be paid per hour. Before you can do that, you need to figure out how many hours you work a year. 

There are 365 days per year. Subtract 104 days for all the weekends, and that gives you 261 days. Subtract 20 vacation and personal days and nine holidays, and that leaves you 232 days to run your practice.

In a standard eight-hour day, how much time do you really have to spend with clients? Even with a great team, you must spend some time in other areas besides relationship management. After dealing with financial management, office management and referral development, a good estimate is that you have five hours a day to spend on your clients.

Five hours times 232 days equals 1,160 hours for the entire year. If you want to earn a million dollars, simple math shows that you must net about $862 per hour (1,160 hours times $862 equals $1 million). 

That means considering your payout and average assets under management per client. For example, if you have a 100 basis point payout for your clients, you need 100 clients with average assets under management of $1 million. Or you need 200 clients with average assets under management of $500,000, and so on. 

We realize that one financial advisor’s production and net can be very different from another’s. However, by understanding the basic moving pieces, you can determine the number of clients you would need given your revenue and net.

Now to determine the amount of time you can spend with a client, simply divide your total available hours by your total clients. In simplest form, if you have 100 clients and 1,160 available hours, you can afford to spend 11.6 hours per year with each client. 

Let’s say you meet with any one of these clients in person once a year for one hour. When you include preparation and follow-up, you are looking at three hours minimum per meeting. That leaves you eight hours to manage the relationship for the remainder of the year. 

So how can you create a highly satisfied client that wants to refer you to her friends, family members and colleagues when you have just eight hours to spend on that individual? Eight measly hours to develop, prepare and execute a knock-their-socks-off marketing plan to some of the pickiest people on the planet. Easy right? 

We all know it’s not, but now at least you have a clear picture of the task before you, even if it’s through this very simplified example. The only answer is to get systematized in your relationship management—to provide high-touch service to 300 clients by running just three or fewer service models. 

And the only way this can work is if you use high-net-worth psychology to identify one, two or three personalities among high-net-worth clients that you work best with, and then develop one relationship management plan for each of them, using it again and again on hundreds of affluent clients. Again, think of their goals, interests and personal affinity with you. 

Working this way is easier, more efficient and more profitable, and it helps you create a business model that’s easier to sustain. 

Working with clients like you feels less like work, and they, in turn, recognize your natural interest in them. And what you might not realize is this: You’re already unbelievably skilled at working with them. You already know how they want to be treated. 

This approach also helps you with economies of scale—because you can create one service model and apply it to everybody (or big segments of your client base). You can streamline it, simplify it and get systematic. That allows you to focus your mental and physical energy on all of the other issues related to financial advisory management and business development. 

Contrast this with creating a new service model for each new client, reinventing the wheel each time and using up significant energy doing it—energy that ripples through the rest of your staff as they handle each new wheel and its set of issues. 

That’s why if you take on a client that doesn’t fit, there must be several million very good reasons justifying the incremental additions to the service workload. 

We are not saying you shouldn’t take on an affluent client just because he or she is not like you. But you do better when you actively cultivate referrals from clients you relate to. 

If the affluent clients are happy, you will have created a marketing and asset-gathering machine. We know from our own research that highly satisfied clients regularly increase the amount of assets under management they keep with their financial advisor—it might come from their business income, bonuses, options, inheritances or assets previously overseen by another advisor. And research shows they will increase the number of referrals they make regularly, bringing in
new clients. 

Best of all, when you create a homogenous clientele cultivated for their personalities, you will get referrals of similar wealthy clients roughly 90% of the time. 

 

Russ Alan Prince is president of R.A. Prince & Associates.

Brett Van Bortel is director of consulting services for Invesco Consulting.