Equally important, Manibay says, is to know who your best clients are and which ones are truly paying the bills. At most firms today, it is still the top 20% of clients who contribute 80% to a firm's revenues. A good coach or consultant will be able to provide intelligence reports to an advisor that clearly delineate the profitability and cost of each client. "You have to know who your platinum clients are so you can devise your service experience and marketing efforts around their wants and needs," she adds.
That's exactly why R.W. Rogé & Co. in Bohemia, N.Y., has developed three tiers of customer relationships, as well as launching The Rogé Partners fund. At the top tier of planning in the firm's roster is its Unique Wealth Management Experience clients, who have a minimum of $1.2 million. Those clients who only want investment management are called Strategic Access Portfolio clients and must pay a minimum monthly fee of $1,250. The firm has also introduced it's WealthBridge Strategy program, so that investors who are getting started, as well as kids, grandkids and referrals from existing wealth management clients have a meaningful place to turn for investment management and basic financial planning.
For wealth management clients, the firm "focuses on anticipating clients' overall needs, including college funding for grandkids, Medicare planning, estate planning and even assistance in shopping for residential retirement and care facilities," says Roseanne Grande, managing director of client services at the firm. "We are also in the process of launching a geriatric planning department, which we believe will benefit our clients and their aging relatives."
Knowing thy client has been a near-biblical mandate for a small but select group of advisors. Charlie Haines, who heads a firm by the same name in Birmingham, Ala., could lead this group. "We probably merged psychology and money earlier than anyone else in this business," says Haines, who manages $500 million for about 200 clients.
Haines brings in a clinical social worker to talk to new clients within a month or two of being hired. "We work on family, friends, physical wellbeing and even philanthropy," says Haines. "We started doing this about 15 years ago when we became dissatisfied with our client experiences and just dealing with the issue of money. We know great planning is not just about the money. It's about the issues underneath the money."
While Haines has created a highly personalized service experience designed to give clients everything they want, his vision has also come to include legacy planning and philanthropy. "Just because the client is not asking for something doesn't mean you shouldn't be trying to provide it," says Haines. "We should be learning from our older clients to see what they need, so we can position our practices more precisely to help the rest of our clients as we move forward."
Envisioning the next ten or even 20 years of client needs and expectations will help advisors plan strategically so they stay ahead of their competition, ClientWISE's Sclafani says. Advisors of the future who identify their market and articulate their value proposition clearly will be most relevant and most able to charge for their services, he adds.
Which brings us to that touchy subject of pricing. "Advisors tend to be apologists about what they charge, but [you] profoundly change the lives of your clients," says Moss Adams's Tibergien. Ask yourself this: Is your pricing aligned with the value you deliver, the way you communicate that value and the perception of what competitors charge and deliver?
"If not, that's when complaints start rolling in," says Waesche of RMI, "when clients perceive that they're not getting value for what they are paying."
RMI has shunned an asset-under-management fee structure and instead charges its 300 clients retainer fees on the $650 million it manages. RMI is, of course, in the minority when it comes to formulating a pricing scheme. The majority of advisors charge 75 to 100 basis points to manage $1 million, Moss Adams says. Waesche says RMI has opted to use a retainer fee instead so that its advisors will never be tempted to retain assets that might better be deployed elsewhere to serve the client's best interests.