But we are not done yet. Bob is well networked into other franchisees. They have study groups and major conferences. Unless one of his peers approaches him asking for a referral to a money manager, Bob will almost never bring up the topic. However, he is much more inclined to share with some of his closer peers how he saved $1 million in income taxes.
To increase the probability of getting Bob to discuss the value you just provided, it is useful to teach him how to summarize the most important aspects of what you did as well as highlight you and your firm. The focus should be heavily on outcomes and not the mechanics of the defined benefit plan. Additionally, you should know when Bob is going to one of these meetings and you will talk with him right before he attends, prompting him to talk about his peers, whom you are willing to meet.
Once you have been referred in, there are usually other ways you can add value and pick up even more assets to manage from these new clients.
You are not done with maximizing your relationship with Bob, however. He wants to have his children take over the business. His net worth exceeds $20 million with all of it in the business except his house ($1.2 million) and the $4 million in investable assets. At the same time, he is planning on substantially increasing the number of franchisees he owns over the next five years, so his estate is going to expand. There are a number of wealth planning strategies Bob can potentially use to ensure his family never pays estate taxes.
While this is not your area of expertise, you recognize the situation and you have a strategic partnership with a top-of-the-line estate planning attorney. By smartly setting the stage and introducing Bob to the attorney, the attorney will most likely have a new client.
We are not advocating the “trading” of clients with other professionals as a way to grow your investment management business. You are simply delivering value to Bob while helping the estate planning attorney grow his or her practice. Somewhere down the line, you can ensure this will translate into the estate planning attorney sending you wealthy clients for investment advisory services.
Many “Bobs”
You may very well have a good number of “Bobs” among your existing clientele. While we centered the discussion on a defined benefit plan, there are often a number of different possibilities that allow you to deliver significant value to a client and add more AUM for yourself.
Do you know, for example, how many of your wealthier clients have children with severe disabilities? It’s highly likely some of them either do or know affluent parents who do. This is another area where you could add tremendous value and get assets to manage as well as source new wealthy clients.
There are very likely a fair number of these opportunities lying fallow in your book of business. Your ability to find them and facilitate action will allow you to increase your AUM. If you have a solid book of business, then a 20% increase is very doable.
Russ Alan Prince is president of R.A. Prince & Associates. Brett Van Bortel is director of consulting services for Invesco Consulting.