Updated Sunday, November 23, 2014 as of 7:14 AM ET

Are Your Clients Costing You?

What would you do if you realized the bottom 50% of your client base contributed less than 15% to your overall revenue, but was using over 80% of your time?

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Comments (5)
This is an issue that most advisors would be well-served to consider. It is also germane to the decisions about which clients one wants to bring with him/her when they are going to change firms. While some well-meaning and good-hearted advisors are loathe to turn anyone away, paring one's book to include only those clients where time is well-spent is beneficial for both the advisor and the advisor's clients who follow the advice given and provide referrals. Finally, it can actually make a book more valuable when it comes time to sell, as no one wants to buy a bunch of unprofitable, time-wasting accounts.
Posted by Ron E | Tuesday, August 13 2013 at 4:24PM ET
How true, how true how true!

For some reason advisors and business owners alike disregard and have no idea how much it costs to acquire or keep clients. And as mentioned, they treat all clients the same.

That is until they get to a point where they are frustrated and overwhelmed because they don't have time to prospect -- let alone take care of their current clients properly -- because they're wearing too many hats and/or they're "spaghetti marketing".

Sad indeed.

It all goes back to the basics. Who or what is your niche? Who is your ideal client? How are you segmenting your clients and the time you (or your staff) spends with each client?

Why have "D" clients; unless they're immediate family members of your AAA clients. Why spend the same amount of time with B clients as you do with AAA clients?

The bottom line is that when a business owner weeds out their D clients, they have more time to prospect with potential AAA clients. But first the advisor needs to stop "practicing" being in business and rebuild the core foundation of their business from the bottom up taking into consideration the most important question... "what does success mean to them"... vs. what they think they should be building.
Posted by Maria M | Thursday, August 15 2013 at 5:18AM ET
Very simply, while doing the segmentation note which clients are 401k participants. Why? Well, it's typically an area where FA's "GIVE" away 401k advice to clients. If it's your advice, why give it away? It can be a great revenue producer and might move some of the bottom 20% up a level. Efficiently provide those 401k clients advice (on more than an annual) basis requires automation. Take a look at www.ez-adviser.com.
Posted by Bob L | Tuesday, August 27 2013 at 3:32PM ET
The key to reducing your own business costs is to take the time out to have a look at how you are performing. Is your cost on clients exceeding? Look at every part of your job. Sometimes people think their costs are very low; and after taking a proper look at how they work, they find they could reduce them considerably.
Posted by KIMMY B | Wednesday, October 02 2013 at 12:58PM ET
You need to know how profitable your clients are for two reasons:

Assuming you are a softy and cannot bear turning anybody away, in the long run, you will be doing a disservice to your clients since you are so bogged down by sheer quantity that you cannot deliver quality.

Secondly ultimately the objective of every business is profitability and if you do not keep an eye on the bottom line, you will be doing a disservice to all stakeholders.
Posted by tasha123 s | Saturday, October 12 2013 at 12:35PM ET
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