Redefining your client model and pruning your books can generate more revenue, proves one Ontario advisor
The fewer clients you have, the more money you can make, discovered one Ontario advisor.
While transitioning from a commission to fee-based model and switching memberships from MFDA to IIROC – Imran Syed, an Ottawa-based investment advisor with Worldsource Securities Inc., decided to prune his books. Since the membership switch required him to repaper every client file, Syed thought what better a time to weed through his client list; giving him a fresh start, so to speak.
“It was a good time to reflect on which clients I worked best with and which clients might be better served by other people,” he explained. “I thought about doing it before, but it’s easy to make excuses not to do it … to continue bringing in new clients.”
Since tackling this feat back in July 2011 (it took about two years to fully transition), Syed said he has seen his revenue “grow significantly,” though he would not provide an exact figure. He attributes this to being able to focus more on clients who have a need for full-service financial planning.
“What people forget is that you have to service these clients and the service is an expense,” explained Syed. “If you are looking after 100 clients as opposed to 300 … you’ll have better relationships with those clients, you’ll see more of them, remember more things about their lives and (be able to) counsel them on things that you wouldn’t have had time to before, such as debt reduction and mortgage pay downs.” (continued on Page 2)
But pruning your books is nothing less than a daunting task with many aspects to consider and prepare for along the way. Beyond considering the revenue generated from each client, Syed took a look at a few different aspects of the client/advisor relationship including; whether he felt empowered as the client’s primary advisor, whether clients provided him with referrals and whether the client relied upon him for more than just a once-a-year transaction. Those clients who didn’t fit his new criteria, were passed onto one of his business partners, who was better able to service their needs, Syed explained.
For those considering tackling their books, Syed has a couple tips – define and remain committed to your new client model (which clients can transition easily?), determine what’s going to happen to your existing client base that you don’t plan to pursue (you can’t abandon them, so pass them on), and most importantly, be prepared to suffer a loss before the win, in terms of revenue
“They (advisors) really have to look at how committed they are to their new model … Revenue dropped in first year, but picked up pretty quickly after that,” said Syed. “You can grow your revenue and have fewer clients.”