Firms that focus solely on keeping existing customers happy can still find their client bank diminishing through natural attrition (clients dying or moving away).
So a service proposition is needed that frees up the right people to grow the business – and which is genuinely scaleable so quality of service isn’t lost as and when new client growth is achieved. So how can firms get the balance right?
Define the business plan
A one-person firm that doesn’t want to grow much may only need to attract a couple of new clients a year.
This will mean most of the emphasis is on delivering the right service to retain existing clients, while new clients may largely be acquired by referral. However, if a firm has ambitions to grow its client bank by, it will be necessary to focus many more resources on acquisition.
Allocate servicing and prospecting roles
If a firm employs two people or more, then it’s possible to define who oversees servicing for existing clients and who looks after attracting new ones.
Once an ongoing service is defined and set up, then –aside from client meetings – it becomes largely an administrative process (sending out reports, answering queries) – whereas networking and prospecting are more strategic activities that draw on a different set of strengths and will tend to require senior management to be involved.
Build in time for new business strategy
When a firm is focused on the immediate demands of clients, it’s all too easy for new business initiatives to drift. If roles cannot be delegated, then it’s important to ensure that time is clearly allocated each week or month to focus on new business activity.
Be digitally efficient
It hardly needs to be said, but the more that the administrative side of ongoing servicing can be automated, and delivered online and remotely, the more resources that can be freed up for value-adding activities such as prospecting and human engagement.
Back office software can generate and consolidate a lot of the information required for client reviews (valuations, portfolio breakdowns).Sales management information together with mail merge can be used to help automate ISA and pension contributions reminders.
Software that allows files to be shared securely with clients using encryption saves on mailing. Finally, most advisory firms already employ one or two investment platforms such as Cofunds – but it’s important to review how platforms are being used to ensure their functionality is fully realised throughout the business.
Review outsourcing opportunities
Once digital functionality has been fully explored, any firm still struggling to meet all their ongoing service commitments may want to consider what they can outsource.
Outsourced ‘reception’ services can divert calls while team members are in client meetings or on urgent deadlines, with messages passed on via different methods depending on their urgency.
Some paraplanning firms are specifically offering support to help advisers manage their ongoing client relationships – for example by offering to compile reports where a client’s arrangements are too complex to be easily completed using the firm’s own back office software, or require a lot of manual inputting.
Factor in legislative and market events
One unpredictable demand on an advisory firm’s time is responding to clients about sudden market events or new legislation that may affect them. Firms with a clear process for responding to budget changes, sudden market falls or geopolitical events can build their position as a trusted adviser.
Review individual requirements
Many firms offer a range of propositions, so ongoing service (and fees) can be aligned to the level of interaction that a client’s circumstances demand. Some firms also reserve the right to review the time spent on a client after a certain period to ensure it’s appropriate with fees charged.
But it’s also important to ask what clients really need on an ongoing basis. For example, ask clients if they want face-to-face meetings at set intervals or only when a particular event occurs or there’s a change in circumstances.
If you’re investing clients in a long-term buy – ask whether monthly/quarterly valuation statements will really add any tangible value to the client.
Make your clients your ‘new business’ team
Perhaps one of the best ways to grow a business is to ensure that the ongoing service is so good that existing clients can’t help but recommend you.
Make it a family affair
Finally, offering intergenerational planning, or a ‘family office’-style service, is probably the most powerful way to dovetail ongoing servicing with new client prospecting, and involves the minimum of client acquisition costs.
Given the vast transfers of assets expected to stream down from Baby Boomers to Millennials, and the new freedoms to pass down DC pension assets free of Inheritance Tax, family financial planning opportunities have never been greater.
Review trends
Every year, it can be valuable to compare rates of client acquisition and retention to see which activities have been most successful and where improvements can be made.
Liz Pemberton is head of platform consultancy at Cofunds
