CHICAGO – Here’s one way to create more efficiency in your practice, while also getting clients exactly what they need and want: Try providing services tied to client revenue.
"One of the most effective ways to create a sustainable business is instituting a two-tiered service model," Alyssa Von Herbulis, a practice management consultant for Russell Investments told advisers at Envestnet's annual Advisor Summit.
Von Herbulis suggested segmenting clients into two categories: those who generate over $5,000 in revenue in an "A" group and those who generate less in a "B" group.
The first group should receive a personalized, custom wealth management experience, Von Herbulis said, adding that events for this group should ideally be either one-on-one or a small-scale affair where clients can bring a few friends.
For the second group, advisers should create a one-to-many scaled model, she said.
"The events for ‘A’ clients shouldn't be broadly educational," Von Herbulis said in a session on best practices for top performing advisers. "They should be about the client and what's important to them. Afterwards you want them to tell your friends. You want to create commercials for your practice."
For example, if an adviser knows an A-group client has high cholesterol, he or she might enroll the client in a cooking class that specializes in low cholesterol dishes, Von Herbulis said. Or if the child of a high-revenue client is buying their first house, the adviser should consider sending the client information about mortgage rates and financing that they can pass on.
"The point is, you want to deepen the relationship in a personal way," Van Herbulis said.
QuoteTime saved by segmentation can be reinvested in high-revenue clients and other areas of the firm that need attention.
Service to B-group clients should not be as time consuming, Von Herbulis stressed. Events should be educational, and leveraged on a one-to-many model, so a large number of clients can receive information about portfolios, markets and the economy.
Advisers may want to consider coffee clubs on the first Friday of the month for this group, where clients can gather informally to ask questions or discuss current events impacting the market.
SEGMENTING CORRESPONDENCE AND REVIEWS
Correspondence and reviews should also be treated differently for the two client segments, according to Van Herbulis.
QuoteYou want to create commercials for your practice.
Communication with high-revenue clients should be frequent, detailed and personalized, while correspondence for lower-revenue clients can be quarterly and utilize newsletters, she said. Reviews of goals, risk tolerance and portfolios with the A-ranked clients should be at least twice a year and in person, while reviews with the other group should be conducted annually and by phone.
Time saved by segmentation can be reinvested in high-revenue clients and other areas of the firm that need attention, Von Herbulis pointed out.
"Segmenting your client base and developing an appropriate service model is a strategic decision that can have major benefits," Von Herbulis said.