Constrained by Resources and Time, Advisors Need to Choose their Clients Wisely
March 16, 2022 — Boston
Serving too many non-ideal clients may undermine advisor productivity
Nearly two-thirds (64%) of practice management professionals find that the most prevalent productivity challenge for advisors is serving non-ideal clients, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.
On average, practices serve 142 clients per producing or revenue-generating advisor. As practices grow, they must be mindful of exceeding advisor capacity and diluting the client experience by taking on too many clients outside their core market. While it can be difficult for advisors to turn away non-ideal clients, particularly in the early stages of their career, it becomes far more beneficial to narrow their focus as the practice grows and only serve investors who fit their target client profile.
Cerulli has found that many advisors, even those who have been in the industry for decades, struggle to articulate their practice’s ideal target market. “Many default to generic categories such as ‘retirees’ that are far too broad to have a meaningful application to their business development efforts or differentiation value,” says Marina Shtyrkov, associate director. “Wealth management firms should encourage advisors to identify their niche early on and consider how they can uniquely service that segment of clients in a way that other advisors cannot.” This is especially important for second-career advisors who have unique experiences and insights from their past profession. A clearly defined target market is the key to proactively minimizing future productivity challenges.
Effective use of technology can also help practices manage a higher volume of client relationships without compromising service quality or straining individual advisors’ bandwidth. While technology tools offer the promise of efficiency gains, many practices aren’t fully leveraging the full feature set. According to the research, 69% of advisors believe they can make better use of their existing technology stack. “This high percentage underscores the persistent opportunity for technology providers that can truly make their platforms the path of least resistance for advisor adoption and implementation,” Shtyrkov adds.
In addition to exploring digital solutions, advisors can take several approaches to better manage capacity, such as refer non-ideal prospects to another practice, implement a tiered service structure, or hire additional support staff. “Ultimately, practices that strategically align their value proposition with the right client type, fee structure, and AUM segmenting will be best positioned to scale,” concludes Shtyrkov.
Looking for More Information?