How good are you at following up potential clients?

A question often asked by financial advisers and planners is how to effectively get prospects “over the line”. Some cases are very straightforward – you meet a prospect, find out a bit about them, set out how you might help them, and they immediately decide to move ahead with you. But sometimes it’s not like this.

There is a myriad of reason for this. Some clients are just fishing around, some are at the early stages of thinking they need a good adviser, some are talking to a number of advisers to find the right one and others don’t really know what they want! It is very hard to know after just an initial chat what is preventing your prospective client from using your services – they often don’t feel they know you well enough at this stage to open up and give you the reason for their (lack of) speed to commit.

On the other hand, you are busy. You have other clients who are making the leap with you and you have all your existing clients to look after. You just don’t know what is going on in the prospect’s life that is stopping them from moving forward with you, so what are supposed to do with these prospects who aren’t yet committing to you?

You need to stay on their radar.

The great thing about marketing today is that it is so much easier to stay on the radar than in years gone by, with a wide range of tools available to you. It is easier to practically do it, but it will require time and commitment from you to do so. Think of all the ways that you can stay in touch,

  • Diary to give them a call periodically: This might be once a quarter or at whatever frequency you think is best. Yes, this can be hard! You can be rejected a few times – but often the prospect is simply not ready to move forward as yet. Be patient and resilient – don’t give up. Effective follow-up phone calls are one of the most powerful tools available to you.
  • Add them to your regular newsletter: In my book, every financial adviser should have a regular (at least 4-6 issues a year) newsletter going out to clients and prospects. It’s hard to beat having high quality content landing regularly in their inbox. After all, this is a place that most people go to, many times a day. Encourage all prospects to sign up for your newsletter, positioning it as a valuable free resource that you offer to clients and contacts to educate them in personal finance matters.
  • Connect with them on LinkedIn: OK, not every prospective client is on LinkedIn, but many are. If your target clients are business owners, senior executives or professionals, they most likely have a presence on this platform. LinkedIn offers you an opportunity to share your own content, share useful content generated by others and participate in discussions with your network, including of course your prospective clients.
  • Invite them to your next client event: You’re not going to invite every prospect to every client event, but if you have a seminar about a topic that you know from your previous conversation with them is important to them, invite them along. You are now adding value and also demonstrating that you were listening to them when you spoke previously.
  • Invite them onto a webinar / phone conference: For the same reason as above, if the topic is going to be of interest, invite prospects onto particular calls and webinars. It won’t cost you anything and may just get them over the line.

The main point is not to give up. Clients can be slow to move for many reasons. They key for you is that when they are ready to move ahead with addressing their personal finance challenges, that you are top of mind. For this to happen, you have to stay on the radar.

Do you segment your clients beyond asset amounts?

We have written many times in the past about the importance of client segmentation. In this latest of our “12 StepChanges to a Better Business” series, we are going to explain how we work with adviser firms to assist them in completing structured and effective client segmentation.

As recently as January 2019, we wrote here about why different people want (and deserve) different things. Segmentation enables you to identify groups of likeminded clients or clients of equal value, and to then deliver differentiated services that meet their needs. We have worked with a number of firms who had previously felt that they had this task completed already, having segmented their clients by assets under management only. We feel that this is only one aspect of a multi-dimensional view that is needed.

When StepChange works with advice firms on their segmentation approach, we follow four main steps as part of the process.


Identify the relevant factors

As mentioned above, assets under management are only one factor to be considered. There is a need to identify each of the other relevant factors to be considered, some of which may be subjective factors. These might include;

  • Asset amounts
  • Current recurring income levels
  • Current services used (cashflow planning, rebalancing etc.)
  • Future potential of client
  • Business introduction value (referrals)
  • Number of products held
  • Age
  • Whether you enjoy working with the client


Apply a weighting to each factor

Some factors are more valuable than others. To smooth this out and ensure that greater value is placed on the appropriate values, a weighting system for the different factors needs to be developed. This will help you ensure that the most valuable clients (as identified by the factors you deem most valuable) end up in your “gold” segment.


Score the clients

The next step is to score all of your clients based upon your chosen factors and their weightings. Some of this can be done with downloaded information from providers / your CRM system. Some of this has to be done by reviewing each individual client. Having a robust and easy to use system for this is probably the greatest benefit that we bring to advisers! Your clients can now be allocated to their correct segment, based upon this rigorous exercise as opposed to gut feel…


Deal with exceptions

There will always be exceptions. If lots of clients emerge as exceptions and clearly in the wrong segment, this suggests your factors and/or weightings are not quite right and need to be revisited. If you have a small number of exceptions, which is always to be expected, treat them as that – exceptions. You can of course manually re-allocate a client to a different segment based upon your own business judgement.


Structured and rigorous completion of your segmentation will result in you providing the most appropriate level of service to your different clients. At StepChange, we can help you to achieve this important result.

“So, can you tell me please how you charge”?

There’s a lot of work being done at the moment by financial planning firms in the Irish market in the broad area of charging for services delivered. Firms are reviewing the services delivered to clients and are working out how best to be paid for those services. This opens up a number of areas; fees v commission, how much to charge, how to charge, justifying charges etc etc.

We end up having lots of interesting and thoughtful conversations with financial planners that can be quite illuminating. When working with these firms on their Client Value Propositions, we spend quite a bit of time looking at the services delivered and how these are paid for. We are looking to develop the remuneration model of the future for the business. However as part of this, we want to understand the starting point – how the business is operating today in this area. To get clarity on this, we ask how the following question is replied to, when posed by a potential client,

“Can you tell me please how you charge?”

We get a quite a variety of responses!


We don’t charge

Yes, we have heard this one! This of course simply makes no sense. Nobody works for nothing, and clients have no expectation that you should work for nothing. Potential clients at best are simply confused by this answer and at worst are hugely suspicious of this answer. Where’s the catch? What am I missing? How can there be any value in what you are providing to me, if you are providing it for nothing?

Of all the potential responses, this one certainly takes the biscuit in terms of being the one to avoid…


You don’t pay us, we get paid commission

When advisers are being very candid, it’s apparent that this one is still trotted out quite frequently. For many of the reasons mentioned above, I have a real problem with this response. I also have a problem with it as it is simply not true. The customer always pays – fact. Without further explanation, this also positions the adviser as a price taker, and whose remuneration is solely dependent on the sale of a product. More suspicion for the customer – do I need this product? Why am I being sold this product etc.?

I am not for one minute decrying commission as a method of payment. It makes sense in so many situations. However that is the way it should be positioned – simply as a method of payment and not where the product is seen as the driver for you to be paid.


We charge 50bps on all monies invested

We’re moving into more positive territory now – at least with this response you have your own developed pricing approach. A thesis could be written on the differences and comparative benefits of AUM pricing v flat fees v retainers etc., but that is for another day.

The challenge I have with this approach is that it doesn’t make sense to me that all clients are charged the same amount. Because all clients are different and need and deserve different things and services.  Some clients need to meet you quarterly, some once a year. Many embrace cashflow, some don’t. Why are they all charged the same, when they place completely different levels of demand on your time and expertise?

I’m not proposing a unique charging structure for every client, but the approach below seems much more appropriate to me.


We charge based on value delivered

Can there really be any other approach? Clients seek the services of financial advisers today to help them address a very broad range of financial challenges. For some, they have a single, specific challenge. For others, they want to make better use of their financial resources or improve their relationship with their money. For others again, they want a very broad service around establishing life goals and then understanding what is needed to bring those goals within reach through careful planning.

All very different requirements and delivering different levels of value. How can you not charge differently for each of these?


How do you answer the questions “Can you tell me how you charge?”, and how will you answer it in future?

Money always moves when life is in transition

Credit to Stephen Browne, Voyant

At the Power of Financial Planning conference in the UK last year, Mitch Anthony said, “Money always moves when life is in transition”. This quote really hit home as a central theme of the life changing impact that you can have as a financial planner, and how you are so powerfully positioned in comparison to other professionals who are employed by your clients.


All our lives go through a series of “transitions”

While of course we can trace life events (or instead call them transitions) right back to birth, for the sake of financial planning we can start with transitioning from being a student to working. Transitions are those significant life events that cause a relatively significant change in your life. Each of these changes will have a fundamental impact on your client’s financial situation and include the likes of,

  • A new job: Usually this will result in an income increase (hopefully!) and probably a change in benefits.
  • Marriage: A very significant financial change where your client and their better half marry their fortunes together. Also now their financial goals and needs substantially change.
  • Moving House: A new home usually results in new debt and changed regular expenditure.
  • Children: Apart from the obvious immediate costs, your client’s thoughts will soon turn to increased living costs and future education costs etc.
  • Retirement: A significant financial event as the income tap turns off and it’s time to live off savings.
  • Death: This could be your client’s death or the death of their spouse or parent. Each of these events will have a significant financial impact.
  • Other events: And then there lots of other possible events – buying a holiday home, a significant gift for children, the world tour, winning the lotto or maybe a divorce! Whatever it might be, there will be a significant financial impact.

The point to remember is that every time there’s an event, money moves. Think about it. The question is, will you be the one assisting its transition?


Transitions deepen relationships and create opportunities

The good news for planners using cashflow planning software such as Voyant is that you are the key professional relationship for your clients before, at and after each of these transitions. That is because you are the person managing the client’s timeline, preparing for each of these life events and then helping them at the time of transition. No other professional enjoys this trusted position. Your client’s solicitor is consulted when the event is looming and they need legal advice. The same applies to the client’s accountant – their expertise is sought as the event draws near.

However using cashflow planning, the financial planner is the one that is helping to plan for these transitions. You are the one helping your clients to envision their future life, what they want and how they want their life to plan out. You are capturing all of these goals, desires and events in their timeline. You then help them draw up a financial battle plan to empower them to life the life they want. So, when they actually come to that major life event, their financial situation is an enabler rather than a problem. You are the person that is helping them develop a clear financial strategy for their life, giving them clarity and confidence to live a life free from financial anxiety.

Isn’t it funny that while products will be needed as a result of many of these events, these are simply vehicles to drive the plan. The value that you have provided is helping your client to live their life, to move their money wisely in preparation for and during each of the transitions throughout their lives. Is it the product that your clients will be thankful for or the realisation of the life they always wanted to live? I think you know the answer to that one… The added benefit is that you will also be plotting future business for yourself as your client plans for each of their life transitions. As the financial life planner, it’ll be you who will be there when the money moves.

What questions are you most often asked?

Financial planning is a fairly simple concept. There, I’ve said it! It is at least in the eyes of clients, who consider it broadly as sorting out their money stuff. Of course, effective financial planning is anything but simple. It takes a lot of expertise, talent and a really good process to transform the financial lives of your clients.

Towards the end of last year, FT Money carried out a piece of research among 300 UK clients of financial advisers, with the aim of uncovering their most common questions and the solutions that advisers are offering. The survey results were quite insightful and would likely be relatively similar if carried out in Ireland.

For a start, the top 10 issues that clients want to discuss with their advisers are in the following areas,

  • Retirement/pension planning
  • Tax planning
  • Brexit/political uncertainty
  • Inheritance tax
  • Future financial planning
  • Investment returns/dividends
  • Portfolio review/diversification
  • Global politics/likelihood of market crash
  • Pension drawdown
  • Pension transfer

Maybe no great surprises in the above? It is interesting though that there is nothing directly relating to protection of wealth in there – does financial security fade into the background during times of economic growth?

However, there were four questions that featured frequently in the concerns of clients – do they reflect the conversations that you are having with your clients?


Can I afford to retire?

This was the number one question that FT readers wanted to discuss with an adviser, with more than 20 per cent of respondents naming retirement and pension planning as their top concern. With state pensions providing only basic subsistence support to people, clients are rightly focused on how they will live when their income earning days are behind them. Retirement planning is a critical element of financial planning today through both the accumulation and decumulation phases of life. No surprises here!


How can I pay less tax?

Tax planning was cited by over 17 per cent of readers as a topic they wanted to discuss with a financial adviser. Many financial planners today are expert in tax matters and indeed many of you have additional taxation specific qualifications. This all makes a huge amount of sense as tax is a significant drag on wealth accumulation and good tax advice has a huge impact. Being a personal tax expert is a necessary requirement for advisers today.

This is an area of potential improvement for some advisers. Do you shy away from giving tax advice and guide your clients towards an accountant or tax adviser? Is this always the right approach? Can you really give expert financial planning advice without being a personal tax expert? I’m not so sure…


How can I reduce the impact of inheritance tax?

In addition to general concerns about tax, inheritance tax (IHT) was also a key, specific concern for readers. Although only 5 per cent of estates nationally (in UK) pay the tax, many readers nevertheless fear the impact of IHT — and need an adviser’s help to understand the system.

Of course you are all aware of how penal the Irish IHT system is, with thresholds slashed since the economic crash and IHT rates increased. When you layer increased wealth over the last decade and the recovery of property values, IHT can take a big chunk out of estates. There are ways of reducing these tax bills – you play a really valuable role in helping your clients to take advantage of them.


How will Brexit impact my finances?

Obviously this topic is not going to be of such concern to Irish clients. What it does demonstrate though is that clients rightly worry about significant external events beyond their control. One of the most important roles for you as a financial planner is to reassure clients and to keep them focused on the plan. You are all aware that irrational behaviour by investors is often the single biggest drag on growing wealth. You are the voice of reason, helping clients to keep a long-term perspective.


While these may be the most common questions that clients ask, one important point comes to the surface. The questions that clients have are about themselves and their money, not about the products that they hold. This further confirms the value that you add is as an expert financial guide… and not as someone who chooses the best products and times the markets.

Are you ready to answer the big questions of your clients?

Different people want (and deserve) different things

How many clients have you? 200, 500 or 2,000? Often as your client base grows, it results in your number of staff growing. But the chances are that even with your increased staff numbers, you are unable (and unwilling) to provide a top-drawer service to every one of these clients…

Really the question is – why should you? After all, you derive hugely varying levels of income from each of those clients so surely the clients that are driving very high levels of income to your business deserve a higher level of service?

Of course this is not at all a novel concept! Every time you step on a long haul flight, it’s immediately obvious. Turn right for the cheap seats in Economy or turn left to be pampered in Business Class or 1st Class. And then when you book a hotel, you can pay less for a standard room or pay more for a suite with all of the bells and whistles that come with that.

Now let’s take this concept into the financial advice space where for many of you, your remuneration model is built around trail commission. If I’m fortunate enough as an investor to come to you with €1 million to invest, your trail commission might be €5,000 p.a. (assuming you charge 0.5% of assets). That’s fine if your proposition stacks up.

But what happens if I decide to place just €200,000 of my money with you? Now your trail commission falls to €1,000 p.a. Still very attractive, but obviously not as nice. However the question that’s in my head is, “What extra am I getting from you by placing the full amount with you, that’s giving you the benefit of an additional €4,000 p.a. of my money?”

If there is no difference between the services offered in each of these situations, I suggest you’ve got a challenge on your hands… Simply adding trail commission to policies without thinking through your client proposition is fraught with danger.

Not completing a robust segmentation of your clients is also very dangerous. Even without doing a segmentation exercise, I’ve no doubt that a small number of your high value clients get your best service at all times. But inevitably what happens is that there are other high value clients that slip off your radar. Either you don’t realise that they are high value or they just aren’t demanding. This is aside from some low value clients who are constantly on the phone end up getting a huge amount of attention. That’s hardly fair, is it?

So what do you do?


Segment your clients

For starters, do a proper segmentation exercise. Know who is valuable to your business and who is not. Don’t be put off from doing this work with the excuse of “it doesn’t capture the full picture”. Yes, there will always be exceptions within your segmentation – for example a client with very little business with you, but who constantly refers other clients to you is actually a high value client to you and should be treated as such. But don’t start with the exceptions; work out how to deal with them later on a case-by-case basis.

I’m definitely not suggesting that client segmentation be based on asset values alone – that is only one factor to be considered and used. However it is usually one of the more heavily weighted factors used by advisers in segmenting their clients.


Develop your service packages

Develop service packages for your business that reward clients depending on their value to your business. Make your high value clients feel really special, reward them for trusting you with their money by giving them a truly rewarding client experience. Build a moat around them and pull up the drawbridge from your competitors by providing a second to none service.

Let your mid-tier clients feel valued by your business, while making them aware that there is lots more you can do for them (if they are willing to pay for it).

And of course your no/low value clients will begin to realise that it’s a business you are running and that they don’t have 24/7 access to you. If they want access to superior service (ongoing advice from you), they pay more for it. The same as when they book a flight or a hotel room.


Don’t be afraid to say no

Yes, your lower value clients may want a better service possibly than you are offering and might try to demand it from you, without paying for it. Don’t be afraid to say no. You’ll only be doing this with your no/low value clients… And they are of little or no value to your business. Put your time into those clients that are of value to you – this is what your clients deserve and what your capacity allows.

The days of a “one size fits all” approach are over. Give your clients a service that they want and deserve.