Stratified Client Base

Almost every financial advisor segments their client list.  Their are many ways to do so, but the common way tends to fail.

  • An “A” could be anyone with resources and needs that are not fully addressed.  Opportunity to arrange more products or invest more money.  All good things.  These clients tend to attract lunches, birthday notices, golf outings and more.
  • A “B” is usually like an “A” but with fewer unfulfilled needs.  Solid ongoing revenue for the advisor, perhaps a person who could refer the advisor to others.
  • A “C” is typically someone with too few resources to be interesting for the advisor.  Perhaps an older person.  Someone who does not or cannot refer.
  • A “D” is someone who is a “C” but hard to deal with.

This style is for an advisor who stratifies their clients to suit their own needs.  That might have some validity from a “manage the promotion budget” standpoint  or to identify the kind of prospect you like, but it fails in the client service world.  Anything that fails in the client service world fails completely, just not immediately.

To be fair, most advisors behave intuitively around this method.  They may claim to do it but in fact, pay little attention.  If a “D” wants to write a cheque today, they will no longer be a “D.”  (maybe just for today)

Stratification is a powerful tool for management and the simplistic approach hides its power.

Functional stratification works.

  1. Every client should be an “A” for routine service.  Annual review, prompt response to queries, followup on changes and recommendation for change.  You will do yourself no good if service is weak for anyone.  If you choose not to prize a client, dispose of the client.
  2. You can stratify clients based upon service required by means of prepared material and a network of supporting professionals.  Proactive.
  3. You can stratify based on who deals with them.  Some advisors fit better with certain kinds of people.

Prepare some packages to simplify the delivery.

Some common ones.

  • Will and power of attorney.   Package some of the required strategic vision. Business owners usually have more complex needs than do retirees living on a pension.  Similarly the professional may have different skills.
  • Someone inherits money, sells something valuable, or wins a lottery.  What they do with it in the first six months matters most.   The bespoke plan follows.
  • Annual reviews should follow a pattern.  Collect new information.  Compare to expectations.  Query client about changes in wants, needs, hopes, fears and expectations.  Recommend based on findings.

Ad hoc meetings seem like more fun and more compelling, but they are not.  Good meetings are structured yet open-ended.

Years ago, MDRT found that clients most value:

  • identification of a problem or opportunity about which they were unaware and
  • a creative solution to a problem they knew they had.

That might be a good mission statement.

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact: don@moneyfyi.com  

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