compliance-paper-people

Author Nick Murray’s concept of dealing with fewer clients — but offering greater service – is the cornerstone of my practice. Murray’s theory is advisors can only manage a certain number of households before the client experience suffers.

(Incidentally, my first target was to manage 350 households myself. What was I thinking?)

Read: Limiting the number of clients you serve

When I started my practice 16 years ago, the industry was different. I built my book one client at a time by holding informal seminars in my office boardroom.

Each time I met with a client, I prepared a financial plan, ensured she had the proper amount of insurance, and diversified her portfolio. Today, we charge fees for such plans. They’ve also become more comprehensive and include estate planning, tax planning, education savings, tax-free savings strategies as well as corporate planning for healthcare professionals.

As a result, no advisor manages more than 100 households.

Read: How to fire clients

Recently, we reduced our client base by about 15% by only keeping clients who share our investment philosophy. You can use this simple test: imagine the phone is ringing, and it’s a particular client on the line. If you dread answering the phone, then it may be time for you and your client to either part ways or discuss resetting objectives and expectations.

An ideal time to reduce your client base is when you’re making a significant change in your practice. For instance, if you are switching from a commission model to a fee-based model, it’s an opportunity to re-communicate how you do business. If they no longer fit after having the discussion, then it’s easier for both client and advisor to part ways. We reduced our client base when we switched from MFDA to IIROC in 2009.

Read: FaceOff: IIROC vs. MFDA

Robert Abboud, CFP, PFP, is the co-founder of AdvisorPractice.com, which offers advisors practical solutions to help transition to a financial planning practice and offers a 12 week training program. He is also the author of 'No Regrets, A Common Sense Guide to Achieving and Affording Your Life Goals'. He has been offering life goals financial plans for over 15 years through his firm Wealth Strategies. Robert is available to speak at conferences and educational days. You can contact him at rob@wealthstrategies.com.
Originally published on Advisor.ca
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SCOTTKWAS

Hey Robert,
This is an on-going struggle in our office. Can you tell me what you use to identify a client? Is it per household (husband, wife, corp)? Or per client?

What about children of clients that are just starting out? Do you take them on as well? Do they count in your 350?

Thanks!

Scott

Monday, December 3 @ 2:58 pm //////

ROBERT.ABBOUD.6

Hi Scott.
Our max is actually 100 Households – when I first started I shot for 350 but quickly realized it was not manageable for the way we did business. When we look at a household it includes all people domiciled at the same address. This includes mom, dad and kids. If we have the grandparent account it is considered a separate household for our purposes and if the child moves out, separate household.

Hope this helps.

Rob

Monday, December 10 @ 11:49 am

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