3 approaches to prospecting

By Evelyn Juan | March 7, 2014 | Last updated on March 7, 2014
8 min read

Who wants a millionaire? Every advisor, it seems. But bigger isn’t necessarily better.

In an industry long focused on attracting moneyed baby boomers, some have followed different paths. Here are three effective alternatives.

Approach 1: Go one generation down

Turner Tomenson Wealth Management Group, Toronto

Potential practice gain: $100 million

Current book size: $300 million

Garth Turner, a Toronto Raymond James advisor, is in his 60s, but he and partner Scott Tomenson grew their book by more than $100 million over the past year in large part by tapping a younger generation: the 30- to 40-somethings. “We moved to Raymond James in August 2012, and our book was $170 million, and it’s now over $300 million,” Turner says.

Many Generation Xers may not be millionaires, but with help, some can get there. “They have a lot more potential to grow with us over a number of years,” he says.

Read: How to make your neighbour a client

At 42 years old, Turner’s average client comes from the first segment of Gen X and has about $480,000 in investable assets. He primarily reaches this tech-savvy cohort by writing a blog on economics, real estate and money, greaterfool.ca, which receives 6.5 million visits annually. The former MP and journalist is also active on Twitter and Facebook. “The majority of business we’ve brought in was introduced to me through social media,” Turner says.

Canadian doctors are good prospects

  • Canada had more than 75,000 physicians working in 2012, a 4% increase over the prior year.
  • The number of Canadian medical graduates has grown every year since 2001.
  • In 2012, growth in the number of physicians outpaced population growth, continuing a six-year trend.
  • The average payment for provincial-and territorial-funded services was around $328,000 per physician in 2011–2012: about 5% more than in 2010–2011.

Source: Canadian Institute for Health Information

He and Tomenson also run live events, which are only promoted to prospects online. Their last Toronto and Vancouver engagements attracted 1,600 and 1,200 people, respectively. “The conversion process can be two years long,” he says. “But it’s worth our while from a business standpoint to do it.”

He uses an all-ETFs approach, which appeals to his younger clients because of the lower fees compared to mutual funds. But they’re reasonable when it comes to returns.

“Young people need lots of growth because the world is getting more expensive, [but] they’re insanely conservative,” Turner says. “Way more than boomers like me. I don’t find they’re looking for 10% or 20% returns at all. They just want growth and safety. So our approach of balanced, diversified ETFs-based portfolios works well for them.” He also gives clients online access to account statements and conducts weekly conference calls on major economic developments to explain how they affect portfolios.

He also reviews each client account every 100 days. To do this, Turner calls clients and then uses a computer program that allows them to see his desktop. “We run through the portfolio line by line, give performance data, review holdings, answer questions and talk about the world.

Read: Don’t give up on cold calling

“A good 15-to-20-minute desktop sharing is a powerful way for people to get fully up-to-date on their portfolios. Sure, they can look at it themselves online all the time, but [reviews] allow us to give texture and explanation.”

Turner does between six and 10 of these reviews daily.

Approach 2: Get professionals while they’re young

Bluteau DeVenney Caseley Wealth Management Group, Halifax

Potential asset gain: about 10% yearly

Current book size: 185 families

Do it right

After a former business partner left, David Bluteau, a financial advisor at National Bank Financial, shed roughly 100 accounts to other advisors since he could no longer handle the client load.

It didn’t turn out well. Bluteau decided to part ways with those clients without meeting face-to-face; that made some feel rejected. The impersonal approach also made some of the dispersed clients reluctant to give referrals. “We were younger and it was our first time doing it, and the last,” he says. “It was a learning experience.”

If he had it to do over, Bluteau says, he’d have brought in a junior advisor to handle those accounts, rather than losing them, which was more costly in the long run.

Today, he relies on his new partner, Darren Caseley, to look after certain clients, particularly friends and family members. “I want to serve friends, but at the same time, it’s awkward. I don’t want that every time I go out with them, we’re talking about their affairs,” says Bluteau.

Caseley, who’s about a decade younger than Bluteau, says overall, they work with clients as a team in order to facilitate strong institutional memory. Bluteau adds that the team eventually plans to hire someone younger than Caseley to work with the next generation.

Some advisors cater to an even younger crowd: medical interns in their mid-twenties to early 30s who are still paying student loans.

David Bluteau, an advisor at National Bank Financial in Halifax, says compared to lawyers, whose salaries range widely—because associates don’t graduate to billable hours for several years—doctors’ starting salaries are higher and more standardized.

New specialists make an average $350,000, compared to young lawyers who sometimes make less than $100,000, depending on practice size and area.

Bluteau says it’s better to catch them before they have their own lawyers and accountants. A physician in her 50s, for instance, probably has a solid relationship with an advisor, and she’ll only move if something market- or service-related breaks that relationship.

With young people, “you’re saying, ‘I’m investing in you because I believe it’s a mutually beneficial relationship, that you’re going to be successful and I’d rather help you get there,’ ” says Bluteau.

To look for potential clients, Bluteau and his team bring chartered accountants to conduct free seminars in hospitals on how to incorporate a practice. He partners with those same accountants to give financial planning and investment seminars.

Read: So you want to specialize?

Finally, he scours Nova Scotia’s provincial list of doctors and asks current clients to introduce him, whenever possible, so he doesn’t run afoul of do-not-call rules.

Relationships with these young clients only become profitable after about five years. The initial stage is spent getting them set up with DI, CI and life insurance, building up an RRSP, and using a cash-flow management plan to pay off student loans.

“If they’re incorporated, we can consider taking out extra dividends to pay down the debt,” he says.

Building these foundations really does pay off. For instance, two of his clients—a couple—started with nothing five years ago. But they’re both medical specialists, with good saving habits, and now have more than $1 million in invested assets, free from mortgage and student loans.

“Five to ten years down the road, there are so many gatekeepers to get through,” says Bluteau. “It’s best to get them while they’re young.”

His team’s book is 80% doctors, and he calls it good risk management to prospect among qualified clients whose needs you’re familiar with.

Approach 3: Seize segmented clients

Schikkerling Wealth Management Group, Vancouver

Potential gain: 20% of book

Current revenue: In top 15% of firm

While some expand by courting younger generations, others grow by acquisition.

Such is the case for James Schikkerling and his father Peter, advisors at Raymond James in Vancouver. Three years ago, they purchased some business from colleague Andrew Johns, when he scaled down his roster.

Read: 5 tips to prospect wealthy clients

Johns decided to focus on more profitable accounts and cater to institutional investors. “We didn’t have the resources to serve [all our] clients.” This led to a decision to trim 180 of his 220 clients.

Before doing so, Johns emailed seven Raymond James collegues and two external candidates with similar business models. He told them he planned to transition out some clients, and then met each candidate. Johns later asked them to approach him if they were interested in acquiring his clients.

Johns looked at three areas; service, advice and performance; and chose his mentor, Peter Schikkerling. Both have the same approach to portfolio construction, which is to be well-diversified and focused on large, blue chip companies. Both also rely on systematic client calls, updates, annual meetings and a fee-based advisory model (and the Schikkerlings are starting to focus on discretionary accounts).

Johns then sat down one by one with the 100 clients he wanted to segment (the other 80 were smaller, transaction-based customers who went elsewhere).

At these meetings, Johns would tell them he’d decided to focus on institutional cash management and might not be able to offer the level of service they’d been accustomed to. Johns then broached the idea of working with the father-and-son team because they might be a better fit. Johns suggested “they deserved better service, and could get that with us,” says James Schikkerling.

Once the clients expressed interest in the transition, Johns called in the Schikkerlings, who were literally waiting in another room. The Schikkerlings then talked about their team and similarities to Johns’s approach. Johns would stay in the meeting for around 15 minutes, and then leave the clients to bond with their new advisors.

Read: How to network better

A handful stuck with Johns even though it meant less attention, and some moved to other advisors. Johns also referred a few Toronto clients to a local advisor. One client was primarily trading penny stocks and also moved elsewhere.

In all, 80 clients chose to work with the Schikkerlings (or 80% of the transferred client group), and the practice’s assets rose 20%. Of the clients who moved, roughly 80% went over to the Schikkerlings in the first three months; the remainder took about 18 months.

“In taking that additional batch of clients, our revenue rose enough to let us take on an additional team member,” notes Peter Schikkerling. “This not only helped these clients, but all our clients.” What’s more, the acquisition vaulted the Schikkerlings into the top 15% by revenue within Raymond James.

“In following up with [my ex-clients], some of whom I had for ten years, I’ve found out they are not only happier now, but they’ve given the Schikkerlings more money than they had with me,” laughs Johns.

He suggests advisors looking to acquire clients tell top advisors in their branches or firms. He discourages people from looking outside their firms, given the logistical and technical challenges that come with switching dealer platforms.

Read: How your spouse can help you prospect

It’s not you, it’s me

If you’re segmenting your book, here are four phrases you can use to let the departing clients down gently.

  • I interviewed [X number of] advisors to make sure [NAME] was the best fit for you. Here’s what I like about her.
  • I’m sure you’ll be happier with this new advisor. I can’t offer the service you deserve, but she can.
  • I’ve really appreciated your loyalty and I will check in periodically to make sure you’re pleased with your new advisor.
  • Your new advisor has [X] credentials and she takes care of several clients just like you. That’s why I know you’ll be in good hands.

Evelyn Juan is a Toronto-based financial writer. Melissa Shin is the deputy editor of Advisor Group.

Evelyn Juan