Using a client review to increase revenue

Client reviews can be used as a powerful tool to increase business for your practice if you’re willing to look at more than just a client’s investments.

I’ve talked to many advisors over the years, and client reviews are one of the areas they wish they could improve. Many advisors still think a review means looking at a client’s investment portfolio and printing graphs, charts, P/E ratios and index comparisons. Often, at the end of the review, the advisor ends up having to defend his or her investment advice rather than use it as an opportunity to expand the business relationship.

I have five suggestions on how to change the focus of reviews from investments to other areas.

1. Create an agenda.

Have an agenda template for each review — it immediately increases your professionalism. Your agenda could cover your client’s retirement target. Ask clients if they are still on target to reach their overall retirement goals. If you have not already created a financial or retirement plan for your client, take 10 minutes during the review to do a retirement projection on the spot. Many free calculators from dealers or fund companies are available to do this.

Doing the retirement projection opens the door to asking where all the client’s assets are so that you can properly complete the retirement projection. Three things happen when you do this:

• The client sees that you care about his or her retirement and are adding value by seeing if he or she is on track.

• You gain a full view of your client’s assets and can make recommendations on how you can manage the assets held elsewhere so that you can update his or her retirement projection each year.

• A retirement projection will tell a client how much he or she needs to save each month to reach a retirement goal. This is a great way for you to build your monthly pre-authorized chequing (PAC) plan business, which will shift some of your revenue stream from its concentration in RRSP season and create regular monthly deposits. At our firm, our average PAC per family is approx. $2,000/month.

2. Switch from DSC to FE.

Switching clients’ assets from deferred sales charge (DSC) to front end (FE) load mutual fund assets is a regular item on our agendas. Remember, you can free up 10% of DSC assets each year, plus any matured assets, which, if switched to front end or no-load, will double your trailer.

We started this transition process five years ago when we decided to go fee-based. The explanation to the client is simple — this process creates flexibility. We are freeing up any matured or free units you have in case we ever need to change fund companies or you ever need access to more than 10% of your assets in any year.

We also go through the disclosure of how their management fee remains the same but the amount we get from the fund company increases, allowing us to offer no-load investments going forward. Over the five-year period we’ve been doing these switches, we’ve freed up more than $15 million in assets, which increased our revenues by approximately $75,000/year.

Remember, if you have a DSC book of $10 million, you could “free up” $1 million a year. This should increase your revenue by approximately $5,000 each year going forward.

3. Protect your clients’ families.

Do your clients have sufficient insurance coverage? This is an important part of each review to ensure nothing has changed with clients’ insurance requirements. Maybe they bought a new home and, heaven forbid, bought mortgage life insurance? Maybe they are expecting a child?

We also use this line of questioning as a great opportunity to educate clients on critical illness and long-term care. We use our Client Dashboard™ to highlight any deficiencies we see in a client’s overall situation and ask probing questions to help the client understand his or her needs. Our CI sales have increased significantly since we started using this process.

4. Don’t forget estate planning.

This is where we ensure clients’ estate plans haven’t changed since our last review and find out if leaving an inheritance to the next generation is a priority. This sometimes leads to joint-last-to-die T-100 (JLTD) sales to provide a tax-free inheritance for their kids or grandkids. We are finding more and more that our older clients are very interested in leaving money directly to their grandchildren and JLTD T-100 can be the solution.

5. Assess short-term goals.

Ask clients about their three top goals for the next three to five years and then try to find a way for them to afford these goals. You could set up a high-interest bank account for them at one of your banking partners or have them transfer existing bank balances to the account and begin a monthly savings program to reach these goals. This process shows you care and want to help the client. As well, it earns you 0.25% on the managed cash account.

Don’t be afraid to call clients during bad markets. Now is when they need you, and now is when you need to strengthen your ties with them. You’ll find that when you work with an agenda, clients are much more willing to talk about the things you ask as they can see that it is part of the meeting. It also reminds them that you are a professional and have a process to your meetings. You will also be pleasantly surprised by the end results to your bottom line.

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.