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Does Size Really Matter?
2019-07-23 • 3 minute read

How many times have you heard the phrase, 'It’s not the quantity but the quality that really matters'? This statement is definitely true when considering a financial advisor’s book of business. Yet despite this reality, a large number of advisors have a difficult time grasping the concept that bigger is not necessarily better. In fact, more often than not, advisors dream of building a very large client base. It seems that in this business, there is a false belief that size does matter! One thing’s for sure, in this day and age, a large book of business means one thing – considerably more work. Gone are the days where an advisor can be assured that a client is competitor-proofed with an annual or even bi-annual call. 

Client right-sizing is one of the first areas we tackle when working with a new client in our one-to-one coaching program. However, it is often a difficult subject to broach as many advisors going through our Pareto Systems program are looking for guidance to grow their businesses in order to increase their net incomes. Instinctively, they believe their action plan should begin with increasing the number of clients in their book, not paring down their number of clients. This is where many advisors miss the mark.

Are you looking to boost your income by increasing the size of your client base? If so, you should consider some important questions. Before answering, think hard about what each question implies:

  1. Could your business, as it’s running now, handle a dramatic increase in new clients?
  2. Would a substantial increase in business create some level of chaos in your office? As you know, there is a lot involved in bringing on even one new client (or at least there should be!)
  3. Would an influx of new clients result in a decreased level of service for all your clients as a whole?
  4. Would you need to add an assistant to the team in order to keep track of all your clients and make sure that nothing falls through the cracks?
  5. Might the new business, in fact, cause you to lose focus on the clients who really matter in your book, your Top 20%? And if, as a result, you lost even a handful of your top clients, would that have a dramatic effect on your practice?

There is a specific process to “growing one’s business.” It is often important for an advisor to reduce his/her number of clients before adding new ones. The point is to clear out the old ones to make way for the new (and improved) ones! This gives the advisor the opportunity to let go of clients who aren’t necessarily adding to his/her income but are certainly draining on time, or have attitudinal quality that don’t align with the advisor’s.

If you take anything from this article, please remember that to increase your income, you don’t necessarily need more clients, just different ones and more engaged ones. Another thing to consider is that to remain at the same income level you are at now, you could most likely drastically reduce your client base by letting go of clients who are not significantly contributing to your business.

To begin client right-sizing, it’s important that you first take a hard look at your client base (hopefully you are already utilizing a fully encompassing client classification system), then make some critical decisions. Who is your ideal client? Who is no longer suitable as a client? Who takes up too much of your time? As you can imagine, by re-evaluating who an ideal client may be, then letting go of the clients who don’t , or most likely always won’t, fit the bill, you become much more efficient overall. Let’s face it, some clients are more of a hassle than they should be. They may eventually cause you to lose focus of the clients who really do deserve your full attention and your valuable time.

With a smaller book of business, you are once again able to gain control of your practice. By going through this process, you are now in a position where you are able to really service your top clients. As you know, when you spend more quality time with the clients who count, they really begin to appreciate your services, regardless of what is happening with the market. As long as you are in constant contact with your top clients, they will feel as though you are looking out for their needs. If at the same time, you are in the habit of re-stating your introduction process, those same top clients will brag about you to their friends and family. This will no doubt increase your rate of introductions and soon enough, more ideal clients. 

So before haphazardly taking on new clients, remember this: bigger is not always better!

Continued Success!

Contributed by Duncan MacPherson

Pareto Systems
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