Archive

Secrets of less successful advisers

As the saying goes, all happy families are alike. Apparently, the same is true of successful financial advisers…

As the saying goes, all happy families are alike. Apparently, the same is true of successful financial advisers — and those who lag behind. Multi-Financial Securities Corp. looked at answers 700 advisers gave in an April survey covering practice management, and cross-matched their answers to the firm's revenue per principal. The results identify the top drivers of revenue for advisory firms, said Susan Theder, chief marketing officer of Multi-Financial, a unit of Cetera Financial Group. Conversely, the survey also revealed the mistakes made by less successful rivals. Here's seven of the most common — and most costly.

FORGO FEEDBACK

If you ignore your clients, you pay for it. Advisers who regularly ask clients how they are doing — by survey, phone or e-mail — generate $622,280 per principal. That's nearly a third more than those who don't.

CALL TOP CLIENTS INFREQUENTLY

The less firms call their A-class clients, the less revenue they bring in. Calling top clients six to 12 times a year translates into a 22% increase in principal revenue over those that call less than six, and calling more than 12 times a year boosts average revenue by 68% to $619,235 per principal.

DON’T DOCUMENT BUSINESS PLANS

Advisers who have a formally documented business plan generate 47% more revenue per principal at $523,468 than advisers who don't see any need to put it in writing.

PUT EVERYTHING ON PAPER

Of the 700 advisers surveyed, a surprising 25% said they keep their client records on a paper-based system. It's no surprise that advisers who rely on paper lag their computer-savvy peers. Advisers who use database software to manage their client information reported an average of $546,706 in revenue per principal, 46% higher than the $373,362 the paper-based principals reported.

OFFER THE SAME SERVICE TO ALL CLIENTS

Most practices (81%) segment their client base, but only 48% offer different levels of service to various categories of client. The rest have a generic level of service for all clients. Those that segment reported an average $558,518 revenue per principal, 33% higher than the generic brand.

PUT OFF SUCCESSION PLANNING

Firms with a written succession plan reported 31% more revenue than those without one, at $634,158 in average revenue per principal. For advisers who said their plan is “effective,” revenue jumps 62% to $785,270.