How to build your practice with the right clients
By Tom Henske Partner, Lenox Advisors
How do you get your name to be the one that pops up over and over when someone is looking for a wealth management referral? How to get prospects to wait in line to do business with you? It’s all about Gathering ... Gathering clients in droves … not just any clients, but the right clients … gathering the right assets … and gathering the best referrals.
Today I will share with you:
1. How to determine which clients are “right” for you
2. The infrastructure you need to service those “right” clients
3. How to build loyalty with the “right” clients
4. Making values the foundation of your relationships
5. Marketing to the “right” client
My goal is to have you asking yourself who the right clients are for you and how you can deepen your relationship with them to bring more meaning to both their lives and yours. I will also be sharing with you some practical suggestions as to what you can do – through words, stories and actions – to have clients waiting in line to do business with you.
Everyone has a story about the wrong client. The kind of client who cost you money. Someone who was never happy … and who seemed to enjoy making both you and your staff miserable. That’s right; we did business with them because we could. Because they came to us and wanted to do business with us. There was money to be made.
From our early years in business, we are programmed to take business anywhere we can get it. While our sights may be set on a certain market, when an opportunity outside that market pops up, we grab it. We don’t choose our clients, they choose us. And, for the most part, we feel lucky to have them. Even when they are taking up all our time – time we could be spending looking for the right clients -- and making us miserable.
The “take-anything-you-can-get” approach creates tremendous stress on your service capacity. You don’t have time to service all the clients you brought in. A lot of your time is spent servicing clients who will never be profitable. People you don’t even like. People you have nothing in common with. Some who may even drive you crazy. Worse yet, some who put your staff over the edge. And … most importantly… you don’t have any time to go digging for the right clients.
Now for those doubters out there …. I have two words: Private School. In New York City where I practice, some parents put their names on a waiting list at a private elementary school before the child is even born. How do those schools do it? Simple. They are selective. They only accept a set number of children each year. They don’t compromise on their standards. Referrals weigh heavily in the selection process. And why do the parents go through the hassle? Because the three most important things to people are their health, wealth and kids. More on this later.
Educational institutions aren’t the only ones where selectivity has proven to increase demand. Look at country clubs. I’ll bet good money the exclusive ones get twice as many applications as they have open spots.
So the first step to get clients to wait in line to become your client is somewhat counter-intuitive. Be selective. Have the confidence and fortitude to turn away business. Don’t be tempted by opportunities that stray from your target. Draw a line in the sand. You are not going to take on just any prospect who crosses your path. Instead, you are going to look for the right clients. Burn this picture into your head and think of it the next time you’re contemplating taking on someone who doesn’t fit your definition of the “right” client.
The next step is to decide which clients are right for you. Here are the three questions I ask myself
1. Would I like working with them? The subsets here are: Do we share the same values? Do I respect them as individuals, and do they respect me and my staff? For example, if someone tells me they are not interested in leaving anything behind for their children – well, I probably won’t have much in common with that person. Or, if someone tells me they’re looking for a new money manager because their current planner is only getting a 20% return – well, I know right then and there this client is never going to be happy.
2. Will they be profitable? A profitable client is one who needs multiple services. Life insurance, disability and long term care insurance, asset management and financial planning. If a prospect tells me her sister is her asset manager and her brother-in-law sells insurance – as much as I like her as a person, her profit potential as a client just isn’t there.
3. Will they be my ambassador? Meaning… will they help me create new clients? Will she promote me to friends, colleagues and associates, and open the door for new opportunities for me? And do I want this person as my ambassador to the “right” clients?
In my practice at Lenox Advisors, we’ve taken the concept a step further. About five years ago, we created a Client Score Sheet to help the partners reach common ground regarding what we were calling “A” “B” and “C” clients. Under the old system, if you asked one of my partners who his “A” clients were, he would have ticked off the names of every client who liked to play golf. Obviously we needed a tool to level the playing field.
We came up with a Client Score Card, where each client was ranked in six areas:
a. Ongoing revenue
b. Potential for new revenue over next 24 months
c. Lines of business with us
d. Referrals
e. Assets Under Management
f. Maintenance (aka PITA)
By articulating what was important from each client to help our business grow, we defined what it is we are looking for in our new clients. It also gave us a forum to discuss our own personal and business values and what was important to us as a wealth management firm. Ultimately we understood that what we were looking for was an alignment of values; ours with our clients.
Now we have to make sure you can provide the best possible service to those clients so they realize their full profit potential and give you those all-important referrals.
INFRASTRUCTURE
To get the best return on the time you’ve invested getting your clients, you want to do two things – maintain their loyalty and provide as many services to them as possible. Here’s the equation for a profitable wealth management practice
Values Alignment + Insurance + Asset Management + Financial Planning = Wealth Management.
Think of it like this. At the beginning of any sports season, you prepare, you train hard and you set your sights on winning the national championship – not just the match this weekend. What I am suggesting is the same thing. You’ve put the time and effort into gaining the client’s trust and confidence – why settle for winning just one game, or for our purposes, getting one line of business? Go for the title – become the Go To advisor for anything financially related.
Now, I’m not suggesting you go out and try to become a jack of all trades; in fact, I’m suggesting the exact opposite. Stick to what you are good at and what interests you, but align yourself and build out your service capacity to support each of these disciplines. The collection of good specialists will always beat out one generalist. We’ve all heard the adage that one person cannot be all things to all people; however one organization can be all things to the right clients.
It all starts with the right infrastructure. An infrastructure to support a full-service model consists of:
• Financial Planning Division headed by a CFP®, ChFC
• Insurance Protection Division led by CLU
• Asset Management Division headed by a CFS/CIMA
This kind of structure is as much about defense as it is offense - a simple, winning formula.
It is offense because you will be able to gain greater client wallet-share. It is defensive because it insulates you from client poaching. It protects your client relationships so you don’t have another financial professional inserting themselves in an area where you may not have expertise.
Open for Business
Ok. So now you know what kind of clients you are looking for and you have the service capacity to support deep and long term relationships by offering a full spectrum of financial services. Now it’s time to get to know your prospects before they become clients.
Your first meeting with a prospect is as much about you interviewing them as it is them interviewing you. Remember, you are choosing to work with them, and if you go in with that mind set, position it appropriately by putting your cards on the table right from the outset … they will realize they would be lucky to work with you.
Let me show you how I do it. First, my introductory “pitch”--
“I’m thrilled Peter Feeney told you about our firm. We’ve worked with Peter and Karen for years and value our relationship. In fact, we highly value all the relationships we have with our clients. We are very selective about who we do business with because of the long term nature of our business. We recognize there are a limited number of clients who we can take on – and give the highest degree of attention and service. I’ve decided to take on only twenty new clients per year. This way I can be sure I’m giving all my clients the attention they deserve. Now, given that this is a mutual interview process, I have a series of questions for you. I will be taking some notes so I can present your background to my team. We meet every Monday morning to talk about the plans of our current clients and then about people who are interested in working with us. We make our decision as a team. ”
And then, three questions we ask of prospects:
1. If we were sitting here five years from today, what would have to have happened for you to feel good about your progress?
2. What is it about money that’s important to you?
3. What do the two of you disagree about when it comes to money?
The answer to these three questions reveals an awful lot about a prospect. It tells you what is important to them. It helps you determine if they are a good fit for you and for your firm. If in your initial meeting with a client you are focused not on a person as a financial being but as a whole being – you immediately send a loud, positive message. A message about your values. You care about them as individuals. You and your team want to help them succeed financially . . . not so you can pat your own back in your marketing materials . . . but so they can achieve their hopes, dreams and goals.
OK, back to our initial meeting. It is concluded. You have all the data you need to determine if the prospect is a good fit for your organization. And you’ve decided you want to take on this person as a client. You need to communicate that to the client. You need to reinforce the message that you’ve decided they would be a good fit for your practice and hope they’ve reached the same conclusion. Now they are part of your exclusive club and you are looking forward to a long and mutually beneficially relationship with them. This makes them special – they are special after all – they are 1 in only 20 new clients that you are taking on.
Now, how do you drive home these shared values in all your planning decisions?
MONEY CONSTITUTION
At our firm, Lenox Advisors, we try to ensure everyone understands our common financial values. To articulate those values, we have our clients create a Money Constitution. Similar to a corporate mission statement, the Money Constitution summarizes what it is about money that is important to them. The client couples spell out their shared values as it pertains to money. The Money Constitution serves as the compass from which all decisions are based. One catch – the Money Constitution has to be in writing.
It is really a fascinating exercise. Very few families take the time to commit to understanding and agreeing to what is important to them when it comes to money. In fact, many families spend more time planning their vacations than talking about their personal financial values.
Here is an example of a “Money Constitution”:
- It is important we remember where we came from. This would include staying involved with our school alumni and the communities in which we grew up.
- Since we did not grow up with substantial money, it is our desire to make sure we stress the value of a dollar to our children.
- Debt makes us uncomfortable. And although we realize debt can be a healthy financial choice, we agree to avoid using it as one of our financial strategies.
I could go on here but I think I’ve made my point. When you have clients formally sit and discuss what’s important, hash through some of the details and commit it to writing, you have significantly increased the likelihood you will be able to help them achieve those goals.
Once you have your money constitution, you can strategize with your clients how they are going to achieve their hopes, dreams and goals.
These are all ways you can offer your client a different kind of wealth management experience – one that’s high-touch and deeply personally, exclusive, and driven by values. Now here’s the revelation – it’s unique. It differentiates you from all the other financial service professionals out there …. And, it will give you a competitive advantage if you market it effectively.
Marketing
This leads us to a marketing strategy. The thing we all know we should be doing but don’t have enough time or money for.
But as John Romero, a casino marketing consultant, once said: “In marketing I've seen only one strategy that can't miss -- and that is to market to your best customers first, your best prospects second and the rest of the world last.”
Your marketing strategy should mirror your client acquisition strategy. Market to the right audience. To clients you would enjoy working with, and with whom you share similar values.
Like I pointed out before, children come first on that list. Parents want to provide them with a quality education that prepares them for a life of independence and good decision-making. Armed with this insight, we developed the Lenox Money-Smart Kids® Program which gives parents the tools they need to raise financially literate children.
Money-Smart Kids does more than increase client loyalty by helping them achieve financial literacy for their children – it is a marketing platform. It gets us in front of the right prospects – people who care deeply about their children and want to prepare them for the wealth they will one day inherit.
And, we’ve struck a nerve both locally and nationally. Because there is an increasing recognition that we as a nation have fallen short in teaching our children the value of the dollar. Remember, kids are not born with a money-gene
They need to be taught. And, they are not going to be taught at school -- formally that is. Regardless of the financial circumstances of the parents, all children need to be taught about money. In fact, this is an area where affluent parents may have an even more difficult time than the less well-to-do.
So, we talk about how to raise Money-Smart Kids every chance we get - on our website, in podcasts, on television and the radio, at parent organization meetings, networking groups, and seminars through community organizations – you name it, we’re there.
Here is the beauty of Money-Smart Kids. We are talking about something we feel passionately about. Something we believe in. Something that by its very nature tells our audience what we are all about.
As a result, we have built even deeper loyalty among our clients. We have given them something unique – a way to foster a lifetime of independence, good judgment and responsible habits for their children. We are helping them instill in their children an understanding that having money is not a right, but a privilege. And, like all privileges, it needs to be honored and protected.
CONCLUSION
The single most important thing you can do to improve your business is to be happy. Be joyful. Enjoy going to work every day. Greet your staff and your clients with vibrancy and enthusiasm. That can only come from two things – loving what you do, and enjoying the people you work with, including clients. Don’t ever underestimate the toll it takes on both you and your staff to work with people you do not like and respect. It will drain your energy, try your patience, and may even sour you with other clients. It is a mistake you simply can’t afford.
Work with people you like. Work with people who have values similar to yours. But, remember it isn’t just a personality test that qualifies a prospect to work with you. They also need to meet other criteria to help you build your practice. They have to be your ambassador. Willing and able to refer you to others. They also have to qualify financially to work with you and open to a full-service model.
After all, the full-service model is your gateway to client profitability. It gives you control of the client relationship. You become the client’s “go to” person, or “go to” firm for all of their financial needs. It protects you from other professionals poaching on your relationships. Client satisfaction goes up, client retention goes up. And, the client referral engine starts humming.
Once you enter a relationship with a client, make sure it isn’t just about money. It is about what matters to the client. It is about their hopes, dreams, fears and goals. Have clients create a Money Constitution to guide them through their financial journey. And, throughout that relationship, no matter what the financial decision being contemplated. Whether it is an asset allocation strategy, estate plan, or an insurance protection purchase. Help them stay true to those values and remind them of their ultimate goals. Continually stress the dynamic tension between Savings, Spending, Donating and Investing and bring balance to your client’s financial lives. The balance of needs vs. wants . . . today vs. tomorrow . . . and getting vs. giving.
When you build your practice around values, you bring more meaning to life for both you and your clients. It will keep both you and your clients firmly grounded about what is truly important in life.
The author is a partner at Lenox Advisors, Inc. in New York City. Tom Henske Bio Click here