Unlocking Real Value Blog

Advisor Opportunities For Growth Abound

My posting last week focused on the results of PriceMetrix’s annual report on retail advisors. It included a number of criteria by which advisors can compare themselves to their peers as a way of introspectively evaluating their businesses. (Click here to see that posting.)

To recap the major finding of the PriceMetrix study – 1) advisors are increasingly migrating their books of business from smaller accounts to larger accounts; 2) advisors are increasing the percentage of fee-based accounts in their books; and 3) the average fee on fee-based accounts has been trending slightly downward over the past few years.

The study also outlined a number of opportunities that PriceMetrix feels exist for advisors. I want to take a look at, and give you my thoughts on, each of these opportunities:

1) 30% of the typical advisor’s book of business is comprised of accounts that produce less than $150 in revenue. Opportunity/Action: Review your book of business carefully, and identify accounts that you can transition out. Set a relationship minimum fee, and let this fee guide you. Of course, exceptions will be made, and you will keep certain accounts – but transitioning whatever smaller accounts that you can out of your business will help you leverage your time.

2) New fee-based accounts are being opened at an 11% discount to current relationships. Opportunity/Action: Ask yourself if this is the case with your business as well. Perhaps it’s time that you reviewed your value proposition and the way in which you approach prospects and describe your business. Even though times are tough, clients will pay for premium service and performance. Are you worth a premium?

3) More than 100 basis points separate premium and discount fee pricers.Opportunity/Action: Similar to (2) above, analyze the way in which you conduct business, and determine how you can elevate yourself to be a premium provider if you are not one today (according to the statistics). If you are at the top of the heap – don’t be complacent. Use this as an opportunity to improve what you are doing so that your business does not become vulnerable to the competition.

4) 44% of households have only one account. Opportunity/Action: Review the questions that you typically ask clients about themselves and their families, and review your referral process. If clients are happy with you and the services that you are providing, they should be amenable to moving more assets to you, bringing in related and family accounts and making referring. But you have to ask. And then you have to help them articulate your value proposition.

Opportunities abound for those advisors that evaluate them and act upon them.

Leave a Reply