Phantom Clients
If you’re a licensee, there are a number of critical conversations you need to be having with your advisers in the next 12 months.
Arguably the most important of these is a discussion about what their ideal client looks like and how many of those currently on their books actually fit that profile.
Recent research from CoreData suggests that on average, financial advisers meet with just three in five clients (58.3%) at least once a year in person.
By default, that means that two in five clients are not being given the love and attention that will be necessary to hold onto clients in an opt-in environment, and are potentially at risk.
What percentage of clients would you personally meet with at least once a year?
While the number of clients met with face-to-face has increased somewhat year-on-year (from 54.7% last year), there are still a considerable number who have relatively infrequent touch points with their adviser.
Meeting with every client in person at least once a year is simply not possible for the majority of planners, given that on average, advisers personally oversee around 300 clients.
If you consider that most advisers would work no more than 240 of the 365 days a year, this would mean seeing more than one client every working day of the week.
Let’s reflect for a moment about the difference between a customer and a client.
The main difference between a customer and a client is that with customers, there is no ‘relationship’. The exchange is transactional, and there is no ongoing business relationship.
A client, on the other hand, enters into a reciprocal agreement to pay a fee in return for the provision of a product or service.
This begs the question: are they a client if they’re not receiving a personal service, or worse, if they don’t know even they’re a client?
The notion of ‘phantom clients’ is set to become a thing of the past if the Future of Financial Advice reforms become a reality, however there are numerous unintended consequences – not least of which is the emergence of more selective client acquisition among advisers – that will create a less, not more, desirable outcome for Australians.
Advisers cannot afford to be everything to everyone, and will be forced to pick and choose the clients they want to deal with going forward.
Left with a choice of servicing mums and dads, with low to mid-size investment portfolios and little appetite for paying for advice, or the wealthy, with deep pockets and large investment portfolios, it’s not hard to anticipate who will lose out.
The industry funds, who play a key role in servicing those with simple advice needs, will pick up the low end of the market, advisers will service the rich, and middle Australia will be left to flounder.
One Comment on “Phantom Clients”
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Michael Peloquin says:
We all need to grow up and act like professionals, treating our clinets with the respect they deserve. If an advisor can not see more than one client per day, that is pretty sad.
There should be very few clients whom we do not meet with at least once per year. The top 50% of our clients I see twice per year, many three times. Assess your client base honestly, if the client is not worth seeing once per year (or organising a review via telephone if distance is an issue)than you should not have the relationship, and do not deserve the income.