Benjamin Franklin’s adage, “Time is money,” is commonly used in the financial world, and with good reason. Time is one of the most valuable assets an advisor has. The challenge, however, is to use your time wisely and spend it on the most important activities. According to our research, advisors often don’t use their time sensibly and are, therefore, not realizing the full potential of their advisory practices. Their pitfall? They simply aren’t spending enough time with their clients.
Advisors who are looking for ways to achieve greater profits and increase their competitive advantage often get bogged down in the operational and administrative tasks necessary to achieve those goals. They tend to forget that the tried-and-true methods of meeting client expectations can still be highly effective in growing their practices. One of the most common ways investors rate their satisfaction with their financial advisors is by the amount of time spent together.
According to preliminary findings from our 2005 AdvisorBenchmarking survey, advisors aren’t spending nearly enough time with clients. Compared to 2003, the amount of time advisors spent serving clients and managing their portfolios decreased dramatically in 2004, with registered investment advisors (RIAs) spending only 19% of their time on client service, down from 36% in 2003. Time spent on portfolio management slid slightly to 18% from 19%. Factor in the demands of new compliance regulations and the increased administrative duties firms must fulfill and it’s easy to see why actual time spent sitting down with the client has diminished dramatically.
Clients aren’t just looking for great investment performance; they also want to feel secure in their relationship with their advisors. A client may be familiar with the ins and outs of investing and may get all the relevant information he needs in the form of automated online reports. However, nothing beats actual time spent with their advisors–someone who is there to provide support during challenging market conditions and to direct them through life’s changes. Clients gain confidence when they know that their advisors are in tune with their goals.
Unfortunately, our data shows that few advisors grasp the importance of strengthening client relationships. Only one in 10 advisors spends more than 60% of her time in front of clients and almost half (46%) spend less than 30%. In other words, the vast majority of advisors are failing to provide what their clients want most–their time.
Time spent with clients equates to more than just happy clients. Our research shows that there is a strong correlation between the amount of time spent with clients and how much revenue the firm generates. The chart below shows that the small fraction of advisors who spent more than 60% of their time with clients enjoyed profits that were eight times greater than those advisors who spent less than 30% of their time managing client relationships.
It’s About Time