Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Building Your Business

Prosperity Strategy 2008

Your article was successfully shared with the contacts you provided.

Forget about 2007. It’s mostly too late to do anything about it. Instead, let’s implement a strategy now that will pay off big in 2008.

A “strategy” is a detailed plan of action to achieve a goal. As you think about 2007 and beyond, at least one of your goals should be to survive and prosper in business.

Remember when you started college and the person welcoming you to the school told you to look at the person on either side of you because one of them wouldn’t be there in four years? Look around. While I don’t know what the exact figures are, it’s much worse than that.

Of course, survival is relative. Some are severely threatened if they net less than $1 million. For others, survival means $60,000 a year and time to spend bird watching.

Since I first wrote the following eight-point strategy in 1989, thousands of advisors have implemented it to survive and prosper.

1. Maintain state-of-the-art know-how on investment strategies necessary to accomplish your clients’ financial objectives. This reflects a universal principle. If you run a photography business, the first step to ensure its survival would be to maintain state-of-the-art know-how on cameras and techniques to accomplish your clients’ photographic objectives.

Without the know-how, you don’t have anything to sell. But if you have only the know-how, you’re just an expert, unknown to anyone except yourself.

It’s the other points in the strategy that create a business.

2. Computerize. As fees and commissions trend down, it is imperative to improve productivity by using the computer’s ability to track large numbers of clients and prospects while standardizing and automating routine tasks.

Compared to five years ago, you have to manage more clients and more assets today just to stay even.

However, having a computer and being computerized are obviously two entirely different things. This means:

a. Maintaining a database to document every contact or contact attempt with a client or prospect.

b. Communicating with clients in the manner they prefer, i.e. fax, letter or e-mail.

c. Keeping track of all relationships within your client base.

d. Automating common business processes such as those generated by new referrals, new clients and new opportunities.

e. Creating a complete library of pre-written, compliance-approved messages for virtually all recurring situations.

f. Assigning tasks to staff and building a system for knowing when they have been done.

3. Master alternate channels of communication. In days gone by, the telephone was the primary communication channel. But with the advent of the “Do Not Call” list, answering machines and Caller ID, an advisor can no longer rely on the telephone even to contact clients, much less prospects. At a minimum, an advisor must be able to reach people by letter, fax and e-mail. Text messaging and Web conferencing are also viable channels.

4. Manage your time expertly. You have exactly the same amount of time as your competitors. Those who spend time wisely make it to the winner’s circle. Those who squander it go to the advisor graveyard.

“Expert time management” means doing those things for which you get paid, i.e., talking to clients and prospects and preparing for such meetings. Delegate everything else.

5. Build a support team to let you delegate non-sales, non-investment functions. Twenty years ago, I concluded that nobody makes it to high six or seven figures without a team. As an advisor, a financial advisor was worth at least $1,000 an hour, or $2 million a year. If you were doing less than this, you were doing other people’s work.

Back then, mutual fund and limited partnership commissions were 8 percent. It’s even truer today. It is vital that you get help as quickly as possible in order to spend your time talking to clients and prospects. It is essential to have people to whom you can delegate the non-sales functions.

6. Retain all clients who follow your advice. This strategy flies in the face of today’s commonly accepted wisdom that the road to riches is paved with the bodies of low-end clients hurled from your speeding truck.

You’ve probably heard that 80 percent of your business comes from 20 percent of your clients, so why not prune that bottom 80 percent of your clientele? As it turns out, there are some serious errors in this logic.

First, you cannot build a business as “trusted advisor” over a massive breach of trust. The people you would cull from your book are, in many cases, those who got you here in the first place. They extended you their trust, paid your mortgage, fed your family and now you want to fire them and still call yourself a trusted advisor?

Second, this practice generates intense ill will. If you brought your 10-year-old car to a garage and were told your business is no longer welcome because you don’t generate sufficient revenue, how many people would you tell?

Third, it makes no economic sense. With a team in place, you can manage hundreds or thousands of small clients and still produce at the rate of $1,000 an hour. A little client may only need investment advice every two years, but your sales assistant can set up a 15-minute telephone appointment that generates $400 in revenue. You are working at an hourly rate of $1,600. Throw her overboard? Have you lost your mind?

Don’t keep all clients. Kick out the jerks; life is too short to deal with these folks. If someone doesn’t follow advice, they should go. That includes people who will not return phone calls or set or keep appointments.

7. Prospect enough. You’ve certainly known people who prospect too much. They open the account, invest the money and go on to the next. And you know people who don’t prospect enough. But how much is enough?

Let me give you two answers, one defensive and the other on the offensive side:


You need to prospect enough to replace assets that could be lost through a market downturn.

In many surveys I’ve conducted, I consistently find it’s the veterans who are hurt the most in a downturn, because they rely solely on referrals for new business. In a downturn, referrals dry up, and in a downturn, less new business translates into an income reduction plan for you.

If you have $20 million under management and think the market could drop 10 percent next year, you need to have a system in place that will generate $2 million in new assets from some source other than referrals.


At Bill Good Marketing, we know you can double your business in two years. As a rule of thumb, you can get half of that from assets your clients have invested elsewhere. You’ll get the second half from new clients.

Let’s assume you have 200 households and $20 million. Over two years, you can get $10 million in new assets from current clients. This means new clients need to provide the rest.

If your average new account opens with $100,000, then you need 100 new households. Over a two-year period, that’s about one client per week.

8. Substantially annuitize your business. Make no mistake. Consumers are not picketing Wall Street chanting, “No more commissions!” or “Fees now!” The trend to annuitization is driven by the financial services industry, not client demand.

However, once you drink the Kool-Aid and annuitize your business, life changes.

Instead of having to write business today, you can do what’s most important for your clients and your business because there’s a base level of revenue you can count on.

The annuitizing challenge, of course, is to pull it off without signing up for a guaranteed income reduction plan as your commission of 4 percent fades to a 1.5 percent fee that might be paid out over four quarters.

Bill Good is chairman of Bill Good Marketing and the author of Prospecting Your Way to Sales Success.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.