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Practice Management > Building Your Business

Best Practices Pay Off for Advisors

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Thousands of financial advisors coached by CEG Worldwide have one thing in common: they want to improve their businesses and be more successful. We know from our research and long experience that this means something other than hit-or-miss attempts at improvement, or a haphazard business plan based on trial and error. You can learn from what highly successful advisors are doing, and this column and next month’s can help.

The engine for all our work is the research we do on some of the most successful advisors in the business. From the beginning, we’ve undertaken trend research to identify the best practices that set apart elite advisors. Our most recent study of 2,094 advisors — advisors who’ve been in the business at least five years and have a minimum of $50 million in assets under administration — was the largest study we’ve ever conducted.

Once again, at the leading edge we found a distinct group of elite advisors whose businesses are characterized by higher incomes, fewer clients and markedly different methods of conducting business. As the first chart shows, these advisors (who fall into what we have mapped out as “Quadrant 4″) have an average income 3.3 times greater than Quadrant 1 advisors, and year over year their income grew 2.3 times as much as that of their Quadrant 1 brethren.

This study reinforces our contention that the most successful advisors become that way not because of good fortune or time spent in the business, but because they employ a particular set of optimal business practices in five areas: growing the business, specialization, running the practice as a business, client service and business systems.

Growing the Business

Elite advisors understand that without regular growth, their businesses will not — and cannot — prosper. They therefore focus on and dedicate themselves to achieving such regular growth, beginning with business plans that spell out diversified yet specific growth strategies and tactics, including: referrals from existing clients; referrals from other professionals; joint ventures and strategic alliances with other professionals

One thing that immediately separates out the most successful advisors is their rigorous use of a formal referral program that focuses on asking existing clients for referrals on a regular, routine and real-time basis. The most important thing to understand about implementing a client referral program is that your entire organization needs to be involved. Advisors who individually take on full responsibility for implementing such programs usually fail because they are busy and get caught up in too many other things.

Instead, make sure that your entire organization understands the importance of the referral program, and that there is someone in your organization whose job it is to take care of all follow-up, including sending thank you notes and setting up appointments. It’s also this person’s job to remind you — hound you if necessary — to ask each existing client, at the end of each physical meeting, if they have anyone appropriate to refer to you. A key here is to look into your client’s eyes and ask for the referral before the client leaves the meeting. Having a placard in your office or tagline on your business card that “the greatest compliment you can pay us is a referral of a friend or family member” is not enough. Elite advisors who have a formal referral program receive, on average, three times as many qualified referrals from existing clients as do advisors with no formal program.

Interestingly, elite advisors know that such referrals are not enough to grow their businesses and achieve the goal of having fewer but wealthier clients. Our research shows that while 82 percent of less successful advisors name referrals from existing clients as among their top three sources of new clients, for elite advisors this is true only 66.5 percent of the time. Instead, elite advisors have a greater focus both on receiving referrals from other professionals, and on explicit joint ventures and strategic alliances with them.

Compared to less successful advisors, elite advisors are three times more likely, at 53.9 percent of those surveyed, to name referrals from other professionals as one of their top three sources of new clients. Similarly, elite advisors are twice as likely to enter into joint ventures and strategic alliances with other professionals.

Who are these other professionals? The top two categories are accountants (especially CPAs) and attorneys (especially estate and trust attorneys). Depending on your specialization, your optimal referring professionals might differ. If you specialize in working with corporate executives, you might target referrals from top human resources professionals or mergers-and-acquisitions attorneys; if you specialize in working with widows and widowers, you might seek out relationships with pastors and rabbis; if your specialize in working with dentists, you might want to know consultants who help dentists convert their practices to aesthetic dentistry.


In all walks of life, specialists do better than generalists. This is true in the medical profession, the legal profession and elsewhere. It’s not surprising that the most successful advisors promote themselves as specializing in a particular type of client 45.7 percent of the time. In fact, elite advisors are three times more likely to specialize in a particular type of client compared to non-elite advisors.

Specialization allows advisors to focus on a specific group of clients and to become an expert in their needs, rather than reinventing the wheel. Our research shows that elite advisors specialize in particular client types by the following percentages: corporate executives, 40.7 percent; widows and widowers, 27.6 percent; retirees, 22.8 percent; private business owners, 17.9 percent.

By far, then, corporate executives are the specialized client of choice, with four of 10 elite advisors focusing on them. These advisors are very knowledgeable about their corporate executives’ benefit plans, deferred compensation and long-term incentives. They are also aware that their executive clients, amid retirements or layoffs, have to make fast, life-changing decisions about benefits and payouts. The advisors must know their clients’ benefit plans better than their clients do.

Widows/widowers comprise the second most specialized-in area. Again, being a specialist here results in having a very different kind of practice. For example, other professionals with whom you would cultivate relationships might include grief counselors and clergy members. Note that these clients often are looking to have less technical information, more hand-holding and more personal contact.

Retirees are another significant group, and advisors who specialize here become experts in plan distribution tactics, deferred compensation plans and annuities, as well as the tax implications of when to tap into different sources of retirement income. However, specializing in “pre-retirees” is a mistake. As Willie Sutton once noted, you want to focus your activities where the money is. For Americans, on average the greatest spending year is age 49, and those who are spending greatly tend not to have liquid resources to work with. So, go for the retirees who have already received their retirement payments.

The final area is private business owners, which 17.9 percent of elite advisors specialize in. While many less successful advisors believe that private business owners would make a good primary area of focus, elite advisors have discovered that many small business owners have 100 percent of their assets tied up in their business in overhead, payroll, inventory and so on. This is why elite advisors are 2.3 times more likely to specialize in corporate executives than in private business owners.

We will continue this discussion of best practices next time. Remember, if you keep running your practice the same way and expect things to substantially improve, you’re likely to be disappointed. Instead, if you want greater success, follow in the footsteps of others who have already achieved great success.

Patricia J. Abram is a senior managing partner with CEG Worldwide in Florida; see