In every business, the most important elements are its people, its processes and its products. As a side note, the efficiency with which the business operates is also a major determinant of its success. After passing my sixth year as an independent RIA, I find myself with more ideas than time to implement them. In fact, I first need to decide which ideas deserve to live and which do not.
One thing of which I am sure is this: clients that engage me in financial planning and asset management are far less likely to depart and are far more likely to refer. As a result, I have been giving thought to accepting only clients that are seeking both services. Why? I find clients can easily see the value in planning once they engage in it. If a client has engaged me for asset management only, how will they judge our relationship? I think it can be assumed that returns will be the most important determinant, and anything that doesn’t meet their expectations will be grounds for divorce, so to speak. This is not true across the board, but when I think about clients I have lost, they have one thing in common: They were asset management only!
I have to admit there is a bit of fear involved with this decision for obvious reasons. Let’s say I have a prospect with a million-dollar portfolio who isn’t the least bit interested in planning. Would I take them on as a client? To help assure it would be a long-term relationship, I’d need to take a few extra steps in the beginning. First, we would need to set realistic expectations and I would need to do my best to assure that they’re not going to pack up and leave after a short period of time. This did happen one time and what I don’t want to do is waste my time or theirs. Hence, if I can be reasonably sure it’s going to last, then I would surely accept them. Actually, I have some clients on an asset-management-only basis now who are great relationships. However, I need to avoid short-term, got-to-have-it-now types, who expect too much too soon.