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

Financial Planning > Charitable Giving

Don't Let Client Overload Slow Your Growth

Your article was successfully shared with the contacts you provided.

Firm owners — and advisors themselves — must recognize when an advisor has become overloaded (or “maxed out” on their client load) and  take steps to solve the problem.

The symptoms are obvious: When an advisor is spending more time in the office than usual, working weekends and/or holidays, appearing increasingly frazzled, or making mistakes with clients that they never used to make. Nine times out of 10 this is happening because their client load has become too large.

What can you do about it?

Some advisors may check to see if they have clients who require an unusual amount of hand-holding or take up more of their time than their fees cover; typically, those issues can be resolved by limiting how much time such clients spend their advisor, by raising the client’s fees, or doing both.

In most cases, overload stems from gradually adding more clients than the advisor can work with on a reasonable schedule. The good news is the solution is usually quite simple. The bad news is that resolving the issue entails something many advisors fear or dislike: transitioning some of their client load to another advisor(s) — which risks losing the associated income streams.

But this shift is really not as hard — or risky — as it sounds. And it includes exploiting one of the few advantages that financial advisors have over other professional services businesses.

One of the biggest problems that other professions — such as doctors, lawyers and accountants — have is that if their clients/patients don’t like what they hear, they can just walk across the street to a another professional.

In contrast, financial advisory clients are more “sticky.” If they want to change advisors, that usually means they’ll have to move their money — and at a minimum, they’ll have to fill out and sign another briefcase full of documents. Plus, they’ll have to find someone else to trust before they take these steps.

Advisors need to keep in mind that their clients may not want another advisor — but they really don’t want to move to another advisory firm either.

How to Offload

With that said, I believe client retention depends on “how” clients are transferred from one advisor to another. If you call up one or more of your clients and tell them: “Hey, I’m a bit overloaded here at the office, so I’m going to be handing you off to another advisor. I’m sure you’ll get along just fine,” chances are the message won’t be well received.

However, we’ve found that making a gradual transition to additional advisors over time is well received by virtually all clients. With this approach, you don’t have a conversation with the client or send a letter. In fact, you don’t even have to inform them of the change — unless they ask.

Instead, as the head advisor, you make a slow, gradual transition from giving your clients advice to leading them: answering the phone when they call, talking to them when they want to talk, asking about changes in their lives, and about how things are going, etc.

But you stop giving them advice. When they ask for financial advice, or obviously need it based on your conversations, you gently hand them off to another advisor: “X is really the expert in that department, and he/she can help you better than I can these days.”

Don’t make excuses for why you can’t guide them; it will make the client feel unimportant. If you don’t hear back from them after this handoff, follow up to make sure they got the advice they needed.

This way, you don’t “sell” the other advisors too hard: They simply are taking over one aspect of the client’s finances. Let clients develop their own relationships with other advisors. Then you can gradually expand the issues that other advisors address for “your” clients.

As client bases grow larger, advisors almost always believe they can take on more work. But there’s a tipping point for everyone.

It’s important for you, your firm, and your clients, that you recognize when you’re getting maxed out, and that you take the above steps to decrease the workload. You’ll be a lot happier, your clients will be better served, and your firm will be more successful.

Angie Herbers is Chief Executive and Senior Consultant at Herbers & Company, an independent growth consultancy for financial advisory firms. She can be reached at [email protected].


© 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.