The COVID-19 pandemic is affecting almost every facet of daily life in America and around the world, with changes that many observers believe are becoming the “new normal” for most of us.
The independent advisory industry has not been immune from its effects. The widely publicized impact on businesses, and consequently our financial markets, is changing our industry as well.
The silver lining is that some of these changes are working in favor of several businesses, and the advisory business is one.
We’ve seen through our clients that the ongoing investment market volatility combined with the pandemic’s impact on most industries, and probably some of the psychological effects of “sheltering in place,” are driving many investors — who until now managed their own finances — to seek professional advisory help.
Here’s the bad news: The increase in business has revealed a critical weakness in how most advisory firms onboard new clients.
The problem is that most firm owners have not taken the time to consider the inefficiencies of the client onboarding process, and these can overwhelm the system during growth spurts.
This strains not only firm owners, but staff who are left to serve existing clients while also handling more new clients. New business is overwhelming, and advisor burnout is not a recipe for success.
Over the past several months, we have witnessed advisors not following up on prospects simply because they are tapped out and don’t want any more clients to serve.
Consider the revenue lost when your advisors have halfhearted meetings with qualified prospects and do not follow up. This may be stifling growth, and possibly could have major consequences on those firms for months or years to come.
The Growth Trap
Lack of time to follow up with clients is the real issue when an advisory firm goes through high growth periods. To solve that problem, start by looking at all the firm’s processes and determine ways to reduce any cost-inefficiencies. That means reengineering the firm to accommodate the growth all while hiring and training new advisors faster.
Improving the client onboarding process is the easiest and fastest way to transform time crunches and capitalize on growth opportunities. When a new client first agrees to work with the firm, onboarding serves as a trust-building process.
Most advisory firms will deliver this feeling of trust at the beginning of the client relationship by providing a detailed portfolio allocation and financial plan and front load a large amount of work in the first three months.
A typical onboarding process begins when the client schedules their first appointment. Typically, for most advisors, it means:
Week 1: A data-gathering meeting, where an advisor determines a client’s goals and gets detailed information about their financial situation.
Week 2: The advisor creates a detailed investment allocation and/or financial plan for a client.
Week 3: A presentation meeting, during which an advisor presents the investment plan and financial plan to the client.