“What’s the optimal number of clients an advisor can handle?” This a question our coaches find themselves continually answering. Due to the many variables, there’s no “one size fits all” answer. So much depends on the profile of the advisor’s ideal clients, the number of ideal clients on the books, the number of non-ideal clients on the books, the service models being used, and so on.
This is a bandwidth issue. For every advisor who is interested in being able to attract, service, and develop a loyal affluent clientele, this is extremely important. It’s time for advisors to truly approach their business like a business.
Every advisor has only so much bandwidth, and today’s affluent clients are continuing to demand more time and attention, both on a professional and personal level. To that end, we developed a Bandwidth Calculator for any advisor who dares to get a snapshot of where his time is going relative to the revenue being generated.
All you need is an Excel spreadsheet and you can formulate your own calculations. For the purposes of this article, I’m going to walk you through a sampling of the input and highlight the corresponding output. That said, the following steps must be completed in advance:
Step One–Segment your client base into two tiers: top revenue clients and everyone else. We refer to these as Platinum and Gold Clients.
Step Two–Develop a service model for each tier.
Step Three–Determine roles and responsibilities for the implementation of each service model.
After completing the above steps, you’re ready to input the necessary data for a time-revenue analysis. The input I’m using is a composite of a handful of our coaching clients that helped us create this tool.
Platinum Client Service Model (25 clients/$800,000 production):
- 4 face-to-face reviews @ 2 hours per review; 200 hours total.
- 4 social engagements @ 2 hours per client; 200 hours total.
- 1 financial plan @ 3 hours per; 75 hours total.
- 1 Financial Organizer @ 3 hours per; 75 hours total.
- 24/7 cell phone access @ 1 hour per; 25 hours total.
- Miscellaneous @ 5 hours per; 125 hours total.
Platinum summary: 28 hours per client annually / 700 total hours per year / 14.6 hours per week for all Platinum Clients / $1,142 hourly Platinum Client revenue.
Gold Client Service Model (125 clients/$200,000 production):
- 1 face-to-face review @ 2 hours per client; 250 hours total.
- 1 telephone review @ 1 hour per; 125 hours total.
- 1 Social Engagement @ 2 hours per; 250 hours total.
- 1 Financial Plan @ 3 hours per; 375 hours total.
- Miscellaneous @ 3 hours per; 375 hours total.
Gold summary: 11 hours per client annually / 1375 total hours per year / 28.6 hours per week for all Gold Clients / $145 hourly Gold Client revenue.
Obviously the variables will change for every service model and variation therein. The fact of the matter is that elite advisors are true business people who understand the importance of bandwidth and each client relationship’s time value. Which is why they make time to consistently work through their personalized version of the above.
In the example above, albeit a composite, it didn’t take long for these advisors to realize that they were spending far too much time (66 percent) with the clients generating only 20 percent of their annual revenue; 28.6 hours a week going to Gold clients and only 14.6 hours being devoted to their top 25 clients.
In breaking this down further, the Platinum Clients were generating $1,142 per hour as opposed to Gold Clients generating $145 per hour. The advisors in our coaching pilot all had a similar objective after reviewing their time-value analysis: Free up time for relationship management/relationship marketing with their Platinum clients.
That said, each advisor approached the situation a bit differently. One advisor added a former assistant who earned the CFP designation to his team as the relationship manager for all but a handful of his Gold Clients. By his calculations, he was investing $50,000 plus an incentive bonus for an additional 28.6 hours a week. Another advisor’s firm had a program that facilitated the sale of the majority of his Gold Clients and their assets to an advisor in his office, allowing for a clean break with these clients.
There is not one single methodology for addressing this bandwidth issue, since there are numerous avenues an advisor can take based on his situation. The key is approaching your business like a business. That means having the capacity, i.e. bandwidth, to strengthen existing affluent client relationships and penetrate their spheres of influence in order to develop new affluent relationships.
Are you a $100 an hour advisor or a $1,000 an hour advisor?