One response to the high demand for financial planning is to increase supply. Due to both the complexity of your core clients’ financial affairs and their desire for a high degree of personalisation, the main way for your firm to meet much of that future demand is by recruiting more staff.
But there are other ways to handle growth and improve client satisfaction without increasing either costs or headcount. And that is by being more discerning about the clients you work for, adding more revenue-generating services or raising prices for your existing services – or doing all three.
By avoiding taking on clients with unreasonable expectations, values that are at odds with yours, or who are overly needy, you will prevent them hogging valuable staff resources. That will free your team up to work with clients who are both more enjoyable and profitable.
Likewise, you don’t need to hold on to clients that turn out to be unsuitable. Having a way to – as financial adviser coach John Bowen Junior puts it – ‘elegantly disengage’ from such clients is vital to effective resource utilisation.
Helping your clients to digitise all their financial life – documents, dates and information – and keeping them aware of when they need to take key financial actions is incredibly valuable to them. So why not charge for doing this as a standalone service rather than just bundling it into your core financial planning or investment management charge?
And why not develop a family university service? This would help younger members learn about relevant financial planning skills and capabilities such as learning how to control spending, the basics of investing, the use of trusts, property investing, philanthropy and impact investing.
A powerful way to control demand is to increase your fees. If you are winning all the suitable clients that approach you, then your prices are probably too low.
I’m personally not convinced that financial planning or wealth management fees should be based on a percentage of the invested assets. But there is nothing wrong with charging sensible and transparent fees that reflect the true value that you deliver.
And those fees can be broken down to reflect the various elements of the service you provide.
Why not raise your fees slightly? Few good clients will quibble about a 10 per cent fee increase, but that is revenue that will go straight to your bottom line.
Each financial planning and wealth management business is different, and there is no one-size-fits-all approach that makes sense. But a clear focus on both the suitability and profitability of existing and potential clients should be on every firm’s radar.
Jason Butler is an expert in financial wellbeing
Follow him on Twitter @jbthewealthman