Limiting the Number of Clients You Have Per Financial Advisor

Besides the fact that it is a good idea to limit the number of clients you have per financial advisor, another reason is that clients leave financial services for the most common cause - high fees. Limiting the number of clients you have per advisor is also good because there is always a limit to the amount of time you can spend on each client.

During a recent PriceMetrix study, we analyzed data for 20 North American wealth management firms. Each firm's book of record is checked monthly for new accounts opened and fee-based revenues. In 2017, the PriceMetrix database serviced more than $6 trillion in assets, representing its most extensive data collection. We identified more than 2,600 financial advisors who manage an average of $2.27 billion in client assets.

The number of clients that financial advisors can serve at one time is a function of how many advisers are in the firm and the complexity of client requirements. We found that a broker-dealer advisor can help 118 ongoing relationships. However, if the advisor only has one-time clients or dual-registrants, the number of clients the advisor can serve at one time is significantly lower.

The average financial advisor spends 5.5 hours per week on investment-related tasks. In addition, the average financial advisor spends 5 hours on business development and 3.2 hours on professional development.

Considering roughly 80,000 financial advisors in Canada, the client competition is stiff. An intelligent number one strategy to deter the competition is to limit your client count to about fifty clients. This is a good rule of thumb for longevity and will keep you in business for the foreseeable future. One should be bold in deferring to a qualified financial adviser when making this requisite decision. A good rule of thumb is always to know your clientele and avoid micro-management tactics such as unprofessional behavior and poor client communication. A well-honed marketing plan will go a long way toward ensuring customer satisfaction.

The most important pillar of success is your clients. A happy and well-versed clientele equates to long-term loyalty and a healthy wallet. It is no wonder the financial advising industry is a hive of activity. The best and most productive way to achieve this is to be clear, concise, and direct in both the office and the home office.

An average advisor spends 53 hours on business during a typical work week. These hours are between administrative and professional development tasks, meeting preparation, client servicing, and marketing. The specific advisor also spends 5.5 hours on investment-related tasks, such as trading with clients and researching investments. The average financial advisor spends a little over two hours per meeting or about three sessions per week.

Financial advisors are pressured to service clients and develop new ones. In addition, the rise of technology has given advisors more services to provide. However, technology only sometimes translates into more clients. Most advisors need to spend more time communicating with clients or building relationships. This is particularly true for smaller advisory firms.

According to a recent study by Kitces Research, the average financial advisor spends 50% of their time on direct client activity. This includes spending time on the client-facing activities of meeting with clients and contacting prospective clients. It also includes administrative tasks, such as answering client questions and answering client inquiries before meetings.

Despite the increased competition in the financial services industry, high fees continue to be the primary reason clients leave. However, some steps can be taken to improve this situation. For instance, improving communication can help alleviate clients' mistrust and encourage them to stay on as clients. Also, adding value to the services can help clients feel they are getting their money's worth.

As a result, investment firms must lower fees to compete. However, reducing costs can also hurt profit margins. In addition, scaling a business can become complicated when prices are cut too low.