There comes a point in a good advisor’s life where your
stellar reputation and solid work may attract more clients than you are capable
of handling. You can work harder, or let the quality of your work suffer—both
suboptimal choices. Your alternatives? Start a waiting list, or refer clients
to other advisors who can serve their needs. I’ve done both with great success.
Our ensemble firm of three advisors provides comprehensive
planning and investment management as a team for almost 100
millionaire-next-door-type clients. We charge for our services based on the
amount of work we do, not by how much money we manage. We are typically a
bargain for those with greater than $2 million in investable assets compared to
advisors who charge based on asset management.
Start a waiting list. Satisfied clients led to many
referrals, and our workload was soon overwhelming. Based on the advice of our
business coach, we instituted a waiting list. We onboarded no more than two
clients a month.
This worked well for a while, until our waiting list became
one-year long. At that point, we raised our minimum fee to $10,000 per year. If
a situation didn’t warrant our minimum fee, we referred that prospect to other
advisors who we’d vetted. As we whittled down the list of promised engagements,
others were added in a slower fashion. Our waiting time eventually dropped to
four months.
Refer to other advisors. What does our vetting of
other advisors entail?
Clients would seek us out for a variety of reasons: a focus
on comprehensive planning, the flat fee structure, or because of my background
in medicine, and expertise in health and finance. We asked potential new
clients what attracted them to our service so we could refer them to someone
else who could fill those needs.
There were a couple of advisors we referred to regularly.
Both hit the most important mark for us: They are fiduciaries and provide
holistic, ongoing planning, including tax, estate, and insurance advice.
Closing our practice to new clients. At the beginning
of 2019, we stopped taking new clients. Although we have plenty of marketing
power to grow a huge firm, my passion is in educating advisors and the public
about the intersections of health and finance. We do quite well in our
practice, adore our current client base, and don’t want the focus of our work
life to be more business management.
We removed our name from all referral sites such as the
online lists of the CFP Board and the National Association of Personal
Financial Advisors. We stated clearly on our website that we were no longer
taking new clients. Still, the calls came. However, a large number of those calls
asked to be referred to someone who worked on flat-fee arrangements similar to
ours.
In search of a larger referral base, I reached out to NAPFA
members on a discussion forum. “Who is charging flat fees?” I asked. I was
pleasantly surprised: Many younger advisors were on the flat-fee path. Even
some more experienced advisors had taken the leap, although changing revenue
models in a well-established practice is not an easy feat.
I queried many advisors on the services they provide.
Financial planning is an ongoing process, and advisers who create a plan to get
a prospect in the door but never revisit it is no longer competitive in our
eyes. Updated insurance, estate planning, goals and projections, and yearly tax
planning are important for success.
When a client calls now, we have a robust list of planners,
their preferred client types, and how they charge. When a potential client
calls, we’ll provide a few names and ask that they report back about their
experience.
Paying it forward. Most affluent and high-net-worth
clients are only getting investment advice and are shorted on the comprehensive
counsel they need for financial security. As many learn about real financial
planning, they leave investment managers and seek out those who are true
financial problem solvers. I’m happy to point them in the right direction.
What do we expect in return for these referrals?
Nothing. Many advisors helped me out early in my career and
we are happy to help other good planners grow their business. A rising tide
truly lifts all boats. My love for the profession and for connecting good
people is the reward. My hope is they remember, and pay it forward to others
down the road.
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