Helping Advisors Blog

Is your business efficient? How do you measure efficiency? Are the clients you have getting the right amount and type of service from you? Let me give you a simple, yet profound, way to answer these questions.

The picture above represents how Russell thinks about your business. The vertical axis represents the revenue a client generates and the horizontal axis represents the service effort you are currently exerting to serve them (both proactively and reactively).The diagonal represents the business efficiency frontier. Stated another way, as the revenue a client generates increases, there should be a corresponding increase in the amount of service and value they receive.

The concept is not difficult to grasp, but it is clear that it is rarely put into practice. Russell works with advisors using the segmentation methodology above reveals that most advisors have not effectively developed service effort in line with client revenue.

If the diagonal above represents the optimal service for revenue, then there must be some tension on either side of the line:

• The lower right represents clients who are unprofitable, receiving more service (time/energy/resources) from you than what they are paying for. There is a lengthy list of people financing this effort (you, your staff, your team, extra hours in the office, community, family, etc.). This reality also leads to a frantic, reactive business, preventing you from delivering the value you should, thereby eroding your brand.
• The upper left represents clients who are indeed profitable, but are under-served in relationship to what they are paying. These clients are at risk and justifiably so.

The key to creating business efficiency is migrating clients towards the business efficiency frontier. This can be done by adjusting the service effort, the client revenue or a combination of both:

• For the bulk of your smaller clients it means creating efficiencies in the investment solutions you implement and the services you provide.
• For your larger clients it means implementing a consistent, scaleable wealth management service model. These clients want your help aligning their wealth with their values and intentions.

Russell has a suite of tools and a disciplined process to facilitate delivering a differentiated experience for your clients. This helps you both stay focused on the goals you are trying to achieve.