Planners must be cut-throat in axing their client base to maximise productivity and profitability, consultants claim.
The average Australian financial planning practice has two advisers servicing 1100 clients, according to research house Business Health.
And while 87 per cent of practices segment or categorise their client base, it is estimated one in five practices provide the same level of service to all their clients
“The sell-off and refocus resources strategy doesn’t seem to have taken hold, yet,” Business Heath director Rod Bertino said.
Advisers could risk breaching the Financial Services Reform Act, The Encore Group managing director Graham Peatey warned delegates at a Tandem Financial Advice conference.
“Your duty of care means you must offer something to your clients – even if it is just annual renewal,” Peatey said.
“If you have thousands of clients you can’t realistically offer them even that. And if you can’t offer them that, then they are just clogging up your systems.”
Peatey said being a good adviser meant having the courage to get rid of clients that cannot be serviced but about saying no to taking on those who do not have a lifetime value.
To assess the lifetime value of a client, advisers need to collect the right information and then mine that data to assess the client’s future needs, Peatey said
“Every client should be profitable to you every year,” he said.
