'A 10% change in your A, B, and C customers can drive your book value up by 60%'
Advisors need to ensure they have contact record management (CRM) systems that can help them make better use of their client base to grow their number one asset – their book of business, says one researcher.
“A CRM is not just about acquisition, it’s about growing that relationship and retaining that relationship,” said Ron Buck, founder and executive chairman of Performance Insights, told Wealth Professional
Buck collects financial data to research things like win, retention, and growth rates, then promotes “what winners do differently”. He surveys 200 financial planners and advisors, bankers, and wealth managers biannual, then works with fintechs and financial advisors to provide them with the best practices that he gleans to help them grow their business.
He noted that he began assessing the data from advisors’ books of business a decade ago, and his research showed that a “5% overall retention rate increases the net value of the book by over 41%. You need to pay attention to that.”
On examining both the data advisors provide, and that which it mines from their other financial tools, he said most advisors only interact with four or five clients a day, so don’t often look at their full book and how they can mine it for more business opportunities with their current clients. Those customers could drift away or give more assets to others. In fact, he said, banks don’t even notice they lose 30% of chequing deposits a year, and advisors are susceptible to that “silent erosion”, too.
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While advisors have a big task managing several hundred clients who are susceptible to various market trends and life events that could impact an advisor’s book of business, a well-managed CRM system could show them how clients’ buying patterns respond to advisors’ sales patterns.
“We’re finding that a 10% change in your A, B, and C customers drives your book value up by 60%,” said Buck. “A CRM needs to become smarter and more proactive. It needs to be your sales assistant because a digitally smart CRM can help you become more proactive with your customers.”
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The system could send out client-friendly questionnaires to garner more information on their job status, whether they’ve inherited money, or whether their risk profile had changed.
“If you knew what life events they were having, imagine what kind of questions you could ask,” said Buck. “If your CRM is smart, then it could ask those questions in a non-intrusive way to your clients and respond with not only good ideas, but by asking clients if they’d like to book an appointment with you.”
