Is It Time to Fire Your Unproductive Clients?

Posted by adaniels in Blog on December 22, 2011 writes that a new report suggests that one way for financial advisors to improve their performance is to get rid of clients. It may sound counterintuitive, but according to a study by PriceMetrix, financial advising “outperformers” were those who added more productive clients, and ditched less productive clients.

Patrick Kennedy, vice president and co-founder of PriceMetrix, explained the rationale to “Outperformers almost think of their book as a portfolio,” he said. “They’re willing to cut their losses on less attractive relationships, and they’re doing more due diligence on new relationships.” reveals that the report showed that the top performers “closed accounts generating $734 in annual revenue on average, and opened new accounts generating average annual revenue of $1,533.” In addition, those outperformers in the top quarter “were able to open 1.5 new accounts on average” for each one closed, “compared  to only 0.7 accounts for advisors” in the bottom quarter of financial advisors.

But Kennedy acknowledged that it was hard for financial advisors to say goodbye to anyone.  “They’ve been taught their entire life to be a hunter and gatherer, and then to move to more of a catch and release mentality, it’s very difficult,” Kennedy said. “Those that are able to take that very scary leap leave themselves room for more focus.”

The PriceMetrix vice president suggested that advisors decide to focus on a specific client type for their businesses. “The days of the generalist are starting to come to an end,” he said.

Written by Lisa Swan


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