trendspotting | PLANADVISER November/December 2016

Laser Focus on Clients Pays Off

Advisers who concentrate on their clients’ interfaces have the fastest growing firms


By John Manganaro | November/December 2016
Art by Sam D'Orazio

A new research report published by FP Transitions and SEI Advisor Network suggests that advisers willing to double down on carefully managing the client experience can generate serious return for their own business.

According to data highlighted by the firms, putting in place just a handful of next-generation client management best practices can increase the value of an advisory business by more than $1 million over a 10-year period.

The data comes from a new study conducted by the firms in partnership—an effort that looked back over 10 years of data gathered from more than 8,000 advisory practices. On average, the best practices of firms that can be categorized as “client managers” add twice as much in assets under management (AUM)—about $14.5 million annually—when compared with those of firms that fall into the “investment manager” category, which add about $7.2 million per year.

The report defines “investment managers” as advisers who self-report, focusing much or most of their time on the investment process, and “client managers” as those who delegate the investment management function to a third party to concentrate instead on gathering and building relationships.

“Despite the similarities found between the two practice models, including number of employees, how they are led by advisers of similar age, experience and number of years as independent advisers, and [the fact they] serve a comparable client demographic, the greatest disparity between the two models lies in advisers’ activities and how they devote their time,” the research says.

Investment manager advisers report that they spend more than one-third of their time (37%) on investment management activities such as research and client portfolio management, while the client-focused group spends less than 3% of their time on these activities, according to the data from the study.

“Furthermore, client managers spend more than half their time on client acquisition and client management compared with investment managers spending just 30% of their time on the same activities,” the research shows. “With 34% of time saved and not spent on investment management activities, client managers spend nearly twice as much time as [do] investment managers on client meetings—37% and 20%, respectively.”