“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

Advisor: I have been in the business for a number of years and have about 200 households in my client base. After my initial efforts to find new clients, in which I used everything from cold-calling to seminars, most of my business has come from referrals, so I really haven’t had to do any prospecting, so to speak. That is, until recently. Now, it seems, those referrals aren’t coming as easily and I am getting the sense that I am losing control of the momentum of my business. As my clients are aging and starting to draw down on their investments to fund their retirement income, how do I get back to the stage where I am not worried about where my next client is coming from?

Coach says: There could be a number of reasons why your referrals have slowed, ranging from the perception among your clients and centres of influence that you aren’t taking on new accounts to them feeling that they have introduced you to everyone who might have a need for your services. Both of those situations are not uncommon in a long-established practice.

More common, however, is the ailment you described, in which you have simply gotten out of the habit of looking for new clients. As a consequence, your “pipeline” is empty and those people who are in it seem to pass through quickly, leaving you with that hollow feeling.

Notice that I use the word “pipeline,” not “funnel.” My early sales training drilled into me the importance of “filling the funnel” with prospective clients. The hope was that an adequate number of those prospects would eventually filter through to become clients. It was an effective enough system: if I put enough people into the funnel, enough came out the other end as clients. Although it may have been an effective system, it wasn’t very efficient. I ended up with a lot of folks in the funnel who shouldn’t have been there.

Today, the only people who should be in your prospecting system are those who meet or come close to meeting your preferred client profile, and with whom you fully expect to do business.

This leads to two questions: how many people do you have in your pipeline; and how long do they stay there?

Prospective clients in a pipeline are like inventory to a retailer. Too little means missed opportunity; too much means outdated goods that don’t generate their full value. My guess is that you do not have a sufficient number of prospects in your pipeline to ensure the ongoing viability of your businesses. As a consequence, you are scrambling constantly for the next sales opportunity.

You are not alone, however. When I ask advisors about their current pipeline, most tell me they have 15 to 20 names in it and they expect to clear most of them in anywhere from two weeks to three months.

My recommendation: you need at least 100 people in your pipeline. And your time horizon for managing them as prospective clients should be a minimum of 24 months. That doesn’t mean it will take two years to convert everyone to clients; just that you need to be prepared to manage the relationship that long if necessary.

So, how do you get from 15 to 20 candidates in your pipeline to 100? The first step is to recognize three groups of people who should be in your pipeline:

1. Existing clients who, in the near future – say, the next 12 months – will need an additional product or service that you can provide.

2. Prospects with whom you have a “work in progress” relationship. Perhaps you presented a plan, but it has not yet been implemented. Or the prospect has had an initial consultation, but the business was postponed. If it’s realistic to assume you will complete these works in progress in the next 12 months, they should be in your pipeline.

3. That collection of people who meet (or almost meet) your preferred client profile and who are attracted by your marketing and promotional activities.

The next step is to ensure that you have a defined process for gradually deepening and strengthening the relationship as people progress through your pipeline. That means having a series of “touchpoints” at which you can increasingly show your understanding of their situation and demonstrate your ability to be of value.

The starting point is right in front of you: your existing client base. Look at your top clients, your A and B clients. Who among them presents opportunities for further planning or additional product placement in, say, the next 12 months? I would be very surprised if at least 10%-20% of your current clients do not have some unmet need that you could address within the next year. (See stories on pages B6 and B8.)

Curiously, most advisors do not look upon their existing clients as potential sources of business – a huge missed opportunity. After all, these are the people who have already demonstrated their preference for doing business with you. In your client base of 200, for example, a minimum of 10% that have unmet needs would mean you could add 20 existing clients into your pipeline. To capitalize on that opportunity, however, you have to manage those relationships with the same diligence that you would with an introduction to a high-profile prospect.

Here are some additional activities to beef up your pipeline:

– Research indicates that most high net-worth clients are willing to provide referrals – but their advisors don’t ask. So, make it standard procedure as an agenda item in your client review meetings to ask for referrals (in your own way). If you did this with, say, your top 40 clients only once a year and were successful in getting only one referral half the time, it would add 20 high-quality names to your pipeline.

– How about taking your top 20 clients to lunch on their birthdays? As a surprise, include two of their business associates or good friends – who are not your clients – in the invitation. Get their names from the client’s spouse or administrative assistant. That should add another 30 to 40 names to the pipeline.

– Hire the pro at your golf club to conduct a “golf tune-up” for six or eight of your best clients. Ask each of them to invite a friend or associate. Do this two or three times each spring and you’ll add another 10 to 20 names.

– Organize a “town hall” meeting for your existing clients. These forums for open discussion, while less formal than a seminar, are gaining popularity. Their informality makes it easier for clients to bring friends and associates.

– Look for opportunities to partner with collateral professionals, such as accountants or lawyers. Co-sponsor seminars on estate planning, taxation or some other topic to provide exposure to high-quality prospects.

– Even better, conduct small workshops on those topics for lawyers and accountants who need continuing-education credits. Demonstrate your expertise to five or six of them twice a year and it is almost assured each one will ask you to work jointly with at least one of their clients, thus adding eight to 10 names to your pipeline. The best way to meet these professionals is to have your clients introduce you to their lawyers and accountants.

George Hartman is managing partner of Accretive Advisor Inc. and president of Market Logics Inc. (www.marketlogics.ca). Send questions and comments on any aspect of practice management to ghartman@accretiveadvisor.com.

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