Topic 3: Client Aquisition & Retention

Question 1

Target client:

Answer 1

1. By wealth level
   - Mass affluent (generally 100K to 500K to 1m investible)
   - HNW (1m to 20m) & UHNW (>50m)
2. Client type (e.g. entrepreneur vs. sports persons) –Punters (can include sophisticated investors, day traders)
   –“Retail”planner clients (need economies of scale - systemetised, low touch)

Question 2

Meet new clients (how)

Answer 2

1. Referrals
   –Best method by far as can flip to consultant mode, not sales
   –From friends & associates
   –Centres of influence
   –From existing clients
2. Must ask
3. Be clear what type of clients want
4. Build your own “brand”/reputation attractive to target clients –Helps clients sell you and you sell yourself
5. Cold calls – Low percentage game, but it works
6. Networking – Social media –Aim is to meet clients or referrers
7. Other marketing activities –Articles, newsletters, lunches, seminars etc.. –Low returns & long term, but essential

Question 3

Madoff lessons (how to sell to the wealthy)

Answer 3

1. Desire to be special and “smart”
2. Quest for exclusivity but to be in the club
3. PWM advisers want to be social. Combination of business & pleasure.
4. Mistaking past own successes as indicia of investment savvy
5. Use by Madoff of high profile people to endorse
6. Emotional issues crucial –Thus note that investment/due diligence lessons are only part of the story

Question 4

PWM adviser - how much $$ you make is dependent…

Answer 4

… 100% on ability to acquire and retain clients
Adviser generally owns the client - can be mgmt. headache (consider incentives like equity / cash pmts)

Acquisition and retention of new and existing clients is #1 strategic focus

Question 5

Personal branding

Answer 5

1. Clients & targets have an image of you - make sure you shape that image
2. Consistency of message and behaviour in every aspect of business
3. Build your brand, not the firms
4. Competency alone will not grow the business

Question 6

Explaining portfolio construction

Answer 6

1. Broad brush strokes
2. Use analogies that they can relate to
3. Explain diversification as essential because no one knows what the future holds beyond doubt
4. If prospects require ridiculously high returns, ask why & how they arrived at the figure, show LT asset class returns and explain firm’s forecasts