This is the biggest growth barrier for most distributors and advisors

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

The single most important activity for any distributor and advisor should be Client Acquisition.

Where do most focus their time? Client Servicing of Non-Ideal Clients.   Now before you jump on me for saying this, read on to understand what I really mean.

I do not mean Client Servicing is not important (It is important rather I would say Client Experience but that is a separate matter altogether) but I have a finer point here.

Here it goes.

Most people end up wasting hours and hours of servicing non- ideal clients. A typical IFA that I have come across has around 200-300 Clients and around 50 Crore AUM. A bigger one has 6000 clients (obviously he has a team) and Rs.1000 Crore AUM. This is a common scenario with most IFAs and Firms whether you are at Rs.1000 Crore or 200 Crore or Rs. 50 Crore of AUM.

The Pareto principle applies perfectly here. 20% of their clients generate 80% of AUM. In your case it could be 30-70 or 10-90 too. I hope you get the point, that for most firms a small percentage of ideal clients make up the majority of their assets.

What is really happening here is that your top clients are subsidizing your non-ideal clients. Thus, people get busier servicing non-ideal clients and wasting precious time capital that could have been deployed in acquiring new ideal clients.

Yes, Client Servicing is important but in the priority list, it comes after Client Acquisition. It is the number 2 activity.

The 2 key Activities in that order are:

  1. Client Acquisition of Ideal Clients
  2. Client Servicing of Ideal Clients

Do this exercise for your firm and see the numbers for yourself. Where are you spending your time?

This is where most firms end up spending most of their time.

Client Servicing of Non – Ideal Clients.

If you have around 60-80% non- ideal clients (if you did the exercise above), then imagine the time you are spending servicing them. Most firms end up spending around 50-70% of their time on non-ideal clients and in such times (of a pandemic, equity market crisis, debt crisis), it is even higher.

There cannot be a bigger growth barrier than this and is something that needs to be addressed for every firm.

I end this post with Bill Clinton’s fantastic quote “The price of doing the same old thing is far higher than the price of change”. The cost of your inaction is costing you big time. It is time you realize it.