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Being a financial advisor for over 20 years, you know how hard it was to find new clients when you first started. You love helping people with their finances and solving their problems. Now you are at capacity or even worse, past capacity. You cannot find the time for yourself for exercise, personal interests or even friends. It seems it is family and work all the time, but mostly work. You enjoy what you do, but deep down you find it hard to say no to people who ask for your help. But, to grow, deep down you know you need to start saying no to clients and prospects.
Saying yes is eating into your personal time
Every time you say yes to a new client or prospect, who does not meet your ideal client criteria is costing you, not generating revenue. Think of the time it is taking away from ideal clients, and even your personal time, family and health. I know it is not easy. You spent years building a practice, only to turn people away. Every time you say yes, 10- 20 hours or more of your personal time is gone, and you can never get it back.
Draw a line in the sand
How can you draw a line in the sand and say no to non ideal clients and prospects? Let's start by identifying an ideal client or ideal household. First off, what is the revenue target you want to generate from a new client? What is the upfront revenue and ongoing revenue you would take on a new ideal client? When I do this exercise for advisors, the typical answer is around $4-5000. I find this fascinating, when we calculate the cost of acquiring a client is around $6000. In my workshops, I ask advisors how many hours does it take in the first year to acquire a new client. This includes prep, planning, meeting time, paperwork and follow up meetings and time. Add it all up and the typical answer is 20 hours, and at $300 per hour, the break even cost of your time acquiring a new ideal client is $6000. Now I know what you are thinking, when you read this. I am a financial advisor and I do not charge per hour. The point is that you need to understand the cost of doing business, not charge per hour that way, but have a clear way to measure it. Some clients you spend less time and make more.
The 1800 exercise
If you really want to know how much your time is worth, simply take 1800 ( Approximate number of hours a financial advisor works in a calendar year) and divide it by your annual revenue last year. This will tell you what an hour of time is worth. Now taking on a new ideal client, you can calculate ideal revenue you want to make, to take on a new ideal client. It may be that your practice is more focused on insurance, so more revenue up front than ongoing, such as a fee based investment practice. Write down your ideal client revenue year 1 $ __________ and your ideal client recurring revenue per year $___________ . I would also clarify two things when identifying ideal clients. First, look at ideal households, they may be part of a household, as children of wealthy parents do not need to be ideal clients and ideal revenue. They are part of an ideal household. Second, there is always some work you will do for little or no fee. For example, in helping low income seniors understand finances, or other situations that you feel are important. It just cannot be a major use of your time. There may be other circumstances, such as transactional clients, but it should account for less than 20 percent of your time and revenue.
Saying no
One simple solution to saying no is, " our minimum cost or fee to take on a new ideal client is $5000 ( or your number) , are you comfortable with that? If the client says no, then it is not you saying no, it is them. If the client is hesitant, that should tell you that this may not be an ideal client in the future. You can also clarify your professionalism by saying" in order to help you organize your complete financial life, we will need a list of all of your financial documents" . Then give them the list. We found that people serious about their finances, will get all of the documents. The ones that have chosen two advisors and keep information confidential from you are not ideal clients, and you should say no to them. It is fine to have two or more advisors, but both advisors should know the total picture. Otherwise what is the financial plan and advice worth? Try telling two surgeons half the story. A second opinion is just that, an opinion. Call it a second set of advice, or a backup set of advice. " how would you like to have a backup set of financial advice? "
Get your life back
In the end, it is building a better business model consisting of three elements, ideal clients, ideal revenue and ideal lifestyle. Learn from my mistakes as an advisor, I struggled with capacity issues, and until I drew a line in the sand, I found it harder and harder to manage. Start saying no to more non ideal clients will be liberating!