At the beginning of your career you tend to be a little scared of failure. So there is a tendency to grab every client who comes your way..so in about 10-12 years time you have a large range of clients – different professions, different geographies, different personalities…It is time to now make a ‘list of clients you want’ and start working on that. Say your list looks as follows:

  • minimum AUM Rs. 20L – or potential to reach Rs. 20L in 3 years time
  • staying within 20 km radius
  • net savvy willing to be self serving
  • with a net family income of at least Rs. 40L
  • a meditative type who will not want to recast his/her portfolio every 3 months.

Now if you do Client segmentation, where you separate your clients into “Platinum” and “Gold” and “Silver” clients, you may find that the “P” clients are the ones you want to service the most (obviously they drive the most profit for the firm), the “G” clients are the bread-and-butter profitable clients, and the “S” clients are the ones who are marginally profitable and may have to be let off altogether in order to grow the firm. Except unfortunately, those “S” clients are often also the first and most loyal clients of the firm. They came on board when you started and you had no minimums and you did a lot of work free!!

The question is “is it ethical or correct” to let go of clients who helped you start? Well, look at it this way. If you are a big practitioner, you may have your juniors leaving you and starting on their own. They need clients too and for the beginner these clients may be ‘Platinum’ for a few years, give them off. Let a junior leaving you take 2-3 clients. Meet with the client and tell him you are doing this to encourage your junior to start his practice – and you are always available for some major consulting.

Other option of course, is to encourage them to do their own investing – a DIY model and you willing to help them on an emergency basis, but not on a fee basis, just gratis. The other option is to sell off a part of the ‘Silver’ business – there are people now specializing in IFA Aum buy and sell – so that the buyer treats them like ‘Platinum’.

Only by doing this will you concentrate on the ‘clients that you must have or wish to have’ and try to grow your business by say 30% a year. It will force you to go out and meet people, ask for references, …- all that you stopped doing when you got complacent. This is like putting a shark fish in the fish tank – it keeps the other fishes active.

You should do this very often – and keep increasing the average ticket size. In case you have too many ‘Silver’ clients seriously think of upgrading 2-3 of your advisers and ask them to run it like a different firm. This will mean that they will start treating these clients as Platinum and look for technology, call center, etc. solutions to cater to a larger number of clients. You could do that for your clients.

Suddenly you have a big set of satisfied clients and a few juniors who are catering to your so called ‘Silver’ clients, but those who are being treated like Platinum!

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