True Story: How Off Boarding Clients Improved the Client Experience and Sustainable Growth

As a business transformation consultant, I help financial advisory firms evolve by designing and implementing a multi-year plan that targets realistic growth goals and completion of staff and business improvements.

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These firms often arrive at a crossroads where they must choose whether to off board clients or hire additional advisers and support staff. Letting clients go can be a difficult decision, but a firm that creates capacity by continually hiring new employees could reduce compensation for current staff, experience soaring payroll expenses, and unknowingly replace business development time with staff management duties. For all these reasons, I craved solutions that would allow firms facing this dilemma to make peace with the idea of off boarding clients. I believe Facet Wealth is a solution.

Facet Wealth has built its business around affordable, comprehensive financial planning for households with less than the typical minimums in investable assets. In other words, it is custom-tailored for the kind of clients who need planning services, but whose assets would not sustain the growth of a traditional RIA that bills on assets under management (AUM). Facet Wealth seeks out advisories that struggle to serve households that don’t meet their minimums and offers to buy these accounts from them. The partner RIA wins back breathing room for their team to pursue growth, and the transitioned client enjoys high-touch, human-first service from a CFP Professional. The efficiencies of Facet’s Silicon Valley-grade technology and a subscription-based service model let them offer full planning and financial life management for an average annual fee of about $1,600.

Ideal example

Since discovering Facet Wealth last year, I’ve recommended it to most of my planning-centric clients. One such client is using their partnership with Facet to fundamentally change their ability to service clients and the strength of its sustainable revenue.

Previously, this firm adhered to an insurance and investment business model that derived about 70 percent of revenue from non-recurrent sources (insurance sales) and 30 percent from AUM. Comprehensive planning services were provided as part of the fee received. However, the revenue model didn’t allow them to provide their ideal clients with great service.

The firm sought to reverse that ratio by focusing on clients with more substantial wealth or income and emphasizing its expertise in comprehensive wealth management. Although this restructuring plan was just instituted during the fourth quarter of 2018, it has already produced eye-opening results.

Steps to success

The advisory firm now fully integrates Facet Wealth into its strategy for both prospects and clients who don’t represent an ideal fit for the new business model. Prospects without sufficient wealth and need are referred directly to Facet Wealth, offering an appealing arrangement for all involved:

  • The firm can focus on providing their ideal clients better service
  • The firm stays true to its desired new revenue structure.
  • Prospects are introduced to a better-fit, affordable experience that remains planning-centric.

The firm also encouraged any clients, who wanted more options, to seek alternative financial counsel that included their local bank or insurance company.

Recognizing results

Since then, more than 150 clients have transitioned to Facet Wealth while providing almost universally positive feedback. Several other clients elected to stay with the firm and pay higher fees for the more comprehensive engagement. Starting in fall 2019, the firm is presenting a similar set of options to its second-lowest tier of clients. This is all part of a progressive streamlining campaign designed to fully implement the new business model.

In less than six months since restructuring began, the firm’s profit-and-loss statement already reveals a drastic decrease in operating expenses. The previous dependence on non-recurrent revenue demanded significant spending on marketing. By implementing this improved structure and having off boarded clients, the firm was able to reduce annual marketing costs by 50% (~$50,ooo). The new model also freed significant time and resources to allow a renewed focus on excellent client service, which is producing more client referrals than ever before.

Going forward, the firm can continue offering investment management, financial planning, and insurance services. And thanks to the structural changes, it expects a more predictable revenue stream, enhanced efficiency, higher-quality relationships that lead to increased referrals, and more time spent on staff development and rising skills.

The partnership between this firm and Facet Wealth has already produced impressive outcomes, while barely scratching the surface of potential revenue growth.

We hope this idea helps and good luck transforming your business!


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