The only way to guarantee good revenue streams is to run a true relationship-based business model that fully contracts your clients on an ongoing basis, writes Chris Yena
There are a number of ways in which advisers can best generate good revenue streams. The key here is your definition of good – as not all business is good business – an old adage I know but a pitfall for many advisory firms
Good revenue streams for me means, repeatable, enduring and increasing income flow, and I feel the only way to guarantee this for your business is to run a true relationship model that fully contracts your clients on an ongoing basis.
Your fees have to relate to your offer and the complexity of the work being undertaken – not the amount of time or dollar base of funds under advice.
Know your business model
Be clear on your model: are you a generalist or a specialist? It’s possible to have a general advisory firm with an individual adviser specialty focus ie financial planning plus aged care, but you will need scale in your business to deliver this model, as a broader offer brings greater diversity across your client segments.
If you are a specialist make sure your depth of competency is very deep as your expertise will be your price gatherer. Pick your niche based on your skill set rather than chasing a certain market segment. The payoff will be better for you and your clients.
Deliver on your promise and then some … and then some more. There are many definitions of value. Mine is simple – it’s when I receive “something” (a service or offer) that I wasn’t expecting and that’s relevant to me, but more importantly, it enhances my position (ie: a tangible benefit).
We all know that clients will pay when they see or perceive there is value for them, so you should be continually delivering beyond expectations. Move beyond newsletters, seminars, investment briefings etc and make it personal.
Think about all the generic email you receive; sure it’s personalised with your name, but is the message relevant to you? I’m sure you just scan it and delete it, so be sure your clients are not doing the same with your service offer.
Plugging revenue gaps
Not all business is good business, and similarly, not all revenue is good revenue. Advisory firms – not just financial planning firms – are renowned for under-pricing their offer.
Make sure you know your cost base across your advice delivery model and spend time refining your efficiencies. Technology is a good enabler here, then leverage up using profit margins as a base indicator.
Your focus should be on both sides of the ledger, so turn your revenue focus into a profit focus and then re-segment your client base. You’ll be surprised by the results.
Separating advice from service
There are many differing views on this, so make sure you are clear on your position. My position is that advice is an investment of doing business and it should never be free, whereas a service offer is all about enduring value.
Clients expect to pay for advice when they visit a professional adviser, so make sure your initial pricing model is profitable. There should be no loss leaders and base your pricing on advice complexity, not dollars to be invested – it opens up the opportunity for you to more prospective clients.
You should be able to articulate your offer and value are critical. Don’t let glossy brochures do it for you; do business on a personal level, make it relevant and be passionate about the value you deliver. After all, our businesses are all about relationships and not documents, aren’t they?
Remember that language is the software of the brain so choose your words wisely. Be concise and clear – engagement is valuable and should be priced into your ongoing service model.
