How Advisers Can Focus on Existing Clients for Growth

Advisers spend a lot of time thinking about where their next client will come from. It's an important question. But I think there's another one worth asking: Have you earned the opportunity to manage the next dollar your existing clients invest?

For many advisory firms, organic growth is synonymous with new-client acquisition. More referrals. More prospects. More households.

Those things matter. But they're only one form of organic growth.

Consider a longtime client whose retirement accounts you manage, but whose 401(k) remains elsewhere. Or a couple where you manage one spouse's assets but not the other's. Maybe there's concentrated stock, an inheritance, assets from a former employer or money earmarked for the next generation.

Those aren't simply "held-away assets." They represent financial decisions happening in the lives of people who already trust you.

The question isn't how to capture those assets. It's whether you've earned the right to help with them.

Retention is the floor, not the ceiling

We often talk about asset management as a retention strategy. And it absolutely is.

When portfolios are thoughtfully constructed, monitored and adjusted as clients' lives change, advisers create an important foundation for long-term relationships. But simply retaining what you already manage shouldn't be the only measure of a healthy client relationship.

The strongest relationships tend to deepen over time.

A client changes jobs and needs to decide what to do with an old 401(k). A parent passes away and leaves an inheritance. A business is sold. A spouse retires. Stock compensation becomes a larger portion of the family's wealth. Parents begin thinking seriously about what they want to leave their children.

Each event creates another financial decision.

And every one presents an opportunity for the adviser to become more relevant to the client's financial life.

That doesn't happen because an adviser asks for more assets. It happens because the client has developed confidence that when the next decision arrives, their adviser is someone they want involved.

That distinction matters.

Start with curiosity, not consolidation

There's a phrase we use frequently in wealth management: "Share of wallet."

I understand why. From a business perspective, knowing how much of a client's investable wealth you manage can be an important measure of the depth of the relationship.

But I don't think advisers should approach clients thinking, "How do I get the assets they have somewhere else?"

A better question is: "Why are those assets there?"

Maybe the answer is inertia. Maybe no one has ever asked. But there could also be a perfectly good reason.

A 401(k) may offer attractive benefits. A concentrated stock position may require a careful tax strategy. Assets might be connected to a family relationship or another adviser. Or the client may simply not understand how those accounts fit with the rest of their financial picture.

The adviser's job is to understand before trying to solve. That kind of curiosity changes the conversation from an asset-gathering exercise into advice.

Instead of asking a client to move an account, you're asking whether their financial life is working together the way it should.

Sometimes the right recommendation will be to consolidate. Sometimes it won't.

Either way, you've demonstrated something valuable: Your first priority is helping the client make the right decision, not simply increasing the assets you manage.

That's how trust compounds.

Asset management can be the beginning of the conversation

For decades, investment management was often at the center of an adviser's value proposition.

Today, I increasingly see it as the foundation for a much broader conversation.

A portfolio can reveal questions about taxes. Concentrated positions can lead to conversations about risk. Required income can open broader retirement planning discussions. Appreciated assets can lead to charitable planning. An inheritance can prompt conversations about legacy planning and the next generation.

The investment portfolio isn't separate from a client's life. It's connected to nearly every important financial decision they make.

The opportunity for advisers is to use what they learn through managing assets to ask better questions.

• What has changed?
• What are we not planning for yet?
• What assets or decisions are we not discussing?
• Who else in your family should be part of this conversation?

Those questions can uncover needs that have little to do with beating a benchmark and everything to do with becoming more useful to the client.

Look beyond household count

There's another implication for advisory firms. We tend to measure growth through assets, revenue and new households. Those are all important metrics. But they don't necessarily tell you how deeply you're serving the clients you already have.

Imagine two advisers.

One adds 20 new households during the year but sees little additional growth within existing relationships.

Another adds five new households but becomes the primary adviser for more of her existing clients' financial lives. She helps with retirement assets she previously didn't manage, begins working with spouses she had rarely engaged with, develops relationships with clients' adult children and is brought into more significant financial decisions.

Which practice grew more successfully?

The answer may not be obvious from household count alone.

That's why I think advisers should pay attention not only to how many relationships they have, but to the depth of those relationships.

• Are clients consolidating more of their financial lives with you over time?
• Are you being brought into more decisions?
• Are you developing relationships with spouses and the next generation?
• When something changes in a client's life, are you one of the first calls they make?

Those can be powerful indicators of the health — and future growth potential — of an advisory business.

Earn the next dollar

None of this means advisers should stop pursuing new clients. Healthy firms need new relationships, and great client experiences should naturally generate referrals.

But client acquisition can be expensive and time-consuming. Before assuming the next stage of growth has to come entirely from people you haven't met yet, it's worth looking carefully at the relationships you've already earned.

• There may be retirement accounts you don't manage
• There may be spouses you don't know well enough
• There may be children who will someday inherit substantial wealth but don't yet view you as their adviser

And there are almost certainly financial decisions your clients haven't brought to you because they don't yet realize you can help.

The goal isn't to find a clever way to capture those assets.

It's to build the kind of relationship that makes clients want you involved.

The strongest organic growth doesn't always begin with a prospect. Sometimes it begins with a client you've served for years who faces another important financial decision and decides you're the person they trust to help make it.

So advisers should absolutely keep asking where their next client will come from.

But I'd encourage them to ask another question, too: Have I earned the right to manage the next dollar?

Because some of the most sustainable growth isn't simply acquired. It's earned.

Related Content

• From 'My Adviser Is Great' to a Great Story: This Is How Advisers Can Turn Value Into Referrals
• Your Clients Have Changed: Has Your Advisory Practice Changed with Them?
• Addressing Your Clients' Emotional Side: Communication Techniques for Financial Advisers
• Winning Strategies for Financial Advisers as Clients' Lives Evolve
• Optimize, Grow, Retain: The Power of Annual Client Reviews

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.