How Many Clients Does Your Financial Advisor Work With

How Many Clients Does Your Advisor Work With?

Last month Barron’s published their annual Top 1,200 advisors in the country.  This list recognizes the largest “producers” from the large Wall Street firms.  Even the terminology at those firms is interesting.  Producer implies that you are creating something…in this case, it’s revenue from selling products and services to your clients.  One specific paragraph really resonated with me and reminded me why it was important to leave that environment.

ON AVERAGE, our Top 1,200 and their teams manage $2.27 billion in client assets. That’s down from $2.42 billion for last year’s group and is, in part, a testament to how challenging the markets have become. At the same time, the advisors are serving more clients: This year’s Top 1,200 serve 521 households on average, compared with 496 for 2015’s crop.

521 households!  That’s the average.  Think about that for a moment.  How can an advisor effectively serve 521 families?  There are approximately 250 business days in a year.  If you wanted to meet with each of your clients just once a year, you’d have to have more than 2 meetings a day and not take any vacations.  That leaves no time for managing portfolios, doing financial planning, or just time to think strategically on behalf of your clients.  The truth is, serving that many clients work with a certain type of model- product sales.  It is easy to call 30 clients a day and talk to them about selling or buying a particular investment.  Or put them in an advisory account where someone else will manage it on the client’s behalf.  Or unfortunately, just overall neglect of a client’s portfolio.  Where it doesn’t work is a true comprehensive planning relationship.  There is not enough time in the day to understand and advise on a client’s cash flow, insurance coverage, estate plans, retirement objectives, tax projections, and investment management needs. We have clients from these firms coming to our firm every month looking for a better solution. At Greenspring, we work in teams of two advisors per client (along with a client service specialist).  Currently, our average ratio is approximately 50 clients per team.  We believe this allows us to manage the intricacies that are common to a true planning relationship.

We hope to see the number of clients per advisor move down over the years for the client’s sake.  Instead of judging advisors based on how much they produce or manage, it would be a breath of fresh air if these types of awards focused on their impact in their client’s lives.

Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.

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