(May 16, 2003) Prominent business coaches frequently proclaim that the best financial advisors are ruthless about weeding out their client base. But an internal survey conducted by Standard Life suggests that top performers actually have more clients than the average advisor.

Standard Life’s Best Practices study found that top advisors had, on average, a robust 566 clients, compared to 276 clients for most others. These findings were presented at the Strategy Institute’s Elite Advisor summit last week in Kleinburg, Ontario, by Bernard Letendre, senior vice-president, Standard Life Mutual Funds.

Letendre jammed his talk with the results of the insurance company’s ongoing survey of independent financial advisors. Here are some of the facts the survey revealed about top advisors as compared to other respondents:

Top Advisors
Rest of Respondents
Average experience (years)
9.8
7.2
Assets under administration (average)
$41,930,000
$9,790,000
Average 12-month gross sales
$7,246,000
$1,421,000
Average 12-month gross revenue*
$470,000
$122,760
Average % of gross revenue reinvested in practice
43%
37%

*43% of top advisors and 35% of others responded to this question.

Source: Standard Life Mutual Funds Ltd., 2003. Abridged.

Not only do top advisors reinvest more in their practices, but they spend more time talking to their clients. According to the survey, the best performing advisors spend 39% of their time contacting or meeting with existing clients. That compares to just 27% for the rest of the respondents. If you want to get to the next level in your practice, you will most likely have to delegate more of your administrative burden, the results suggest.

Standard Life’s Best Practices Survey:
The Best Practices
  • Segment client database
  • Conduct client satisfaction surveys
  • Use a contact management system
  • Have a formalized business plan
Source: Standard Life Mutual Funds Ltd., 2003

The survey also found a relationship between “best practices” and the amount of time advisors spent in revenue-generating activities. As the number of best practices increased, so did the amount of time allocated to client contact and prospecting.

Letendre said the study did not support a connection between time in the business and sales. Nor does he feel that even the top advisors have it all right. With 43% of gross revenue being reinvested into the business by top advisors, Letendre believes overhead is too high. He thinks most advisors should target for a more proportional 35%.

He also encourages all advisors to take the survey themselves (found at www.standardlife.ca). Your answers will be returned to you benchmarked relative to the rest of the Canadian industry.

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    • So far, Standard Life has received more than 1,350 unduplicated responses to its survey, which began in 2001. Top advisors make up 32% of its database and are defined as those having assets of more than $25 million and with sales in the last 12 months of $3 million, or advisors with between $10 to $25 million in assets but with sales of $4 million, or those with assets less than $10 million but with sales of more than $5 million.

    Donna Green, MA, CFP, is a personal finance writer and assistant author of The New Investment Frontier, A Guide to Exchange Traded Funds for Canadians, and Surprise! You’re Wealthy: A Woman’s Guide to Protecting Her Wealth.

    (05/16/03)