HSGrove.com - CULTIVATING THE AFFLUENT - November 2007 Online Bonus Content

NOVEMBER 2007 - ONLINE BONUS CONTENT


	Closing the Gap

We know the high-net-worth market is squarely in the crosshairs of the advisory universe. What’s more interesting, however, is that most advisors want even wealthier clients than those they are presently working with. In our survey of advisors, a whopping 97 percent have set the bar higher for themselves moving forward.

Practice Mastery - EXERCISE

1. What is the average net worth of your top 10 clients?

2. Answer the following questions based on your core product offering (some may not be applicable):

     a. What are the average investable assets of your top 10 clients? What are the fees or average commission dollars generated from these assets?

     b. What are the average credit needs of your top 10 clients? What percentage of the fee do you retain?

     c. What is the average value of insurable property of your top 10 clients? What percentage of the fee do you retain?

     d. What is the size of their taxable estate? What is your average commission?

3. What is the average revenue you earn from each of these clients?

4. Fill in the equation below:

     Step 1. Use the figure you identified as your income gap in the “Reaching Your Income Goals” exercise in the October 2007 issue.

     Step 2. Use the figure you identified as your average per-client revenue in question 3 above. (For illustrative purposes only, we assume that all client revenue drops directly to the bottom line.)

     Step 3. Divide your income gap by your average per-client revenue to determine how many additional clients of this size you need to close your income gap.

Step 1
--------------	=	Step 3
Step 2


	Food for Thought • The average net worth of a life insurance producer’s top 10 clients is $4.7 million and the average commission from each of these clients is $40,000. If the producer’s income gap is $500,000, he needs 12 or 13 more clients that have similar profiles to his best 10 clients to reach his goals. Is this realistic? • An investment advisor has an average of $1.2 million in investable assets from each of her top 10 clients. This produces revenues of $90,000 per client. Her income gap is $2 million, so she will need about 22 new affluent clients to close the gap. Is this realistic? • A financial consultant’s top 10 clients have an average net worth of $1.4 million and generate an average of $18,000 each in revenue for him. With an income gap of $125,000, he needs 7 new clients to reach his goals. Is this realistic? If the number of new clients you need to close your income gap seems daunting, consider another approach. Focus your prospecting efforts on wealthier clients with broader needs that can generate more revenue for you. For instance, if the life insurance producer we mentioned above can increase his per-client commissions by 50 percent to $60,000, he can reach his goals with just 8 new clients. NOTE: This exercise is intended to provide perspective on your business and your income goals, so we have simplified the process by assuming your expenses will remain constant as your client base increases. A more detailed and accurate analysis should include all costs, expenses and other relevant data.

HOW TO SUBSCRIBE
You can subscribe online or by contacting Steve Kimball at Charter Financial Publishing Network at 732-450-8866 x29.

The cost of an annual subscription is $245. Payment can be made by major credit card.

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Who Should Subscribe
Cultivating the Affluent is written for any type of advice professional at any stage in their career as long as they have ambitious personal and professional goals including:

• Fee-Based Planners
• Life Insurance Agents
• Registered Investment Advisors
• Wirehouse and Regional Brokers
• Property & Casualty Agents
• Independent Advisors
• Advanced Planning Specialists
• Private Bankers
• Portfolio Managers
• Investment Professionals
• Private Client Attorneys
• Trusts & Estates Attorneys
• Accountants
• Trust and Business Development Officers
• Tax Planners and Specialists

If you want to build your high-net-worth client base and earn more money, this is the publication for you. Cultivating the Affluent can also be a valuable resource for the managers and home-office personnel of distribution and advisory firms, and other professionals or institutions that rely on advisors for business such as asset managers and custodians.