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Simply said, if you are a financial advisor, insurance agent, or providing other financial professional services, your book of business is always in peril.\u00a0 Silent erosion, split relationships, the cost of getting the wrong customers, and managing customer infidelity are all ongoing concerns.<\/span><\/p>\n Every financial professional wants to optimise their book\u2019s annual gross revenues, net present value, and future cash flows.\u00a0 The ultimate exit value of their book of business is related to a multiple of annual gross revenues and future cash flows.\u00a0 The multiple is dependent on:<\/span><\/p>\n It\u2019s important to know that many book-of-business risks can go unnoticed, and yet be deadly to your business.\u00a0 The financial results and ultimately sale value of any book of business are driven by three risks:<\/span><\/p>\n The cost and frustration of customer acquisition are high, so the longer you are able to keep a customer, the more you can spread the cost.\u00a0 Additionally, the cost to replace a lost customer is also high so the longer the life of a relationship, the higher the net present value of your book.\u00a0\u00a0<\/span><\/p>\n Financial advisors often say that retention is not a problem, yet when we distinguish retention of share of wallet, or your share of the customer\u2019s total business, we find that while financial advisors haven\u2019t totally lost a customer, they may have lost much of their business to other financial advisors. This is the definition of <\/span>\u2018silent erosion\u2019.<\/span><\/i><\/p>\n There is always the risk that someone else will grow your customers. And, <\/span>\u2018split connections\u2019<\/span><\/i> means customers are making financial and investment decisions every day.\u00a0 If you are a financial advisor, and your customers have abandoned old 401K plans at past employers, and investments with banks, insurance agencies, and other advisors, numerous parties are potentially managing your customers\u2019 financial portfolios.\u00a0\u00a0<\/span><\/p>\n Why are financial relationships so fragmented?\u00a0 I believe <\/span>\u201ccustomer buying patterns directly reflect an advisor\u2019s selling patterns\u201d.\u00a0<\/span><\/i><\/p>\n Growth risk is real \u2013 in terms of both missed opportunities (life events) and customer defection due to poor service delivery or inferior portfolio performance.\u00a0 The goal is penetration and consolidation (share-of-wallet) of the relationship.<\/span>\u00a0<\/b><\/p>\n As long as the emphasis is on volume (a common practice at larger firms and wirehouses), financial advisors will go after the short-term, easy hits because all sales lead to revenue volume, profitable or not, high service cost or not, and sustainable or not.\u00a0 This course of least resistance is not always the best course \u2013 but it is the easiest one.<\/span><\/p>\n We must think of new customer acquisition cost as a scarce resource, like capital, and ask the question,<\/span> \u201cwhat prospecting effort will give the greatest return?\u201d <\/span><\/i>If you could make only one prospect call next year, are you clear on what the profile would look like? Just because you have customer referrals or easy access to prospects does not mean those prospects should be at the top of your list.\u00a0 If you get only those that you seek out, you may be displeased to discover that you got what none of your competitors wanted.<\/span><\/p>\n Most financial advisors (and insurance agents) are trying to manage more than 200 customers in their book of business \u2013 nearly an impossible job without the help of a CRM like Act Premium, which has been designed to enhance customer acquisition, growth, and retention.<\/span><\/p>\n It is vitally important to stay in touch with your customers and let them know you are accepting new clients.\u00a0 Ask for referrals and invite your customers to <\/span>\u2018bring-a-friend\u2019 <\/span><\/i>events.\u00a0 Act! Premium\u2019s e-marketing capabilities can be configured for automated and scheduled emails.\u00a0 The email messaging can be scheduled and customised for different customers and automated for delivery on specific dates.\u00a0<\/span><\/p>\n Life events (a new birth, marriage, divorce, death, inheritance, graduation, a new home, a change of residence, a change in employment, retirement, etc.) usually trigger financial decisions.\u00a0 Life events can be revealed in a digital questionnaire every six months.\u00a0 The questionnaire can be automatically sent by Act! Premium\u2019s e-marketing capabilities and timed just before a semi-annual customer review. The questionnaire responses can be automatically entered into Act! Premium\u2019s customer record with a notification to the financial advisor (and a digital brochure to your customer).\u00a0 The Act! Premium system has predictive analytics (growth and retention alerts) and propensity models (my other clients like you \u2013 age, income, risk tolerance, etc. \u2013 are investing in . . .) to help you manage your book of business.<\/span><\/p>\n Your book is your most important Asset Under Management (AUM) \u2013 and you should manage it like it is an asset.\u00a0 Track key performance metrics (KPIs) \u2013 insights to make better decisions related to acquisition, growth, and retention.\u00a0 All these KPIs increase your book valuation. Act! Premium tracks and reports on the following KPIs.<\/span><\/p>\n Act! Premium is constantly analysing your book for signs of <\/span>\u2018silent erosion\u2019<\/span><\/i> and sending you alerts.\u00a0\u00a0<\/span><\/p>\n Act! Premium sales reports and dashboards are visual, interactive, and cascaded from the financial advisor to the CEO.\u00a0 Act! Premium sales reports and dashboards use data from the entire sales stack.\u00a0<\/span><\/p>\n\n
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Risk Summary<\/b><\/h2>\n
Retention Risk – Keeping customers for life & the cost of <\/b>\u201cSilent Erosion”<\/i><\/b><\/h3>\n
![\"\"](\"https:\/\/dev-inproduct.pantheonsite.io\/uploads\/Book-of-Business-Blog-Stat-1.png\")
<\/p>\nGrowth and Penetration Risk – Managing <\/b>\u2018Customer Infidelity\u2019<\/i><\/b><\/h3>\n
![\"\"](\"https:\/\/dev-inproduct.pantheonsite.io\/uploads\/Book-of-Business-Blog-Stat-2.png\")
<\/p>\nAcquisition Risk – The <\/b>cost of getting the wrong customers<\/i><\/b> & subsidising unprofitable customers<\/b><\/h3>\n
![\"\"](\"https:\/\/dev-inproduct.pantheonsite.io\/uploads\/Book-of-Business-Blog-Stat-3.png\")
<\/p>\nAct! Premium – Helping financial advisors manage customer risks and grow their book of business<\/b><\/h2>\n
![\"\"](\"https:\/\/dev-inproduct.pantheonsite.io\/uploads\/Book-of-Business-Blog-Stat-4.png\")
<\/p>\nReferral management<\/b><\/h3>\n
Life events & analytics <\/b>(predictive and propensity)<\/span><\/h3>\n
The metrics that matter<\/b><\/h3>\n
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Retention alerts & analytics<\/b><\/h3>\n
Sales reports, dashboards & analytics<\/b><\/h3>\n
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