10 Biggest Productivity Challenges for Advisory Firms: Cerulli

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Financial advisory firms, whatever their size, have to figure out how many client relationships their staff members can realistically manage based on their ideal client type. Serving too many non-ideal clients can lower a firm’s productivity, according to the latest Cerulli Edge — U.S. Advisor Edition.

Ending an unprofitable relationship is one of the top challenges in running an advisory firm. Though a necessary business decision, it needn’t take an inelegant approach.

Advisors at large organizations often can transfer non-ideal clients to another part of the firm that may provide a better fit based on the clients’ needs and pricing, Cerulli points out. Some smaller independent broker-dealers and RIAs can offer these clients digital advice solutions as an alternative.

However, many independent practices lack internal resources to offload non-ideal clients, and so engage in other practices, Cerulli found. They may refer clients to a strategic alliance in their network, perhaps one that works down market or that can serve the clients more effectively.

In addition, a practice with a large number of non-ideal accounts may consider selling them to another practice through a third-party platform, their broker-dealer or a matchmaking consulting service on offer by many custodians.

Cerulli expects this approach to become more commonplace as it provides an opportunity to monetize the accounts. Not only that, but it allows the advisor to frame the move as a larger business decision with a warm client handoff, versus terminating a client relationship.

See the gallery for 10 advisor productivity challenges, based on Cerulli’s survey of practice management professionals.

(Image: Adobe Stock)

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