sales champ | PLANADVISER March/April 2011

Cultivating Your Client Base

By | March/April 2011

5. Become a sponsor’s problem-solver. Sources point to this as a second key to signing a new client successfully, a natural extension of educating sponsors about issues they face. “That is the only thing you are there for [with ­clients],” Cafaro says. “HR groups are usually half the size they were a few years ago. If you can become an extension of the HR group with no additional cost or minimal cost, you are adding value.”

When Cafaro has a second meeting with a potential new client, she focuses on offering ideas about how her company can help with the challenges discussed in the first meeting. “It is all about what issues they are facing, and the adviser’s solutions to those issues?” She finds that she can contribute the most when she focuses on plan design and helping plans match corporate strategies and retirement benefits more. She may identify plan-design opportunities to boost participation or reduce costs, for instance.

When considering a new adviser, employers “are looking for a high degree of comfort that you are going to take care of them,” Stone says. Calculating Sharpe ratios and the like does not differentiate advisers at this point, he says, since all advisers offer investment-analysis basics. Adding value for a new sponsor client could involve doing an operational-compliance review to correct errors, designing customized target-date funds to fit an employer’s population, or solving a testing issue in a 401(k) plan by setting up a nonqualified plan for highly compensated employees. “They are looking­ for a problem-solver,” he says. “Issuing a report on the investments every quarter is a core service, but it is not solving a problem.”

Kozemchak, who works primarily with plans that have more than $500 million in assets, likes to focus on his company’s ability to provide quality results for sponsors. So, he talks about specific payoffs at clients with similar situations, such as outcomes in the timing and execution of previous projects, the cost savings, the limited resources that the sponsor had to deploy to the project, and the quantifiable benefits that the sponsor felt the project added.

6. Keep focusing on existing clients. Kozemchak spends about 80% of his working time with existing clients, and the other 20% on efforts like speaking at conferences that can lead to new clients. Balancing time spent with existing clients and time spent cultivating new ones “is a perennial problem for smaller firms,” Stone says. “Larger firms typically have more resources, so it is less likely that a person at a larger firm is wearing as many hats as someone at a small firm. Larger firms typically have pretty good metrics on the number of relationships a particular role can handle, whereas that can be more fluid at a smaller firm.”

To help find balance, look for efficiencies in both areas. Cafaro says that, increasingly, automated reporting lets her allocate less time to doing routine tasks for existing clients and more time to talking with them. On the client cultivation end, her company recently has had more luck with outsourcing some cold-calling to make initial contacts.

Advisers have a strong business-development incentive to keep making sure existing clients get enough attention. “It takes a lot more hours to recruit a new client than to keep an existing one—by tenfold,” Carl says.

A referral from existing clients, “across the industry, is usually the number-one source of new business,” Byrnes says. He suggests a progressive deepening of relationships that an adviser should strive for: employer awareness in the first stage, followed by becoming satisfied clients, then loyalists who plan to stick with the adviser, and finally ­advocates who will tell others the good experience they have had with an adviser. “You should be looking for a way to get all your client relationships up that curve to advocacy­,” he says. —Judy Ward