Converting Disengaged Clients - The Modern Adviser Approach

A double whammy

The first issue is ‘grandfathered’ conflicted remuneration. While some dealer groups have already implemented these changes, the general ban on ‘grandfathered’ commissions comes into effect on 1 January 2021. Radar Results have estimated that some practices will lose up to 25% of their re-occurring revenue.

The next issue affecting planners will be the looming legislation on ongoing advice fee arrangements entered into prior to 1 July 2013. The new legislation is expected to subject these clients to the same ongoing fee arrangements as post 1 July 2013. Advisers will need to obtain written consent from these clients to continue receiving fees.

Disengaged clients

The problem with low fee-paying clients is that they may have just a single product such as life insurance or a super fund that links them to an adviser. They may not have seen that adviser for many years or if the client base was purchased then they may have never met their current adviser.

Mandatory annual fee disclosure statements and an offer of a review meeting was supposed to sort this group out by getting them to either re-engage with their advisers or ask for their fees to be switched off however it hasn’t worked out that way, hence the new legislation.

The opportunity

The good news is that to maintain your existing revenue from these disengaged clients a practice may need to convert only one in every ten to a full fee-paying client. 

Let’s say a practice has:

• 200 clients at risk
• Paying an average of $300 p.a.
• $60,000 is at risk

If the practice charges a service package for clients at $3,000 pa then only 20 of these clients need to be converted for the revenue to be recouped. If more than 10% can be converted then the practice will not only improve their revenue but also reduce their client base (and their compliance risk).

Achieving this in an efficient and profitable manner is the dilemma. 

The solution

The first step in re-engaging these clients is to offer them something valuable, what’s worked for some pro-active advisers is to offer a free and no obligation Retirement Reality Check. An email is sent to all the disengaged clients offering a short virtual (screen share) meeting to determine if they are on track to achieve their retirement objectives. The offer of a virtual meeting reduces the client’s requirement to exert much effort in return for a valuable service.

If 100 emails are sent then you may receive five responses but the good news is that there the five that are ready to re-engage and are worth your time. You can repeat the exercise every few months until no more responses are received but over time you would expect at least a 10-15% reply rate.

The adviser can then contact these clients to organise the virtual meeting and also ask them to provide some high-level information regarding their retirement expectations, age of retirement, income needs, updated assets & liabilities.

The second step is to use a retirement modelling calculator in the virtual meeting to visually show how much the client can expect to accumulate in superannuation by the time they retire and how long their superannuation will last. If the outcome is not what the client had hoped for then it’s an opportunity for the adviser to re-engage the client into their practice by offering to look at ways to improve their retirement outcomes.

The third step is then to organise a longer meeting to discuss this issue and any others that are discovered through the process and convert the client to a full fee-paying client.

Technology will assist

AstuteWheel software provides a ready solution for this project:

The Retirement Modelling Calculator is a simple to use, interactive and visual tool for an adviser to utilize in a virtual meeting and will assist in providing the client with a valuable experience

Prior to the next meeting the client is asked to complete:

• Five-Minute Financial Health Check – is a self-assessment questionnaire to provide an overview of the client’s concerns, and
• About You Questionnaire – is an online mini fact find that provides the adviser with updated information on the client and includes a goals questionnaire; or
• Electronic Reverse Fact Find – if you have relatively up to date client information

Other AstuteWheel tools you can use to ensure efficiency and compliance:

• How We Can Help You Tool - to help the client understand how you can help them address issues they may be facing
• Disengaged Client Video Email - to help re-engage them in the review process
• Goals Based Advice Tool – captures the client’s goals and provides a process for the adviser to discuss, prioritise and track the client’s goals over time
• Scope and Scale of Advice Wizard  - captures information from the previous tools and provides a structured approach to explain to the client what advice will be provided as well as providing evidence of the discussion and linking goals to advice.
• Letter of Engagement - auto generated that captures the client’s goals and the scope of advice agreed to and allows the pricing of advice.
• Ongoing Service Agreement - can also be generated to help you explain the value of your review service and the importance of this to the client.

If you want to find out more register for a webinar and receive a 7 day free trial by clicking on the link below:

https://www.astutewheel.com.au/book-webinar/ 

Hans Egger is Managing Director of AstuteWheel

https://www.astutewheel.com.au/