The dynamic of too many clients and not enough advisers has encouraged a growing number of firms to invest additional time and effort ensuring they’re taking on only clients that fit the profile they’re looking for.

For many, this can mean a two- to four-meeting screening process, but the benefit down the track of getting the process right is worth the investment.

Charles Badenach, the Hobart-based principal of Main Street Financial Solutions, says if new clients do not fit their “ideal”, they are referred to an alternate adviser to better suit their needs.

The process begins with a few phone calls and three to four meetings, to determine the right fit, with the best clients usually those referred through trusted networks, Badenach says.

“From our experience you no longer compete with other advisers for work, the dynamics have changed from 20 years [ago] so, now the relationship more closely resembles that of other professional service providers such as lawyers and accountants,’’ he says.

“Referred clients are the best source of new business as they generally have been referred by someone who knows and understands first-hand the benefit that financial advice can bring.”

With a current minimum initial adviser service fee of $5,500, that cost is rising every year under the continued heavy compliance burden, Badenach says.

“What this has meant is that the cost of seeing a financial adviser is cost prohibitive for many Australians and, for advisers, some clients are simply not worth the ‘risk’ of helping given the limited upside and significant downside risk,’’ he says.

Badenach says the firm has been focused on technology to reduce its cost to service a client which was “an evolving journey with no end point.’’

“We started this journey when Main Street opened in 2014 and this has continued from simple innovations such as an online diary, to the failed artificial intelligence statement of advice provider Nod, to online cash portals, managed accounts,’’ he says.

While there have been some false starts, he expects artificial intelligence to provide future solutions.

“The world of artificial intelligence is something we are watching closely as we believe this has the potential to be transformative for the industry,’’ he says.

Rising costs of living has also become a factor for Brisbane firm FutureGen Solutions’ onboarding process, says its director and lead adviser Murray Wilkinson.

“In tighter economic times the decision-making process becomes more elongated given financial planning advice and the associated fees are viewed as a ‘discretionary’ spend,’’ he says.

But regardless of economic times, sticking to their engagement and onboarding process has been essential.

Initial enquiries via FutureGen’s website, followed by phone call discussions and a client-completed “fact find” to identify their situation resulted in an initial “Discovery Meeting” are all without cost or obligation, Wilkinson says.

The Discovery is without cost or obligation to either party to determine whether all can move to the next stage – a provision of a Financial Guidance Paper, not a Statement of Advice (SOA), for payment of an initial fee.

“Generally this process will involve not less than two meetings – one to present the findings and a second to meet, discuss client reflections, take questions and agree on a pathway forward,’’ he says..

The next move is a SOA with detailed recommendations and rationale that takes up to six weeks with most cases and strategies taking six months to a year to implement.

“Generally for us it takes two meetings for every conversion,’’ Wilkinson says.

“Referred clients generally always have a higher probability of conversion because the referring client has often gone into great detail to speak about their experience and what is involved.

“Prospects coming through the website would have probably a 25 per cent conversion rate on average.”

But the process is worth it for both adviser and client, he says.

“Generally speaking, the costs of onboarding and the ongoing costs will be met many times over by the benefits that come from the solution you have implemented,’’ Wilkinson says.

“Done properly, the majority of solutions will incorporate cashflow, tax, investments, superannuation and estate considerations. So there are usually improvements occurring over a broad range of areas within the client’s financial ecosystem simultaneously.”

Josh Dalton, director of Brisbane-based firm Dalton Financial Partners, uses a deposit scheme for its onboarding process.

“If clients meet our criteria, we then offer them a complimentary meeting to have a general discussion about their situation and how we might help. If they like our approach, they can pay a deposit to move to a draft strategy and engagement meeting,’ he says.

Success with converting referrals to clients has changed the firm’s marketing strategy to focus on quality.

“Referred clients are definitely better. We have shifted our marketing from Google campaigns to more networking and this has definitely improved the quality of enquiry,’’ Dalton says.

“Google campaigns can generate a lot of leads, but they are poor quality in general.”

Once the firm meets with potential clients, two out of three convert to becoming clients, he says.

“As a student of (Certainty Advice Group managing director) Jim Stackpool, I believe that two out of three is optimal. If you are converting everyone, there is no price tension and you’re probably too cheap and will get overwhelmed,” Dalton says.

While screening clients was a “sunk cost”, more targeted marking for clients minimised time spend on onboarding.

“We are also getting quicker to identify when a client is unlikely to suit our model,” he says.

Join the discussion