As advice practices ponder of the viability of C and D clients, a pair of advisers has found that technological efficiencies are helping drive down costs to keep make them profitable to serve.

Australian Financial Advisory Group director James Gerrard says advisers should consider their options before turning off fees on C and D clients.

“With technology [there are] more ways, still in a compliant manner, to not only service but to make a profit from those clients and keep them,” Gerrard tells Professional Planner. “They can turn into bigger clients at a later stage.”

In Gerrard’s case, his firm is one of many utilising artificial intelligence (AI), in this instance using the service provided by adviser software firm Dash to develop the advice documentation, leaving the advisers to focus on the strategy.

“When I say AI, it’s digitising the advisers and the first thing we did was do that more with the client SOA process, so we’ve digitised myself and two other advisers; a paraplanner can type in a script or use template scripts that we have that we generate videos that we drop into Statement of Advice documents,” Gerrard says.

“These Statement of Advice documents are not your usual 100-page word documents, they’re visual web-based advice [documents].”

Lee Clarke and Company managing director Lee Clarke says his firm never sought to take on C and D clients but acquired several businesses which had them on their books.

Not wanting to abandon and offload them, Clarke says relying on similar digital efficiencies has helped make those clients financially feasible.

“It’s starting to work out to be phenomenal in managing these clients that have been, typically to a lot of planners, worthless,” Clarke says.

“I’m not going out looking to try and grow that sort of book of business. I am now running it separately. However, I can see it’s a gamechanger in terms of [retaining and servicing] these smaller low-balance clients.”

Despite C and D clients not being the type Clarke’s business would target, he felt an obligation to serve them in some capacity.

“We have a business that I’d like to say is a true high-net-worth business; however, you can’t avoid having these smaller balances and typically advisers have been treating them as worthless and either giving them away or turning off their fees,” Clarke says.

New age of information

Gerrard says by giving the client videos to watch before the meeting, what would have been a one-hour meeting can be completed in five minutes.

“We’ve done this about 10 times over the past couple of months and it’s been consistent every time,” Gerrard says.

“In the SOA presentation meeting we haven’t had to go through the full advice because the client has felt like they have received the advice by looking at the visual document.”

Gerrard says this cuts down on time irrespective of whether it’s a larger or smaller balance client, and has helped reduce face to face time during the new client engagement process.

“We’ve now moved this across to our review function as well,” Gerrard says, adding the review consists of the traditional PDF review document along with a two-minute summary video.

“What I’m going to do is replicate that because we have 30-50 clients to review every month. It would be a bottleneck of every adviser having to do these. Even though they’re two minutes, it takes five to 10 minutes to read up on the file and get everything ready to do a two-minute video.”

The review team uses the digital AI to write scripts while the adviser makes final checks and approvals.

“That way the client gets a personalised AI video and that means we can retain our C and D clients rather than shed them off,” Gerrard says.

He adds that roughly one in 20 would request a meeting, while 19 out of 20 would sign off on the video update via DocuSign.

“The key is to not just say markets are up 5 per cent for the period…it has to be personalised,” Gerrard says.

Extra benefits

Gerrard says it allows the younger advisers in the firm to learn the ropes and help them build their own books.

“The C and D clients do run into money at times; they get inheritances, they get divorced, there’s periods in their life, life events where they can move up the chain,” Gerrard says.

He adds these clients are typically the lower-balance children of existing clients.

“You can really turn the son away, so a lot of advisers will have children and relatives of their bigger clients who make up this C and D which is difficult to shed because it can affect the relationship of the [bigger] client,” Gerrard says.

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