Building An Ideal Client Experience - CIFPs · •Do you consider yourself to be a client-centered advisor or an investment-centered advisor? Sharing Your Best Practices . 13 For

Building An Ideal Client Experience

2

For Broker/Dealer Use Only. Not for Distribution to the Public

Introduction

1) Client Experience

2) Profitability

3) Growing the Practice

3


Segment Definition

# of

Households

(000’s)

% of

Households

2010 Assets

($ Billions)

% of 2010

Investable

Assets

Mass Market < $100K 11,759 79.22% $315 10.63%

Mid-Market $100K - $500K 1,929 13.00% $456 15.63%

Upscale Market

(Affluent) $500K - $1M 594 2.28% $433 7.05%

Affluent Market

(Affluent) > $1M 562 3.79% $1,760 59.38%

The top 3.8% of households (affluent) control nearly 60% of investable assets

Where is the Optimal Opportunity?

Source: Investor Economics, Household Balance Sheet Report 2011, data as of December 2009.

Segmenting the Financial Wealth of Canadian Households

Over 20% of households control almost 90% of investable assets in Canada

4


A Growing Market

0

1,000

$500K - $750 $750 - $1M > $1M

2010 2020CAGR 4.9%

CAGR 5.4%

CAGR 6.0%

Source: Investor Economics Household Balance Sheet 2011

Projected Growth of Affluent Canadian Households (000s), 2010-2020

5


$738 Billion “in Motion”: Risk or Opportunity?

Projected Average Intergenerational Wealth Transfer

2010 – 2020

Age segments Number of wealth

transfer events Average transfers

Total value

of transfers

65 - 74

130,000 $492K

$66.4B

75+ 1,033,000

$650K $671.6B

Wealth by Age Group

Source: Investor Economics, HBS Report. Total of $738B will be left by Canadians over the age of 65 who die during the next decade.

6


Return Preservation of Capital

Shifting Investment Goals of Affluent Investors

• The basic financial goals of affluent investors have shifted from growth and

reasonable returns to the preservation of capital

50%

42% 43%

45%

49%

47%

41%

50%

54%

58%

54%

57% 55%

51%

53%

59%

46% 46%

56%

44%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Financial Priorities of Affluent Investors (2000 - 2009)

Source: Investor Economics, 2010 IIAC Winter Symposium, based on affluent U.S. investors.

7


% satisfied

with their

advisor

Share of

assets

Don’t Have a Personalized Financial Plan

57% 66%

Have a Personalized Financial Plan

75% 76%

The Value of Financial Planning

Affluent clients are demanding comprehensive and tailored services

Advisor Benefits of Providing Investors with a Financial Plan (Q1 2009)

% satisfied

with their

advisor

Share of

assets

Source: Investor Economics, 2010 IIAC Winter Symposium and World Market Report 2008.

8


Affluent Investors are Now Challenging Their Advisors to

Deliver More

Are you prepared to meet these needs?

Clients Respond to What They Want in a Personalized Written Financial Plan

41%

45%

48%

66%

73%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Trust and Wills/Estate

Planning

Insurance Needs

Tax Planning

Capital Needs

Post-Retirement Income

Needs

Source: Annual Dollars & Sense Survey, 2009.

9


Huge Growth – Shift in Focus

% of Canadian Households with Stock Ownership

(Direct or through Funds)

Source: Canadian Shareholders Study, TSX Group July 12, 2004.

11.2 Million

0%

10%

20%

30%

40%

50%

1983 1986 1989 1996 2000 2002 2004

Reactive: Managing

Assets

Proactive: Talking to

Clients Downturn

10


• How many clients do you have?

• What would you think the ideal number is?

Sharing Your Best Practices

11


Many Advisors’ Practices are Over Capacity

Average Number of Clients Served per Advisor, by Channel

Source: 2005 Corporate Executive Board, The VIP Forum.

170 198

212

300

350 357 378

0

50

100

150

200

250

300

350

400

Bank Broker Regional

Broker/Dealer

Wirehouse Independent

Broker/Dealer

Insurance

Broker

Registered

Investment

Advisor

Private Banker

Ideal 140

12


• Do you consider yourself to be a client-centered advisor or an

investment-centered advisor?

Sharing Your Best Practices

13


Client-Centered Advisors

13.8%

Investment-Centered Advisors

86.2%

Source: CEG Worldwide, The Best of Times, 2001 (608 Financial Advisors surveyed)

The Reality:

Client-Centered vs. Investment-Centered Advisors

Majority of advisors are “investment-centred”

14


Investment Focused Client Focused

Activities / Indicators Investment-

Centered

Advisors

Client-

Centered

Advisors

Activities / Indicators Investment-

Centered

Advisors

Client-

Centered

Advisors

Analyzing the markets 69.1% 14.3% Talking to current clients 15.8% 92.9%

Strategizing about their

business 61.1% 31.0% Reassuring clients 20.8% 97.6%

Balancing portfolios 47.1% 7.1% Personally contacting

prospects 16.8% 84.5%

Analyzing investment

positions 53.4% 10.7% Meeting with clients 19.8% 88.1%

Strategizing about the

stock market 57.4% 6.0%

Immediately responding

to client inquiries 66.4% 100.0%

Talking to peers 76.7% 36.9% Asking clients for

referrals 7.3% 78.6%

The Reality for Advisors

Issues important to advisors’ practices


15


What’s the Pay-off?

Advisor Results Over Last Six Months Investment-centric

Advisors

Client-centric

Advisors

New clients 1.3 6.8

Average assets per new client $51,000 $269,000

Clients providing additional assets 0.8 7.3

Average assets from current clients $13,000 $64,000

Total new assets $76,700 $2,296,400

Success Defined by Advisor’s Focus

30x’s the assets


16


Perspective Investment-Centered

Advisors

Client-Centered

Advisors

This market will make self-directed clients into clients for

investment advisors 15.5% 90.5%

I’m worried that I will have to leave the investment

advisory business 17.6% 0.0%

This is a good time to get new clients 0.6% 96.4%

This is a good time to demonstrate to clients that I add

value 28.4% 91.7%

I’m worried that clients will leave and go to another

investment advisor 69.8% 10.7%

This is a good time to get more assets from current

clients 3.6% 84.5%


Advisor Confidence

Perspectives on the Investment Advisory Business Environment

17


The Everyday Advisor

(Investment-Centric)

The High Performing Advisor

(Client-Centric)

Fragmented, inconsistent Focused, consistent

Extreme competition Low or no competition

Works too hard on the wrong stuff Work gives positive energy, rejuvenating

Works with low creativity Works with high creativity

Gives away too much for free Charges for experience

Business controls advisor Advisor controls business

Competes on price and product Competes on business process and

solutions

“Everyday” Advisor vs. “High Performing” Advisor

Source: CEG Worldwide Report, Capturing the High-Net-Worth Investor: The Client-Centric Solution for Winning Market Share Today, 2004

The Advisor Experience

18


The “Everyday” Advisor’s Client The “High Performing” Advisor’s Client

Low level of loyalty High level of loyalty

Low level of commitment High level of commitment

Price shops Price is not an issue

Not a predictable future Very predictable future

Low level of response High level of response

Less fun, no challenge More fun, challenging issues

Source: CEG Worldwide Report, Capturing the High-Net-Worth Investor: The Client-Centric Solution for Winning Market Share Today, 2004

The Client Experience

“Everyday” Advisor vs. “High Performing” Advisor

19


Refer to Managing

Complexity Handout

Top Advisors Focus on Being Proactive

Source: Sales Executive Council and SEC Solutions Research: VIP Forum Research CEG Worldwide Study CEG Worldwide Report, Capturing the High-Net-

Worth Investor: The Client-Centric Solution for Winning Market Share Today, 2004.

Initial Client

Contact/Cold Calls Lead Identification/

Qualification

Create Sales Plans Continued

Relationship

Building

Sales

Calls/Meetings/

Presentations

Competitor/Industry

Research

Analysis of Financial

Needs and Proposed

Solutions

Create Call Strategy

“High Performer” (Client-centred)

Administrative

Activities

Line Up Internal

Resources

Internal

Communications

Handling Client

Service Issues

Compensation

Tracking

Other Administrative

Activities

“Everyday” Advisor (Investment-centred)

20


1 Focus on affluent clients, your most optimal target market

2 Use an investment consulting process to differentiate yourself from

competition

3 Manage your practice as a business. Become client-centric not

investment-centric

4 Partner effectively with institutions and other professionals to support

your service delivery

5 Commit to ongoing learning and execution

Source: CEG Worldwide, Essential Client Communication Report, 2002.

Five Best Practices for Success

21


Articulate

• Define yourself

• Create your DVP

• Distinct Value

Proposition

• Communicate value

• Segmentation

• Three Core Systems:

• Investment Consulting Process

• Client Service Process (CSP)

• Marketing Strategies

Systemize

• Build ideal 140

• Profit Maximization

• Reassignment

strategies

• Client Relationship

Index

• Identify and Capture

HNW opportunities

Capture

Building Blocks

“Profitable Practice”

How to Put These Strategies Into Action

22


Delivering on the

promises

articulated in your

DVP

Systemize Your Business

• Segmentation

• Three Core Systems:

• Investment Consulting Process

• Client Service Process (CSP)

• Marketing Strategies

Systemize

23


Align Resources Know your client

Client Service Scheduler Client Service Matrix Client Service Process Planner

Engineer Your Practice for Growth

BY WHOM

WHAT HOW WHEN

WHO

24


• Assets Under Management (AUM)

• Investment revenue

• Insurance revenue

• Fee-based opportunity

• Relationship to top client

• Future potential

• Level of influence

• Referrals

• Personality

• Availability

• Serviced by team

Segmentation Guidelines

Limit of Five Client Relationship Dimensions

25


Typical Breakdown

A+ Drivers Top 2%

A High Priority Next 18%

B Movers Next 10%

C Maintenance Next 50%

D Low Priority Bottom 20%

100%

Guidelines

Segmentation in Action

26


One of the Most Widely Used Segmentation Tools

in the Market

Help

Step 1: Set up Your Asset & Revenue Criteria

Step 2: Set up Your Segmentation Criteria

27


Benefits of Segmenting your Client Base

1. Center your practice around your ideal clients

– determining what kinds of clients you attract and why

– Identify which clients should be best served

– Align resources to correct clients

2. Make your time more efficient

– Assist in more efficient

– Begin to make yourself more referable

– Ability to identify trends within segment

3. Increase revenue opportunities for both your practice and Credential as a

whole

– Create more capacity

28


Segment A+ A B C D Total

# of Households

Assets (in millions)

Separately Managed

Accounts

Fee-Based Accounts

Managed Programs

Mutual Funds

Stocks

Fixed Income/Bonds

Cash/Money Market

Total Assets

Revenue (in thousands)

Separately

Managed Accounts

Fee-Based

Accounts

Managed Programs

Mutual Funds

Stocks

Fixed Income/Bonds

Cash/Money Market

Total Revenue

Average Revenue

per Client

Recurring

Revenue Asset Optimizer

Transactional

Recurring

Transactional

Refer to Revenue Asset Optimizer Sample Worksheet

29


Revenue Asset Optimizer


# of Households 5 20 60 88 212 385


Separately Managed

Accounts 6 6

Fee-Based Accounts 7 2 9

Managed Programs 0

Mutual Funds 1 5 7 3 4 20

Stocks 1 9 9 3 3 25

Fixed Income/Bonds 9 12 13 3 3 40

Cash/Money Market 1 4 3 1 1 10

Total Assets 25 32 32 10 11 110


Separately

Managed Accounts 60 60

Fee-Based

Accounts 56 16 72

Managed Programs 0

Mutual Funds 6.5 32.5 45.5 19.5 26 130

Stocks 6.5 58.5 58.5 19.5 19.5 162.5


Cash/Money Market 2.5 10 7.5 2.5 2.5 25

Total Revenue 176.5 177 176.5 56.5 63 649.5

Average Revenue

per Client 35.3 8.9 2.9 0.6 0.3 1.7

Revenue from C&D clients: $119,500

On $21 million in assets, you are only earning an average of $450

per client per year

30


Increase Your Revenue


# of Households 5 20 60 88 212 385


Separately Managed

Accounts 6 6

Fee-Based Accounts 7 2 9

Managed Programs 10 11 21

Mutual Funds 1 5 7 0 0 13

Stocks 1 9 9 0 0 19


Cash/Money Market 1 4 3 0 0 8

Total Assets 25 32 32 10 11 110


Separately

Managed Accounts 60 60

Fee-Based

Accounts 56 16 72

Managed Programs 300 330 630

Mutual Funds 6.5 32.5 45.5 0 0 84.5

Stocks 6.5 58.5 58.5 0 0 123.5


Cash/Money Market 2.5 10 7.5 0 0 20

Total Revenue 176.5 177 176.5 300 330 1,160

Average Revenue

per Client 35.3 8.9 2.9 3.4 1.6 3.0

NOW Revenue from C&D clients is:$630,000

On $21 million in assets, you have now earned $1,600 to

$3,400 per client!

31


Pre-Systemization

Revenue Allocation

Maximize Your Revenue Potential and Positively Impact

Your Franchise Value

27%

27%

27%

9%

10%

A+ Clients A Clients

B Clients C Clients D Clients

Impact On Revenue

Improvement on Practice Efficiency

Increase in

Revenue % Increase

$510,000

79%

The Industry has Experienced Tremendous Growth

Post-Systemization

Change in Revenue Allocation

A+ Clients A Clients

B Clients C Clients D Clients

15%

15%26%

28%

15%

Refer to Workshop Revenue

Analysis and Transition Tool

32


Why Create a Client Service Matrix?

• To maximize the value of segmenting

• Establish different levels of service you will offer

and how they will be delivered and by whom

• Deliver service commitments by segment

33


Getting Started to Build your Client Service Matrix

4 15 12 8 5 5

34


Why Create a Service Process Planner?

• To define ownership and accountability

• Streamline services offered for efficiency

• Build franchise value by having structure

35


Service Process Planner

Client Advisory Council 4x Year SERVICE ACTIVITY: Frequency: P

E R

SEGMENT TO RECEIVE:

A+ A B C D JAN FEB APR MAY JUN

JUL AUG SEP OCT NOV DEC

36


Service Process Planner Client Advisory Council 4x year SERVICE ACTIVITY: Frequency: P

E R

SEMENT TO RECEIVE:

A+ A B C D JAN FEB APR MAY JUN

JUL AUG SEP OCT NOV DEC

Book high-end location Private room Pat Invite/Confirm 6 clients +Team CA/COI

Pat

Send Agenda and Materials to review (1 wk) Cindy

Facilitate Topics/

reviews Me

Follow-up letter on ideas raised & plans to execute Me/ Cindy

Show up - all prep looked after

More strategic relationship w CAs

I want to evolve to Board of Directors

Prep work

-Forum for Top Clients to offer feedback -Gets them involved -Improves our Services -Creates Advocates

Reinforces beliefs in our process and in our Team

Thank You Gift: Bottle of Ice Wine

Focus group around business or market expertise

Pat – admin/greeter

Cindy –

Service Update

Me - presenter/

primary relationship

Metrics

Progress Report

37


Benefits of a Client Service Matrix and a Service

Process Planner

• Increased efficiency and a greater focus on most profitable clients

• Proactively manage client expectations

• Effectively allocate available resources

• Ability to adjust service levels as clients move or down from another segment

• Increased referrals and profitability

38


Simplify the Sales Cycle

More Time is Required with Clients Due to Product Complexity

Source: VIP Forum, FTI

Lead not

qualified Prospect not

forthcoming

with

information

Inability to

get a firm

commitment

from client

Documentation

incomplete or not

forwarded to

appropriate parties

Time

consuming

portfolio

or plan

construction

Introduction

to Prospect

Information

Discovery

/Profiling

Client

Commitment

Continue

Process

Needs

Analysis

Recommend

Solutions

Establish

Service

Agreement

Close Secure

a Meeting

1 2 3 4 5 6 7 8

39


Quotential as a Business Strategy

• Positions your practice for productivity.

Focus on servicing your high-margin clients, or prospective clients to grow your business.

• Allows you to provide complete, tier one service.

Provide a robust stable of services to meet your clients’ needs during all their wealth stages.

Choose the right portfolio using:

• Client meeting Tools

• Bestfit Questionnaire [online/offline]

Client Support:

• Award-winning quarterly client statements with commentaries from the investment team

Produce a customized investment policy statement

Advisor Support:

• Quarterly update calls and communication

• Active management reporting

Create Efficiency and Deliver Comprehensive Service

40


Source: Franklin Templeton Investments, as of March 31, 2012. Please visit www.franklintempleton.ca for performance figures of Series A, F, T.

Quotential® Program Series O, Annualized Performance (%)

Portfolio 3 Month YTD 1 Year 2 Year 3 Year 5 Year Since

Inception

Diversified Income 3.00 5.52 6.35 8.09 12.52 5.41 7.47

Benchmark 1.42 3.88 6.47 7.29 8.84 7.29 6.85

Balanced Income 3.83 5.77 2.91 6.41 12.76 3.49 6.74

Benchmark 2.98 6.00 4.28 6.94 10.16 4.22 6.24

Balanced Growth 4.88 7.41 0.58 5.77 14.15 2.34 6.80

Benchmark 4.37 7.87 1.49 6.46 11.63 2.96 6.36

Global Balanced 7.05 9.22 2.78 5.68 13.20 ─ 1.53

Benchmark 5.55 9.07 3.04 6.06 10.69 2.32 2.01

Growth 6.71 9.47 -0.91 5.23 14.96 0.67 5.80

Benchmark 6.03 10.16 -0.29 5.97 12.62 1.11 4.61

Canadian Growth 3.67 8.29 -7.71 6.50 20.67 1.94 7.51

Benchmark 4.39 8.14 -9.76 4.24 15.59 1.65 7.84

Global Growth 10.25 14.25 2.66 6.03 14.44 -1.16 6.26

Benchmark 9.95 15.28 2.55 6.16 12.41 -2.37 4.20

Maximum Growth 7.77 11.61 -2.17 5.97 17.01 -0.17 5.02

Benchmark 7.98 12.75 -1.86 5.55 13.65 -0.72 3.50

http://www.franklintempleton.ca/

41


Source: Franklin Templeton Investments, as of March 31, 2012, Morningstar Research Inc.

Quotential® Program Series A, Annualized Performance (%)

Portfolio 3 Month 6 Month 1 Year 2 Year 3 Year 5 Year Since

Inception

Diversified Income – T 2.39 4.35 4.24 6.00 10.38 3.35 5.29

Global Fixed Income Balanced 3.00 5.74 3.84 5.43 9.45 2.59 4.47

Balanced Income – A 3.21 4.70 0.67 4.18 10.40 1.39 4.53

Global Neutral Balanced 4.80 8.29 1.37 5.11 10.58 1.08 3.97

Balanced Growth – A 4.13 6.00 -1.86 3.34 11.54 0.03 4.41

Global Equity Balanced 6.49 10.16 -0.98 4.27 11.29 -0.65 3.60

Global Balanced – A 6.46 8.00 0.22 3.31 10.59 ─ -0.78

Global Neutral Balanced 4.80 8.29 1.37 5.11 10.58 1.08 1.55

Growth – A 6.15 8.24 -3.21 2.67 12.22 -1.76 3.26

Global Equity Balanced 6.49 10.16 -0.98 4.27 11.29 -0.65 3.60

Canadian Growth – A 2.99 6.80 -10.28 3.62 17.44 -0.73 4.71

Canadian Equity 5.31 9.67 -9.66 2.34 13.45 -0.26 6.13

Global Growth – A 9.55 12.83 -0.15 3.34 11.45 -3.71 3.55

Global Equity 9.26 13.87 -0.13 4.10 11.17 -3.38 3.36

Maximum Growth – A 7.09 10.04 -4.77 3.19 13.93 -2.78 2.28

Global Equity 9.26 13.87 -0.13 4.10 11.17 -3.38 2.13

42


Quotential Balanced Growth Portfolio

Global Equity Balanced

Canadian Bonds

Global Bonds

Canadian Equities

US Equities

International Equities

Emerging Market Equities

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

0.00 5.00 10.00 15.00 20.00 25.00

Ret

urn

(%

)

Risk (Standard Deviation)

5-Year Risk/Return

Risk / Return: The Benefit of Diversification Quotential Balanced Growth Portfolio

Source: Morningstar Research Inc., as at March 31, 2012.

43


Resources and Support Materials To Assist in Client Communications

Quarterly Portfolio Active Management Commentary

Quarterly updates

show how Portfolio

weightings are

actively adjusted

based on an

ongoing review of

market and

economic conditions.

Investment Policy

Statement (IPS) The customized

Investment

Policy Statement

makes it easy for

to determine

which Portfolio is

best.

This diagnostic

questionnaire

helps you select

the appropriate

Quotential

Portfolio based on

your clients’ needs

and risk profile.

bestfit Questionnaire

(Available online) Tax-efficient Proposals

Customized reports

showing the power

of Flexible Series T.

Quotential Statement

Your complete

investment solution.

Easy to understand

statements depict

all the key elements

you need to track

your clients’

investments.

State of the Markets Advisories and Alerts

Industry-leading

commentary ‘as it

happens’ helps you

serve your clients

better.

Sign up on

www.advisorsource.ca

by clicking on the

State of the Markets

banner.

44


What you have learned

• Difference between Client-Centered Advisors vs. Investment-Centered Advisors

• Practice Capacity

• Client Segmentation

• Revenue Optimization

• Benefits of a Client Service Matrix and a Service Process Planner

Dealer Use Only

Franklin Templeton Investments is one of the world’s largest publicly-traded investment management companies,

delivering a truly global perspective to investors for over 60 years. With values that have withstood the test of time,

Franklin Templeton Investments provides global and domestic investment advisory services to the Franklin,

Templeton, Bissett and Mutual Series funds and institutional accounts, including private wealth management

solutions through Fiduciary Trust Company of Canada.

www.franklintempleton.ca

Franklin Templeton Investments Corp.

5000 Yonge Street, Suite 900, Toronto, ON M2N 0A7

Client Services Toll-free: 1.800.387.0830 Fax: 416.364.1163

Sales Team Toll-free: 1.800.897.7286 Fax: 416.364.1320

Founding Member of The Canadian Coalition for Good Governance

Canadian offices: CALGARY • HALIFAX • OTTAWA • MONTREAL • TORONTO • VANCOUVER • WINNIPEG

U.S. offices: FT. LAUDERDALE • FORT LEE • LOS ANGELES • MIAMI • NEW YORK CITY • NORWALK • RANCHO CORDOVA • SALT LAKE CITY

SAN MATEO • SHORT HILLS • ST. PETERSBURG • WASHINGTON D.C.• WILLMINGTON

International offices: ABUDHABI • AMSTERDAM • BEIJING • BRUSSELS • BUENOS AIRES • CAPE TOWN • CARACAS CHENNAI • DUBAI • DUBLIN

EDINBURGH • FRANKFURT • GENEVA • HONG KONG • HYDERABAD • ISTANBUL• JOHANNESBURG • LONDON • LUXEMBOURG

MADRID • MELBOURNE • MEXICO CITY • MILAN • MOSCOW • MUMBAI • NASSAU • PARIS • POZNAN • RIO DE JANEIRO

SAO PAULO • SEOUL • SHANGHAI • SINGAPORE • STOCKHOLM • SYDNEY • TAIPEI • TOKYO • VIENNA • WARSAW • ZURICH

NYSE: BEN

Fiduciary Trust Company of Canada is a wholly owned subsidiary of Franklin Templeton Investments Corp.

Documents

Building An Ideal Client Experience - CIFPs · •Do you consider yourself to be a client-centered advisor or an investment-centered advisor? Sharing Your Best Practices . 13 For