How introducing automation to your advice business can improve the optimum number of clients

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By AdviceBridge

Following on from recent blogs about automation – what should and shouldn’t be automated and how to introduce automation to your clients – this month, read about how automation can affect the number of clients you can service.

Having too few clients is one problem, but too many clients can be equally problematic.

Historically, advisers with hundreds and hundreds of clients on their books were, more often than not, transaction facilitators. Instead of forming strong and profitable relationships with these so-called “clients”, and generating long-term profitable business, clients were likely to be relative strangers you executed business for on an irregular basis.

And that was fine.

But, if you want to build a loyal client base with people who will turn to you for expert advice and rely on you to take care of their financial lives, what is the optimum number of clients to aim for?

Where to start? Well, helpfully, there’s a thing called “Dunbar’s number”.

Dunbar’s number is a useful – but not perfect – guide

Robin Dunbar, a British anthropologist, studied the ratio between brain sizes and group sizes of non-human primates to discover the number of friends and acquaintances the average person can retain.

And, that number, according to Dunbar, is 150.

A BBC article explains that, “Dunbar concluded that the size, relative to the body, of the neocortex – the part of the brain associated with cognition and language – is linked to the size of a cohesive social group. This ratio limits how much complexity a social system can handle.”

When Dunbar and his colleagues applied this principle to humans, “including how big groups get before they split off or collapse. They found remarkable consistency around the number 150”.

This held true for early hunter-gatherer societies, as well as offices, communities, factories, 11th century English villages, and even Christmas card lists.

This knowledge helps to establish an upper limit for the number of meaningful contacts financial advisers might be able to maintain.

However, without some automation, the ideal number of clients is likely to be far lower than 150.

The problem of the law of diminishing returns

The law of diminishing returns is an economic principle that states that once an optimal level of capacity is reached, adding an additional factor will actually result in smaller increases in production.

For example, imagine a widget factory with a number of employees who are able to run the company at its optimum level. Recruiting more employees beyond this magic number will cause the factory to become less efficient and potentially reduce the efficiency of its widget-making process.

Apply this law to financial services and you can see how you would end up being less efficient by adding more clients.

And, if you become less efficient for each client, your client service levels will drop and cause the client experience to suffer. Basically, you’d create a domino effect of shoddy service.

This “level of capacity” varies between firms (and depends on a number of factors) but typically falls between 80 and 120.

Clients want more attention from their financial advisers

It’s also worth noting how clients’ expectations are changing – especially so in the last couple of years.

Research carried out by Qualtrics found that 10% of clients said they switched financial advisers in the past 10 years because of poor customer service. A further 10% said they switched advisers because of a lack of personalised attention.

Plus, a study from Frederick Reichheld of Bain & Company found that increasing retention rates by 5% increases profits by 25% to 95%.

So, finding the optimal number of clients can create a real win-win situation – happier clients and more profit for your business.

Embrace the Pareto Principle – the law of 80/20

Applied correctly, the 80/20 law can be a powerful business rule to apply. Most of us know the “Pareto Principle”, the rule that states “roughly 80% of consequences come from 20% of causes”.

For financial advice firms, the most important application of the 80/20 rule is that the majority of your profit comes from a small percent of clients.

Of course, actual numbers may vary. You won’t know what the ratio is until you evaluate your business, but when you do, you’ll probably find something similar.

When you analyse your business based on revenue generated per client, you’ll likely find the following things:

  • A small percentage of clients generate a disproportionately large amount of profit
  • A large percentage of clients generate a disproportionately small amount of profit
  • A small percentage of clients could even be costing you money.

Prior to sophisticated automation offering greater possibilities, the mission may have been to rid your business of the small percent of clients who cost you money.

But what about those clients generating the least amount of profit? Typically those that received a lower level of service than offered or overpaid to receive the service at all.

Automation can help make less profitable clients more viable

Automation can remove many of the manual, repetitive onboarding tasks, including things like the fact-find.

The time savings from automating the onboarding process can increase capacity for bringing more clients on board without compromising the quality of service you provide. In fact, it can increase the time or service level available.

What’s more, a good onboarding process offers fantastic opportunities to scale efficiently and profitably. In fact, AdviceBridge cuts the time spent on a new client down from the typical 25 to 30 hours to under 5 hours, including meetings.

This can significantly increase profitability by 100 or even 200%.

It’s not just about onboarding, AdviceBridge can also help speed up client reviews without compromising on service quality. The system can analyse and review the client’s holdings in seconds, instantly producing an annual review report, cutting hours from a review.

Further, the client can access their financial plan digitally, 24/7 through a “sandbox” environment, running their own scenarios or adaptations enabling them to instantly assess any changing circumstances. An additional benefit of this is that you’ll get an instant alert telling you about their actions from which you can choose to offer timely support and advice, which all builds greater association with your brand and service.

Finally, detailed management information captured and stored within the platform ensures your firm would be ready to provide information and data to the FCA. This robust, easy-to-access data will allow you to easily evidence analysis and outcomes of your monitoring and testing activity.

In short, integrating AdviceBridge into your business effectively increases the optimum number of clients you can service. Whether that’s 150, 200 or more, the system provides the ability for you to decide.

Get in touch

The AdviceBridge platform is designed to save you time and help your clients feel more engaged in their financial future. Find out more about our service and how we can help you and your clients by emailing us at, booking a demo, or calling 020 3925 3850.