The Practice Doctor is In: Cleaning House

Al Depman , CLU, ChFC, CMFC, BH

In the February newsletter we examined which clients belonged in different segments, from AAA to D. This prompted an email from Chris J. in St. Paul , MN :

“Practice Doc: I recently segmented my client base, which after 15 years has grown to 800. Half of those are reassigned orphans, so needless to say I have a major concentration of “C” clients. Is there a way to sort through them to determine if any of them might have some potential? It’s daunting, to say the least. I have an assistant, Lisa, who might be able to handle this. Thoughts? Thanks, Chris.”

Chris, your problem is a normal one, especially if you’ve been collecting orphans. Generally, they are orphans for a reason – no one sees much potential in them.

Common wisdom for accumulating orphans is the “you never know/diamond in the rough” mindset. We’ve all heard about that one “orphan who led to a million dollars in business. ” But my research has overwhelmingly shown that the time an advisor spends looking for this one million-dollar orphan would be more productively spent with a Center of Influence gathering targeted names. Targeted names are much more likely to result in meaningful results than sifting through orphans.

That said, there are a number of successful advisors who are mining their orphan book in a systematic, focused method. While secondary to that of the advisor’s active client base and other client acquisition systems, mining your orphan prospects can be a significant undertaking.

What’s the secret? Having a system.

As Chris indicated in his email, the orphan portion of his clientele is a large one. He is generating income from having all of those clients under his contract number, so his objectives in setting up an orphan contact system are:

• Identify the clients that have the potential to develop into a long-term and profitable relationship
• Keep business on the books to preserve income

The system requires a dedicated person, such as the assistant that Chris mentioned. She can comb through the client base with a two part approach in mind:

• Place an initial call to set up a telephone interview
• Conduct a 15 minute phone interview with the orphaned client to assess his or her potential

If you have 400 of these orphaned clients, breaking them out into monthly or weekly goals would make sense. This can be determined by date of birth, review date (6 months after the birthday), or other criteria. Four hundred names would translate into 33 a month over the course of a year or about one per day—certainly manageable. Multiple family members might be all part of one client contact.

The initial call’s purpose is to set up a 15 minute interview with the client. After the normal pleasantries, the call might go something like this:  

“This is Lisa from Chris J’s office. We are in the process of upgrading our database and Chris has asked me to give you a call to schedule a time to verify some of the key information we have about you and your account.

Yes, in these transitions, information can sometimes get displaced, so we want to make sure your account is accurate and up-to-date.

At most, this will take fifteen minutes. What would be a good time for us to talk?”

Possible outcomes:  

• You (or your assistant) leave a message. This puts the ball in the client’s court. In this case, make a note to place one more phone call in two weeks before relegating them to permanent “C” status.
• There’s no answer. Verify the numbe r , if possible. Make a note to make one more phone in two weeks before relegating them to permanent “C” status.
• “I’m not interested.” In this case, your client is relegated to a permanent “C” status.
• “I’m not interested, but by the way, I have a service issue.” Note what the service issue is and pass it along to the proper channel.
• Your client begins to vent his frustrations about being an orphan. Patiently handle these points, being sure to write them down. Schedule the follow-up call to address these items.
• “Yes, let’s schedule that call.”
• “Yes, can we do it now?” Ask if you can call back shortly so you can assemble the necessary material.

The purpose of the client telephone interview (call number two) is to verify your client’s information to see if there is any potential to move the person out of a “C” classification. 

Before Making the Call:

• Review any case/file notes
• Review the client’s holdings and financial goals
• Have your checklist ready

Use this phone meeting checklist as a guide; adapt to your unique specifications.

After the phone conversation, review the following:

• Demographic and personal information updates and notes to be included in your database
• Anticipated revenue opportunities
• Client service requests/adjustments to be processed
• A review of the key points of the meeting so a summary letter and confirmation note can be sent to your client

The biggest single issue that arises with this approach is the service work it can generate. If Lisa is the person in Chris’s practice that handles service work, this could be overwhelming and may actually take a toll on productivity. If, however, there is a resource that Chris has access to that could handle the service work, that problem is mitigated.

If you have accepted orphans into your practice, you have an ethical responsibility to reach out to them with a system such as the one above. Document the non-responders, no answers and “not interested” clients for compliance purposes. As long as you make a good faith effort to contact these orphaned clients on a systematic basis, you’re doing your duty.

Can all this be done by mail? Of course. The best practice, however, is to have a proactive system in place versus a passive mail program.

Good luck cleaning house, Chris!

Send in your questions. Until next time….

The Practice Doctor is OUT.

Al Depman , CLU, ChFC, CMFC, BH, a.k.a. “The Practice Doctor”, is mitchanthony.com’s Business Practice Consultant. He is the creator of “The Practice Management Assessment” tool and materials and has authored numerous articles in professional publications on practice management. Al combined his Liberal Arts studies with 10 years of management experience with McDonald’s Corporation to enter the financial services world 22 years ago. Since then, Al has evolved from an MDRT-level sales rep into a full-time consultant specializing in helping others engineer their business practices to the next level. Contact him at al@mitchanthony.com .