Optimizing Advisor Performance: How to Determine the Optimal Branch Deposit Territory and Number of Clients (December 2018)


Many advisors in financial institutions have branch territories that include more banking customers than they can reach out to and have more investment clients than they can serve appropriately. Management would like to reduce the advisors’ branch assignments and trim the size of their books, so that they can focus on the higher value clients and prospects, develop deeper relationships, and increase wallet share. That would also create opportunities to hire additional advisors to cover the branches and clients divested by current advisors.

But advisors balk at the suggestion that they abandon hard won clients, and see their existing branch assignments as an opportunity, not an obstacle.

To help management resolve this standoff, Kehrer Bielan and LPL Financial Institutions collaborated on a study to determine what size deposit territory and client book optimized advisor performance, employing advanced analytics on a database of 1.300 bank-based advisors. The research team found that the branch assignments and client book that resulted in the highest revenue depended on the advisor’s:

  • Rate of return on assets (ROA);
  • Wallet share (percent of clients’ investable assets);
  • Tenure; and especially
  • The share of revenue derived from advisory business.

This study helps advisors understand that less is more, and empowers management to create a virtuous circle where advisors focus on deepening client penetration, increasing the amount of advisory assets they administer, which enables them to shed additional branch territory and clients, freeing them for even deeper penetration. At the same time, management can continually add advisors, further increasing the firm’s penetration of the opportunity in the institution’s customer base.