Optimizing the Advisor’s Client Book

Optimizing the Advisor’s Client Book

 

Investment services directors in financial institutions have been trying to winnow the client books of advisors with bloated books. But what is the optimum number of clients for an advisor?  Clearly that depends on the investable assets of those clients and the wallet share the advisor has captured, among other factors.

In 2017, in a study sponsored by LPL, Kehrer Bielan estimated the number of clients that maximized an advisor’s production based on the share of revenue that is derived from advisory business, controlling for other factors that affect the advisor’s production—client investable assets, AUM, deposit territory, wallet share, and advisor tenure.  These estimates were based on multivariate analysis of data on 1213 individual advisors in 118 LPL partner institutions.

Since that study, Kehrer Bielan has expanded that database to include 2,884 advisors from 162 institutions, including larger bank-owned broker dealers and banks and credit unions that partner with other third-party broker dealers.  And the data on the individual advisors has been broadened to include access to sales assistants, financial planning activity, whether the advisor is part of a team, and whether the advisor operates in a second story environment.

Kehrer Bielan is seeking a sponsor for research that revisits the question of the optimal number of clients an advisor should serve. This research will:

  • Consider other objectives beyond maximizing gross revenue, e.g., growing AUM or advisory revenue
  • Take into account additional factors not available for the 2017 study
  • Provide guidance to investment services directors on how to target the optimum size of an advisor’s book based on multiple factors, not just advisory revenue
  • Be more representative of the broad financial institution financial advice community.

Sponsorship fee:  $25,000