When Less Is More: Defining Your Book Of Business

Defining book of business

One of the more difficult concepts for reps to grasp is that the growth of their book of business does not necessarily equal growth in their practice. In fact, in many cases, as their book grows, it can limit the growth of their practice and carry consequences for their clients.

Before we get into why, first you need to understand that your active book of business consists of two groups:

1) Clients who have bought something from you
2) Clients who have completed your fact-finder and have their information in your system

In other words, to be part of your book of business, they do not need to have purchased a product. Even the best of clients have different investment timelines. Sometimes it takes two or three years before they buy the first product from you and become a client.

Defining A Limit For Your Book Of Business

The controversial area is how many people can be handled in your book of business. I’ll start by telling you that the number is not black and white. Some argue that it’s 400, some say 450, and others might even say 500 if they want to be super active. I’ve met many successful reps that claim the number is 350. The bottom line is that it’s a definitive number, and a point of diminishing returns kicks in once you exceed that number.

Reps often cling to the security blanket that comes with large numbers. If they add a couple hundred people to their system, they can easily be in the range of 2,000+ clients after a quick 10 years in this business. When I meet reps who have thousands of clients in their system and I tell them they need to get rid of three-quarters of them, the reps are usually stunned.

The problem is that they have no systematic process of getting in front of those people on a regular basis. The law of large numbers sits in the backdrop for them to cherry pick month by month, year by year. They sift through the files to figure out who they want to call based on who they think is most likely to buy the next product from them.

This is not only a highly inefficient way to run a financial planning practice, in my humble opinion, it’s also not in the best interest of the client. That behavior simply indicates that your business centers on you, not the client.

It has to be a two-way street - a commitment from both the client and the financial rep. Both parties must meet on an annual basis and relentlessly pursue the promised land of financial security. This becomes a handholding journey filled with challenges, encouragement, and education—sometimes tears and hopefully joy. It means going all in on the mission of having long-lasting, intimate relationships with your clients as you guide them to financial freedom.

Now that your client number is limited, you must be selective. If your limit is 400 and you sign the 401st client, you need to get rid of one. When you possess that mentality, you become very selective as to who you let into your database.

The challenge is that you should also never stop growing. You’re either green and growing, or ripe and rotting. Therefore, once you get to your number—for now, let’s say 400—you want to add those you are excited about to your system, while subtracting those from the bottom who no longer measure up. The quantity never changes, but the quality, measured by net income, net worth, future potential and the caliber of the individual, always increases.

A Process For Bottom-Of-The-Funnel Clients

Often, reps of high integrity struggle with this because they feel they are breaking a promise made to their clients. They feel guilty about getting rid of the ones at the bottom of the funnel. Although this sounds noble, by failing to do so they are causing their clients a disservice without even knowing it.

While they haven’t physically deleted the files of those clients, they have gone years without calling them. When other financial advisors call on them, they’ll say, “I’ve already got a guy.” Thus, they are doing them harm by preventing them from meeting other people who will be more in tune to their needs. This is a disservice, and it must stop.

There are several ways to take care of people you’ve outgrown. One way is to establish relationships with junior reps who are often thrilled to take on these clients. Second, you can create a client resource center in your network office. There, you can turn over client files to a staff member who will service them according to their needs. The third alternative is to find a replacement rep.

Upon deciding to remove these clients from your system, send them a letter informing them that you made a commitment to them and, if they have any future service needs, you’ve made appropriate arrangements. Explain that your commitment to service needs will forever be taken care of but, at this point, you see no need to continuously meet. And, if they feel differently, they are welcome to contact you directly.

Most will not respond. Of the thousands of separation letters I’ve sent over the years, less than 4% called with hard feelings. Most are relieved due to lack of interest in pursuing further financial planning services.

A Mentality Of Abundance Vs. Scarcity

On a final note, it’s critically important that you carry the mentality of abundance, as opposed to one of scarcity. With the theory of scarcity, you’re desperate and feel the need to take anybody who will talk to you. The more, the merrier! This perspective brings a false sense of security and can limit your growth.

Instead, embrace a mentality of abundance! There are millions of people that you can reach, whether in a 50-mile radius of your home, or around the world. You can work globally via teleconferencing and videoconferencing. As a result, you must be highly selective as to whom you take as a client so you can go all in with each and every one of them.


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