How can financial advisors grow their share of wallet from existing clients

Mar 27, 2015 / Dwaipayan Bose | 195 Downloaded |  12987 Viewed | | | 3.5 |  16 votes | Rate this Article
Financial Advisory article in Advisorkhoj - How can financial advisors grow their share of wallet from existing clients
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One of the biggest challenges that many financial advisors face, is seeing revenues plateau off after an initial period of growth. The most obvious response is to look for new clients, but it is easier said than done. Independent financial advisors today are faced with a multitude of competitive forces ranging from other financial advisors to wealth management channels of large banks to direct channels of mutual fund houses and also online portals pushing financial products. One of the ways to overcome this challenge is to get a bigger share of the wallet from existing customers, while continuously looking for opportunities to expand the client base. Getting a greater share of wallet from the existing customers has a significant business potential for the following reasons:-

  • Equity investment is still a very small proportion of the total savings and investment corpus of the average Indian investor

  • Majority of Indians are underinsured as far as life insurance is concerned. Insurance buyers often do not buy the right life insurance product

  • Majority of Indians do not have adequate health insurance or Mediclaim. Additional tax benefits have been announced for Mediclaim premium under Section 80D of IT Act in this Budget

  • The increase in 80C tax saving investment limit from 1 lac to 1.5 lacs announced in last year’s budget, provides an opportunity to get a bigger share of the client’s wallet towards tax savings schemes

  • Additional 50,000 tax savings over and above the 1.5 lacs 80C limit was announced in this Budget for investments in the National Pension Sche

Deepen engagement with Clients

To grow their share of wallet from existing customers, financial advisors need to deepen their engagement with their customers. With the proliferation of digital technology and the internet, information is available today on the fingertips of the investors. Therefore, financial advisors need to keep themselves updated about the market and the industry, more than even before. Financial advisors should segment their clients by age groups, income levels and financial awareness levels to customize their engagement with them. The mode of engagement also has to be tailored as per the client’s preference. Some clients prefer face to face meeting, while others prefer communication over the phone or emails. It is often seen that financial advisor communicate with their clients only when they are doing a sales call or fulfilling a service request. This does not necessarily deepen the engagement with a client. An excellent way to deepen engagement with clients is to conduct regular portfolio reviews. A survey of under 50 high net worth wealth management clients in the US has shown that these clients prefer to have weekly or monthly review meetings with their financial advisors. While engagement needs differ from customer to customer, financial advisors need to figure out what works best for their customer. The primary objective of portfolio review meetings should be to review the portfolio performance and progress against different financial goals set by the client. Financial advisors should not deviate from this primary objective. They should also use these meetings to gather more information from the client, so that they can provide more holistic financial advice to clients factoring in income and expenses, assets and liabilities, tax situation and other considerations. Financial advisors can ask for more business from their clients in these meetings only if it relates to the primary objective of the meeting, which is to review progress against the financial goals of the client.

End to end servicing for the client’s entire portfolio

Financial advisors can offer end to end servicing of the client’s entire portfolio holding, irrespective of whether the client did the transaction with the financial advisor or through some other intermediary / broker. At the beginning this may be too much effort with no tangible gains and therefore financial advisors should exercise their judgement in offering this service to their clients. But this offering definitely has benefits for both the client and also the financial advisors. Mutual fund advisors can offer to service the entire mutual fund portfolio of a client and then gradually expand to life insurance policies, fixed deposits, post office savings, equity holding (Depositary Participant Holding), home loan etc. Advisors can take advantage of several online resources available in the market. Some of these online resources are available free of cost, while others are available for a fee. Servicing the entire portfolio of a client, not only deepens the client advisor relationship, but also provides insights into liquidity events. Liquidity events are situations when the client has additional liquidity or investible cash. Examples of liquidity events are maturity of life insurance policies, fixed deposits, national savings certificates, close ended mutual funds, debentures, sale of a large block of shares, house etc. Financial advisors need to be focused on capturing a portion of the proceeds from these liquidity events to grow their share of wallet.

Develop expertise in multiple product classes

Financial advisors should build expertise in multiple product classes, to expand their scope of financial advisory to their clients. For example, insurance advisors can broaden their advisory scope to mutual funds and other investment products. Getting additional professional certifications like IRDA certification, AMFI certification, Certified Financial Planners (CFP) etc is always helpful in expanding your financial advisory business. Even if financial advisors do not sell a particular product class, building knowledge across multiple product classes is always useful because they can help their clients make the correct financial decision and in turn expand their share of wallet. For example, a mutual fund advisor with life insurance expertise can help their clients buy adequate life cover through term plans and in turn get a bigger share of their client’s wallet for mutual fund investments that may have otherwise gone into paying premiums of life insurance investment plans. Financial advisors can also diversify into alternative asset classes, e.g. real estate. However, financial advisors should always ensure that focus on multiple fronts should not take away their focus from the core business.

Build Income Tax Knowledge

Though tax advisory and IT returns filing typically falls in the realm of Chartered Accountants, tax knowledge can be very beneficial for financial advisors in growing their share of wallet from existing customers. Tax knowledge should go beyond the provisions of Section 80C of Income Tax Act, which most financial advisors are familiar with. Financial advisors should be able to provide tax related guidance with regards to multiple asset classes and help their clients make the most tax efficient investment decisions. This not only will help financial advisors build more credibility with their clients but it also can help financial advisors get more business from their clients.

Financial advisors should build a differentiated offering and brand

While all the above strategies are enabling mechanisms for financial advisors to grow their share of wallets from existing clients, financial advisors should ask themselves one fundamental question for these strategies to work. Why should a client do business with him or her and not with another financial advisor or other wealth management channels? What are the key differentiating attributes and offerings that make it beneficial for the client to do business with a financial advisor? Financial advisors should think about these attributes, not from his or her perspective, but from the client’s perspective. The advisor should not only be able to communicate these attributes very clearly but more importantly, they should ensure that the client experiences them in each and every interaction.


Once they reach a critical mass, financial advisors should prioritize client retention and growing their share of wallet from existing customers to acquiring new customers. In fact, a great by-product of client retention and consolidation is getting client referrals, which can help advisors further expand their business.

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