$300K Additional Revenue: Advanced Planning Boosts Client Loyalty

$300K Additional Revenue: Advanced Planning Boosts Client Loyalty

Executive Summary

Legacy Bridge Advisors, a growing RIA firm managing over $250 million in assets, faced increasing client churn due to a lack of comprehensive advanced planning services. To combat this, they strategically expanded their offerings to include specialized tax and estate planning. This proactive approach not only generated an additional $300,000 in annual revenue but also improved client retention by 3%, demonstrating the significant impact of holistic financial planning on client loyalty and firm profitability.

The Challenge

Legacy Bridge Advisors prided itself on providing personalized financial advice and portfolio management services. However, in recent years, a concerning trend emerged: clients, particularly those with high net worth and complex financial situations, were increasingly seeking advanced planning services, such as sophisticated tax strategies and estate planning, from external providers.

This "leakage" presented a significant challenge to Legacy Bridge. Several factors contributed to this issue:

• Lost Revenue: Clients seeking advanced planning elsewhere represented a direct loss of potential revenue for Legacy Bridge. Management estimated that they were missing out on $200,000-$300,000 annually in planning fees.
• Client Churn: The firm noticed a slow but steady increase in client churn, especially among higher-value clients. Analysis revealed that 7% of clients with over $1 million in AUM left the firm in the past year, with a common reason cited being the lack of in-house advanced planning expertise. This compared to an average churn rate of 4% across all clients. Every lost client represented a significant AUM outflow.
• Competitive Disadvantage: Competing firms in the region had already begun offering comprehensive advanced planning services, putting Legacy Bridge at a disadvantage. The firm realized they needed to adapt to meet evolving client expectations.
• Client Frustration: Clients expressed frustration at having to coordinate their financial planning with multiple advisors. They wanted a single, trusted advisor who could handle all aspects of their financial life. One client, the owner of a successful manufacturing business, lamented, "I'm paying Legacy Bridge for financial expertise, but I still have to manage my tax and estate planning separately. It's time-consuming and inefficient."
• Increased Complexity: Regulatory changes and evolving tax laws were making financial planning increasingly complex. Clients needed expert guidance to navigate these challenges effectively. For example, recent changes to estate tax laws required proactive planning to minimize potential tax liabilities.

These challenges highlighted the critical need for Legacy Bridge to expand its service offerings and provide clients with a more comprehensive and integrated financial planning experience. Failure to do so would result in continued revenue loss, increased client churn, and a diminishing competitive position.

The Approach

Legacy Bridge adopted a multi-faceted approach to address the challenge and enhance their service offerings:

1. Needs Assessment: The firm began by conducting a comprehensive client needs assessment. Through surveys, one-on-one interviews, and data analysis, they identified the specific advanced planning services that were most in demand. The assessment revealed that tax planning and estate planning were the highest priorities for their client base. 85% of clients surveyed expressed interest in receiving tax planning services, and 70% expressed interest in estate planning.
2. Strategic Partnership: Rather than hiring in-house tax and estate planning specialists immediately (which would be costly and time-consuming), Legacy Bridge decided to strategically partner with established external firms specializing in these areas. They vetted several potential partners based on their expertise, reputation, and alignment with Legacy Bridge's client-centric philosophy. The selection process prioritized firms with a proven track record and a commitment to providing personalized service.
3. Integration & Training: Legacy Bridge invested in training its existing advisors on the basics of tax and estate planning. This training enabled advisors to identify client needs and effectively communicate the value of advanced planning services. They also developed streamlined processes for referring clients to the external partners. A dedicated point of contact was established within Legacy Bridge to manage the referral process and ensure seamless communication between the client, the advisor, and the external specialist.
4. Service Package Development: Based on the needs assessment and partner capabilities, Legacy Bridge developed a suite of advanced planning service packages tailored to different client segments. These packages included varying levels of tax planning, estate planning, and wealth transfer strategies. Pricing was structured to be competitive yet profitable. Packages ranged from basic tax preparation and review to comprehensive estate planning with trust creation and asset protection strategies. The firm offered an "Advanced Planning Consultation" as a complimentary service to all clients, designed to identify planning opportunities.
5. Marketing & Communication: Legacy Bridge launched a marketing campaign to inform clients about the expanded service offerings. The campaign included email newsletters, website updates, and one-on-one meetings with advisors. The messaging focused on the benefits of comprehensive financial planning and the convenience of having all services managed under one roof. They emphasized how advanced planning could help clients minimize taxes, protect their assets, and achieve their long-term financial goals.
6. Ongoing Monitoring & Improvement: Legacy Bridge implemented a system to track the adoption rate of advanced planning services, client satisfaction, and revenue generated. They regularly reviewed these metrics to identify areas for improvement and ensure that the program was meeting its objectives. Feedback from clients and advisors was actively solicited and incorporated into the program's ongoing development.

Technical Implementation

The technical implementation focused on integrating the expertise of external specialists into Legacy Bridge's existing client management processes and reporting systems:

• CRM Integration: Legacy Bridge uses Salesforce as its CRM. They created custom fields within Salesforce to track client interest in advanced planning services, referral status, and the specific services provided by the external partners. This allowed them to easily monitor the program's progress and identify opportunities for cross-selling.
• Secure Document Sharing: To ensure the secure exchange of sensitive client information, Legacy Bridge implemented a secure document sharing platform. This platform allowed clients, advisors, and external specialists to securely upload and download documents related to tax and estate planning. The platform was compliant with all relevant privacy regulations.
• Financial Planning Software Integration: Legacy Bridge uses eMoney Advisor for financial planning. They worked with their eMoney Advisor representative to integrate advanced planning scenarios into client financial plans. This allowed advisors to demonstrate the potential impact of tax and estate planning strategies on clients' long-term financial outcomes. For example, they could model the impact of different estate tax strategies on wealth transfer to future generations.
• Tax Projection Modeling: The external tax specialists provided Legacy Bridge with access to advanced tax projection modeling tools. These tools allowed advisors to estimate clients' future tax liabilities and develop strategies to minimize their tax burden. The tools incorporated complex tax rules and regulations, allowing for accurate and sophisticated tax planning. For instance, advisors could model the impact of Roth conversions, charitable contributions, and other tax-advantaged strategies.
• Performance Reporting: Legacy Bridge updated its performance reporting system to include the financial benefits of advanced planning services. This included quantifying the tax savings achieved through tax planning and the estate tax avoided through estate planning. This allowed clients to see the tangible value of the advanced planning services they were receiving.
• Fee Calculation: The fee structure for advanced planning was tiered based on complexity, assets, and the specific specialists involved. Legacy Bridge implemented a clear and transparent fee schedule that was communicated to clients upfront. Fees were typically calculated as a percentage of assets under management (AUM) or as a fixed fee for specific services. The firm also used a "time and materials" model for complex planning projects.

Results & ROI

The implementation of advanced planning services yielded significant positive results for Legacy Bridge:

• Increased Revenue: The firm generated an additional $300,000 in revenue from advanced planning services within the first year. This revenue was derived from fees charged for tax planning, estate planning, and wealth transfer strategies. This represents a 12% increase in overall service revenue for the year.
• Reduced Client Churn: Client churn decreased by 3% overall. Critically, churn among clients with over $1 million in AUM dropped to 2%, indicating a significant improvement in retention among high-value clients.
• Increased AUM: While not directly attributable only to advanced planning, the enhanced client retention and positive word-of-mouth contributed to a 5% increase in overall assets under management (AUM), representing approximately $12.5 million in new AUM.
• Improved Client Satisfaction: Client satisfaction scores, as measured by the firm's annual client survey, increased by 15%. Clients specifically cited the convenience and value of having all their financial planning needs met by Legacy Bridge.
• Increased Advisor Productivity: By partnering with external specialists, Legacy Bridge advisors were able to focus on their core competencies of portfolio management and financial planning. This resulted in increased advisor productivity and improved client service. Advisors reported spending 20% less time on tasks related to tax and estate planning.
• Higher Client Engagement: Clients who engaged in advanced planning services were more likely to actively participate in the financial planning process and communicate with their advisors regularly. This increased engagement led to stronger client relationships and improved client outcomes.

In summary, the investment in advanced planning services delivered a strong return on investment (ROI) for Legacy Bridge, solidifying client relationships and driving significant revenue growth.

Key Takeaways

1. Clients Value Comprehensive Planning: Clients, especially high-net-worth individuals, increasingly demand comprehensive financial planning services that go beyond traditional investment management. Offering advanced planning services can significantly enhance client satisfaction and loyalty.
2. Strategic Partnerships Can Be Effective: Partnering with external specialists can be a cost-effective way to expand service offerings without the need for significant upfront investment. Careful vetting and integration are essential for success.
3. Technology Enables Integration: Technology plays a crucial role in integrating advanced planning services into existing client management processes. CRM, secure document sharing, and financial planning software are essential tools.
4. Communication is Key: Clear and consistent communication with clients about the value of advanced planning services is essential for driving adoption and achieving desired outcomes.
5. Measure and Adapt: Regularly monitor key metrics, such as client satisfaction, revenue, and churn, to identify areas for improvement and ensure that the advanced planning program is meeting its objectives.

About Golden Door Asset

Golden Door Asset builds AI-powered intelligence tools for RIAs. Our platform helps advisors identify client vulnerabilities and opportunities, providing personalized planning recommendations at scale. Visit our tools to see how we can help your practice.