Are you confident that you are attracting the greatest level of profitability possible? If you feel there is room for improvement, I invite you to consider your client tier structure and something I call a “revenue pyramid.” I will cover how to create and think through a tier structure first, and in my next blog post I will cover how to use your tier structure to support your desired revenue by using your revenue pyramid.

The process of creating a tier structure will support you to strategically and consciously choose the tier (or tiers) of service that you would like to offer. For those of you who have felt overwhelmed by trying to deliver the same level of service to all of your clients regardless of the revenue their accounts generate, this process will shed some light on how you might differentiate your service model and make sure it supports you in growing your business while conserving your time.

Let’s start with your top tier clients.

First, write a complete list of all of the services that you offer your top tier clients. Include everything in your highest tier of service that your clients need to fulfill their goals. Also consider any extra items (services or extra client support) that you’d like to include for your top tier clients.

Here is an example of what your list of services for your top clients might look like:

• A customized financial plan
• Portfolio analysis and recommended changes to support goal fulfillment
• Ongoing portfolio monitoring
• Tax planning support
• Income distribution
• Estate planning input
• Meetings with client’s other professional advisors – such as CPAs, estate planning attorneys, or tax attorneys
• Quarterly reviews

Your top tier clients have more to manage so naturally they will need more of your time. However, you must set up your lower tiers so that you are delivering what they need to achieve their goals as well.

Now determine at what investment level your clients will need to be in order to be one of your top tier clients and benefit from all that you offer. For example, for many advisors their top tier clients have investable assets at the $1MM+ level; for others it is at $500k-1MM; for others $250k-$500k. (Typically the top tier doesn’t go below $100k.)

Now for the next step, decide how many other levels of service you want to offer your clients. Are you only going to accept top tier clients and offer one level of service? Or would you like to offer a second or third tier as well? Most of the financial services professionals that I work with have 2 or 3 tiers of service. With that in mind, let’s now create the second tier in your revenue pyramid.

What is the range of investment that you would like to use for your second tier of service? It might be at $500k, $250k, or $100k. To help you define your second tier of offerings, consider what you will remove from your top tier list of services. For example, the quarterly meetings offered for the first tier may be annual reviews only in the second.

Next, create your third tier of services. What is the range of investment tier for this group? Given that revenue level, what would make sense to remove or adjust from what you included for the second tier group?

For example, with the tax and financial advisory practice example, perhaps you remove the savings for tax preparation altogether. They can absolutely still have you prepare their taxes, however they would pay full price for the add-on in this tier. They can have you create a financial plan although again, they would pay full price. You can meet with their other service professionals as well, like tax or estate planning attorneys, however they would pay your hourly rate for you to attend these meetings. Your fee would not be automatically included in this tier’s services.

I recommend keeping all of your services on one list so that your clients can see everything that you offer; this is a great sales tool. For example, for those who have a tax and financial advisory practice, you might include tax services in your first tier. For your second tier clients, you could offer savings on the hourly rate that you might typically charge for the service. The third tier would pay your hourly rate for the service with no savings. Make sure to clarify the regular fee as well as the discounted fee so that clients are aware of the savings they receive at different levels of service.

Once your tier structure is complete the next step will be to use it to create your revenue pyramid, which I will cover in my next blog post.

If you have any questions or feel your financial services planning business could benefit from support from an expert business coach, reach out to me today: susan@susandanzig.com