Episode 0.3 : 10/03/2016

Focus on quality clients

Steve Moore

President, Moore Solutions


Matt Smith
Managing Director
BMO Global Asset Management

Ben D. Jones
Managing Director – Intermediary Distribution
BMO Global Asset Management

Let's keep the conversation going.

Thank you!

Thank you for your interest. We look forward to helping enhance your client conversations.

Thank you!

Thank you for your interest. We look forward to helping enhance your client conversations.

Start a Conversation

Want to submit feedback, suggest a topic, or just get in touch?

Contact Us

Miniseries episode 3:
Focus on quality clients

In part 3 of our miniseries on building an effective practice, Steve Moore covers the second chapter of his book, Ineffective Habits of Financial Advisors and the Disciplines to Break Them, in which advisors must balance quality vs. quantity of clients. Matt Smith hosts a discussion on how to focus your work on quality clients, allowing you to become an expert in a concentrated demographic and to become an expert in serving those clients.

In this episode:

  • Focusing on quality instead of quantity
  • The advantages of focusing on a client type
  • How to narrow your demographic: occupation, age, and geography
  • Why you should work with an audience you enjoy
  • The challenge of changing your ways

Like what you hear?

Subscribe on iTunes, Google Play, Stitcher, or Spotify.

Ask a question or share your experiences with us



Steve Moore – The more you narrow on these three dimensions — first of all, the type of business or the community that you want to target, the geography that you want to target, and the age that you want to target — the more you narrow around those, the more they stand out to you.

Ben Jones – Welcome to Better conversations. Better outcomes. presented by BMO Global Asset Management.  I’m Ben Jones.

Matt Smith – And I’m Matt Smith.  In each episode we’ll explore topics relevant to today’s trusted advisors, interviewing experts and investigating the world of wealth advising from every angle.  We’ll also provide actionable ideas designed to improve outcomes for advisors and their clients.

Ben Jones – To learn more; visit us at bmogam.com/betterconversations.  Thanks for joining us.

Disclosure – The views expressed here are those of the participants and not those of BMO Global Asset Management, its affiliates, or subsidiaries.

Ben Jones – Today we’re bringing you the third installment of our miniseries, a series of conversations with Steve Moore, embedded within season one of Better conversations, Better outcomes.

Matt Smith – In this session we’re covering the second habit Steve helps advisors change, which is to stop focusing on the quantity of clients; Steve’s advice is to focus instead on the quality of each client.

Ben Jones – What exactly does it mean to focus on the quality of clients versus the quantity of clients?  There’s a lot of factors here, but the main one is to narrow your range of clients by focusing on a certain client type.  Whether that be clients in a specific industry, clients in a specific age group, or clients in a defined geographical area.

Matt Smith – Steve, a lot of the work in the early stages of coaching an advisor or an advisory team has to do with analyzing their book of business.  From there, then you help them create strategies on adjustments going forward.  What do you typically find in those early stages of your sessions, what do you typically find when you’re looking at an advisor’s book of business.

Steve Moore – It’s not just an advisor; this is an industry issue that people tend to sell to anybody that can fog a mirror.  I call it spray and pray.  When you do the analysis of it and you put the revenue by deciles for an advisor, you find that the bottom 20% of their book represents about 1% of revenue.  The bottom 50% is oftentimes 7% or 8%, maybe 10% of their total revenue.  Often in that same book, the top 20% is up to 80% of the revenue.  Certainly the top 30% is at least 70% of the typical advisor’s revenue.  That all just happens because that’s what they’re told to go do in the beginning, just sell to anybody.  Sell to family and friends and then to ask them for leads, and point them to the next people.  So they just grab anybody that they can grab.

Matt Smith – To be clear, in the early days of your career some of that is needed, right?  You don’t want to perpetuate it throughout your career, but sometimes young advisors have to do that.

Matt Smith – You have to survive.  But what will get you to a certain level will not get you to ultimately where you’d like to get.  So those habits are formed in those early stages, but then they just continue doing it.  I work with somebody who’s been in the business for 35 years, they’re still doing that.  They’re still selling to anybody who can fog a mirror.  This system’s generated — you know, Deming had a really interesting exercise.  Deming and a gentleman by the name of Girard are two engineers who turned the manufacturing sector, North American manufacturing sector into a war machine for World War II.  They did absolutely spectacular work, and Deming continued his work with business and industry up into his 90s.  He had this seminar where he would demonstrate why most of what is driven is by the system and not by the individuals.  So he brings people up on stage and he puts them into teams, two teams of say five, and he has this big vat of marbles, red and white.  He gives each team member a little what would look like a ping pong paddle with little undulations in it that would allow him to go into this big vat, jiggle it around, and come out and show what they came out with to an inspector.  Their job was to bring them red marbles, but there was always this blend of red and white marbles.  So they would go through each team two or three times and they’d measure it, and there’d always be this blend of red and white marbles.  He would say alright, this isn’t what I’m asking for.  I’m going to fire the two worse performers, because remember I want red marbles.  And they continue on, but nothing ever changes because the problem is in the mix.  So then they’d say, okay, I’m going to give a bonus to the best two performers; nothing ever changes.  That’s where he says that you have many willing workers, what you have are flawed systems, and that managers are responsible for the system.  When you look at the advisor after the advisor after the advisor, and there’s an 80/20 rule going on, you know that that’s the system that’s driving that and not the individual.

Matt Smith – There’s something about the system, right.  What you just talked about was analyzing from a quantitative standpoint, a book of business.  You also talk about and this podcast is focused on the chapter The Second Habit, Focus on Quality.  You also talk about how to develop a focus around a certain client type.  Can you talk to me about how you help advisors think about client type and getting focused?

Steve Moore – Sure.  So, one of the good things about spray and pray is that at least it gives you data against a big broad market as to what clients are attracted to and who has more money than others.  We asked people to plot on a reoccurring revenue and a reoccurring client chart where their client types actually fit.  You might have software engineers, you might have medical specialists, you might have small business owners.  You simply plot those, and inevitably what you’ll find is that there are some groups that produce more reoccurring revenue and more reoccurring revenue per client than others.  So that’s a pretty good indicator of what you’re naturally attracted to and who have money.  We do that exercise.

Matt Smith – You’re encouraging the advisor and their team to focus in on a certain client segment, and there’s certain criteria you need to look at when you come up with that client segment.  One of them you talk about is does it have an exciting financial opportunity.  Maybe this is what you were just talking about is some of those client types have more to invest or more wealth needs than others.

Steve Moore – And I think that’s where you start, is it a target market that has interesting money.  In our society, not everybody earns the same amount of money.  Medical specialists earn more than teachers.  Software engineers, particularly as they move up in an organization, they’re earning more money than police officers.  So one of the principles of a target market is to identify those markets that actually have some interesting money, people that can pay you well.  You can spend the same amount of time and earn four times more simply by targeting a market that has money.

Matt Smith – It’s more than just does that client type have more money than another.  There’s other advantages of this client focus.  For instance, you talk about is there a viral marketing opportunity.  When you have clients of similar type, then they talk to each other, and they have their own communities.  If you’re doing good work, it can spread.

Steve Moore – An example of that would be in my own life when I was doing my consulting up at Microsoft, I could walk in the building because I had a card key.  I’d go see the vice president that I was going to prepare to do a planning session for.  I’d bump into three or four people down the hall and I walk out of that what was supposed to be an hour meeting, turns out to an hour and a half because of my slow walk down the hall, and I walk out of there with another three months of work.  And everybody knew who I was because of the viral marketing that happened inside the building.

Matt Smith – What you were doing in those days, you had a very tight client type, client focus.  It was Microsoft and the projects who you were working with.  Essentially for years you kept that as your focus, and you kept getting work because of that viral marketing that was happening within that organization.

Steve Moore – Exactly.  And it would lead to my work in China and Malaysia and across the different organizations here in Redmond.  It spread down to Dallas where I did work with their main office down there.  So yes, that was all done as a result of viral marketing.

Matt Smith – Now advisors can do the same thing.  Maybe not so much a single company, although there are companies that are large enough and have a rich enough clientele that you can do that.  But you have examples of advisors you work with who might focus on an industry or a geographic focus.  Can you tell me an example of an advisor that had a very tight either industry or geographic focus.

Steve Moore – Well sure.  The first advisory team that I ever worked with was here in Seattle, he was a friend of mine.  They identified their target market as business executives at walking distance to their downtown office in Seattle and on Microsoft campus.  That was their target market, and they went from zero to $1B of assets under management in five years.

Matt Smith – There’s another example that I know you’ve told in the past where an advisor had a commute, and I can’t remember if it was a five or a six mile commute, but essentially from his house to his office.  At some point he decided my geographic focus is going to be any client that’s within one mile of that route between my house and my office.  That was his focus, and there’s — I think sometimes when advisors hear that you have to tighten your focus, they’re thinking they need to grow their practice, and if they tighten their focus, that’s going to cause them to have a smaller universe of opportunities.  But something else happens when you understand — let’s say, let’s take the geography for example, you understand the geography so well, you know where people go to church, you know where they shop.  You know the business owners in the area.  Essentially you become one of them, and that helps that viral marketing.

Steve Moore – Sure.  In fact the more you narrow on these three dimensions — first of all, the type of business or the community that you want to target, the geography that you want to target, and the age that you want to target.  The more you narrow around those, the more they stand out to you.  So if I asked you to close your eyes and think of the color green, you’d look around the — you would visualize looking around the room and you wouldn’t see a lot of green.  But then I’d ask you to open up your eyes and you’d see green there, and green there, and green there.  Once you’ve identified that you’re after green, green is everywhere.  The same with target marketing.  When you’re clear on the segment that you want to work on, you’re clear on the geography that you want to spend your time in, and you’re clear on the age group that you want to target, well then they start to jump out of the woodwork at you.

Matt Smith – So that’s your reticular activating system.

Steve Moore – Exactly.

Matt Smith – If you have it in your mind you’re focusing on medical professionals, then all of a sudden they’re popping out of the woodwork, you see them when you’re going to dinner, when you’re out in public, you’re picking up on this.

Steve Moore – Exactly, exactly Matt.

Matt Smith – Another aspect I’ve heard you talk about which might sound extreme, but when you think about it it makes a lot of sense, I’ve even heard of advisors who will — they’ll go to the conferences of that profession that they’re targeting.  For instance, if an advisor says I’m going to focus on hospital administrators and C Suite executives of hospitals, they go to hospital conventions.  They understand the business; they understand the trends, the threats, the opportunities of that industry.  Then when they’re talking to their clients, imagine what kind of an advantage you have when you’re sitting across the table and they start to realize that he or she, she’s one of us.

Steve Moore – That’s exactly the point.  If I were going to be in this business, what I would do, I would target attorneys.  The age group of attorneys would be over age 50 because those are the people that have the money.  And what I would be doing is I would be bringing in wealth management to those people, and my geographic focus would be the Columbia Tower in downtown Seattle.  If that were my target market, my attorneys over age 50 in the Columbia Tower, where do you think I should office.  Well, it would be the Columbia Tower.  Where would I have coffee in the morning, well it would be the Columbia Tower.  What periodicals would I read, what conferences would I go to, how would I dress?  Do you think that over time my language and my demeanor would better match the attorneys in the Columbia Tower?  Do you think I’d have access in the Columbia Tower?  Do you think I could create viral marketing in the Columbia Tower, word of mouth marketing?  You bet I could.  And what I would be bringing to them would be wealth management.  The reason I’d bring wealth management to that group of people is basically you’re going to earn three times more money.  The reason you earn three times more money is because you’re bringing more value to them.  There’s one thing that’s just wonderful about this world that sometimes there’s rules violated, but for the most part if you bring value to the world, it pays you back.

Matt Smith – It’s important to note that this isn’t just a theory you’ve come up with.  You’ve worked with advisory team after advisory team where they’ve done exactly this and had results.

Steve Moore – Matt, some of them will narrow only on the target market, only on the client type, and they do better.  Some will only focus on the age group and they’ll do better.  Somebody will focus on just the geography and they will do better, but the magic is if you actually get agreement on all three of those dimensions for your target market.

Matt Smith – And you recommend do something that you enjoy, right.  There are a lot of opportunities out there, find a group that you enjoy.  It has to be enjoyable work.

Steve Moore – Yes.  For example, I could not work with engineers.  Now software engineers, yes.  In fact, for whatever reason, software engineers like me.  But mechanical engineers are too “dot the i’s, cross the t’s”, too analytical for me to connect with viscerally.  That would not be a good match for me.  You want to spend your time — I would want to spend my time with people that you enjoy being with.  So yes, that’s a part of it.

Matt Smith – One last thing on this client type focus is as you’re developing, that you have to have an eye towards do I have the competency to focus on that group.  This is simple, if you don’t, then you can develop it.  Put a plan together to develop that competence.

Steve Moore – If you want to.  For example, that’s why I personally would not want to work with mechanical engineers.  It just doesn’t resonate with me and I don’t think that I would want to develop the competencies to communicate the way they’re comfortable with communicating.  So I’d pick an attorney category which would like to spar with me verbally, and I’d do pretty good with that, I’d enjoy working with them like that.  So if you choose to develop the competencies, awesome.  If you don’t, find another market.

Matt Smith – Well then tell me about an advisor you work with who’s really figured this out, an example of they’ve got the client segment thing figured out and has really did it right.

Steve Moore – Two come to mind.  One was — and this advisor was a kid.  When he started to think about who had money, he thought through and said well, it’s private jet plane owners.  So he moved his office out to the private air field outside of Denver, Colorado, and he hit the ball through the roof.  He was absolutely spectacular, and he organized himself all around speed.  Because people would walk through to the airport to their next plane ride and they were always in a hurry.  When they’d get off they were always in a hurry, and they’d stop by his office and he organized everything around speed, to the point where his client appreciation type events were bringing out hot cars to speed around the runway.  This kid just did spectacular.  Over time he started to develop the same look as the people that were getting on those airplanes, and he found out what they were most interested in.  He shaped himself to attract that audience, and he did.  Another one that was I thought really interesting, was an area outside of Toronto, and there’s this overall ecosystem that’s connected with the growers of flowers, the people that transport them, the people that sell them, and accountants, and everything in that entire ecosystem.  He targeted that as his marketplace and he was able to draw connections from one person to the next, get references from the next.  He was able to help the ecosystem do better work, and he had a ball getting it done.  There’s another guy also in Toronto that I thought he was very creative.  He loved to play.  He was a member of two or three tennis clubs; he was part of this downhill race club in the winter for skiing.  So his target market was those with the passion to play.  Once again, because that was his network, he enjoyed them and he had connections with them and because of viral marketing, his business grew dramatically very fast.

Matt Smith – Are you starting to see advisors in your sessions that are starting to get this that are doing more focusing or this is something that still is new to advisors that you work with.

Steve Moore – This is so contrary to where they’ve operated throughout their lives, that it is the single most difficult strategy that I try and help them embrace.

Matt Smith – Is that around this issue of they want to grow their practice, so they’re thinking bigger universe, not smaller, which is what you’re asking them to do.  How do you overcome that objection?

Steve Moore – The best I can is through data.  Once they collect the data around that market opportunity, they’re more likely to stay in that market opportunity.  So if they decide to target medical specialists in a particular set of zip codes, we counsel them to query, use Dun and Bradstreet or there’s a number of ways to query to find the actual number of small businesses or mid-sized businesses for example in a particular geography.  One of the things that really causes them to stay there is once they understand how big it is — I mean, there’s 1,500 of them, and I only have two of them in my book of business.  Will 1,500 of them keep me busy for the rest of my life, absolutely it would.  Once they understand the size of that opportunity, they’re more willing to stay in there.  But once again, this is one of the most difficult ones I have to help people implement.  They just are reluctant to narrow.

Matt Smith – You’re giving this advice to move towards wealth management.  You and I have been working together for many, many years, and I think in the early days this was something that you had to explain a lot and it was new.  But now we’re at least a couple of decades into it.  Is there still a lot of missionary work to do on this topic?

Steve Moore – Matt, this industry is the slowest moving industry that I’ve ever been in.  I’ve not been everywhere, but I’ve been lots of places.  This industry is stuck.  People are doing much the same work that they were doing 25 years ago.

Matt Smith – Why do you think that is?

Steve Moore – I think there’s a lot of money.  I think people can earn a decent living and be mediocre.  I think that’s why.

Matt Smith – At some point when you get your client focus right, you need to disengage, and sometimes that’s around client size.  Steve, why do you think it’s so difficult to get advisors to change their ways?

Steve Moore – It’s so contrary to the way they’ve behaved for the last 25 years.  They walk out of the room with every intent to do something about it, and they don’t.

Matt Smith – I see.

Steve Moore – What you do around target marketing and strategic focus, the payback isn’t next month or even at the end of the year.  I suddenly organize myself so that over — the payback is a year out, it’s two years out.  Have you ever seen the exercise, the marshmallow exercise?

Matt Smith – With the kids.

Steve Moore – The kids, right.  Where you can have this marshmallow now, but if you can wait five minutes, you can have two, and kids can’t do it.  Well, advisors can’t do it.  It’s immediate gratification has been their whole reward system.  So something that takes an extended period of time to have a payback, it’s kind of backseat, it’s kind of something I’m going to get around to.

Matt Smith – The way you work with advisors, you have these in-person group sessions where you’re talking about certain content.  You’re taking them through all of these steps, and then in between those face-to-face meetings, there’s maybe two to three months where then you’re doing coaching calls.  I’d be interested in your thoughts when you’re doing those calls, do you know which of the areas are going to be the hardest to get your advisors over.

Steve Moore – I do, I do, and it’s the things that are so dramatically different, and strategic focus being one.  They go back to work and their phone is ringing, there are e-mails coming in.  The capital markets insights stuff is filling their mailbox for them to read.  All of a sudden, that idea of how are we going to organize ourselves to go over medical specialists just falls by the wayside.  Now, those that have the discipline and the maturity to delay gratification, those that have the longer-term view of what it is that they want to build, they’re the ones that have the traction around target markets, around strategic focus.

Matt Smith – So part of that is when they’ve come up with this client focus and the phone rings two days later, and it’s somebody outside that target, they — if they’re going to focus on that client type, they have to say no.  Is that what you’re suggesting to them?

Steve Moore – The common sense principle has to prevail.  The group that I had mentioned that targeted business executives walking down — distance of their downtown office in Seattle and on Microsoft campus, when they began they would have gone to Portland for a $3M AUM opportunity.  Ask them if they’ll do that today.  It’s situational.  You have to apply the common sense principle.  You’re still going to go grab low-hanging fruit as long as it’s tantalizing enough, and the more traction that you get in your target market, the more tantalizing that low-hanging fruit needs to be before you go out of your way at all to grab it.

Matt Smith – I would imagine once the first time that that clicks where you get a referral from somebody inside that target, I’ve got to believe that that builds efficacy with that advisor and just energizes them more to stay on that track.

Steve Moore – It’s that, that piece there, and when they recognize the amount of revenue opportunity around that particular one, and how they’re actual getting traction on improving the reoccurring revenue.

Ben Jones – As Steve mentions, the idea of putting such narrow constraints on your business can be quite challenging, but it not only helps your demographics learn more about you via word of mouth, it also puts you into the mindset of your chosen client type.  This will only help you become better at advising your ideal client.  Many thanks to Steve Moore for lending his time and insight to the show.  Our production team includes Pat Bordak, Gail Gibson, Matt Perry, and the team at Freedom Podcasting.

Ben Jones – As mentioned during our previous episodes, we are rewarding some of our early supporters with a copy of Steve Moore’s book “Ineffective Habits of Financial Advisors and the Disciplines to Break Them.” We have randomly selected 3 usernames from the reviews received on iTunes. The winners are: KSMnfn16; VerociousV; FinanceGuy2016. That’s KSMnfn16 VerociousV; FinanceGuy2016. To claim your prize, please email your shipping information to betterconversations@bmo.com.  Thanks so much for your support and your comments!  

Thanks for listening to better conversations, better outcomes.  This podcast is presented by BMO Global Asset Management.  To learn more about what BMO can do for you, go to bmogam.com/betterconversations.

Matt Smith – We hope you found something of value in today’s episode, and if you did, we encourage you to subscribe to the show and leave us a rating and review on iTunes.  Of course, the greatest compliment of all is if you tell your friends and coworkers to tune in.  Until next time, I’m Matt Smith.

Ben Jones – And I’m Ben Jones.  From all of us at BMO Global Asset Management, hoping you have a productive and wonderful week.

Disclosure – The views expressed here are those of the participants and not those of BMO Global Asset Management, its affiliates, or subsidiaries.  This is not intended to serve as a complete analysis of every material factor regarding any company, industry, or security.  This presentation may contain forward looking statements.  Investors are cautioned not to place undue reliance on such statements as actual results may vary.  This presentation is for general information purposes only and does not constitute investment advice, and is not intended as an endorsement of any specific investment product or service.  Individual investors should consult with an investment professional about their personal situation.  Past performance of is not indicative of future results.  BMO Asset Management Corp is the investment advisor to the BMO Funds.  BMO Investment Distributors, LLC, is the distributor.  Member FINRA SIPC.  BMO Asset Management Corp and BMO Investment Distributors are affiliated companies.  Further information can be found at www.bmo.com.


Related Podcasts

Notice to Canadian Residents: The information on this podcast series is not intended to be construed as an offer to sell, or a solicitation to buy or sell any products or services of any kind whatsoever including, without limitation, securities or any other financial instruments in Canada.

You are now leaving the BMO Global Asset Management web site:

The link you have selected is located on another web site. Please click OK below to leave the BMO Global Asset Management site and proceed to the selected site. BMO Global Asset Management takes no responsibility for the accuracy or factual correctness of any information posted to third party web sites.

Thank you for your interest in BMO Global Asset Management.

You are now leaving the BMO Global Asset Management web site:

The link you have selected is located on another web site. Please click OK below to leave the BMO Global Asset Management site and proceed to the selected site. BMO Global Asset Management takes no responsibility for the accuracy or factual correctness of any information posted to third party web sites.

Thank you for your interest in BMO Global Asset Management.

You are now leaving the BMO Global Asset Management web site:

The link you have selected is located on another web site. Please click OK below to leave the BMO Global Asset Management site and proceed to the selected site. BMO Global Asset Management takes no responsibility for the accuracy or factual correctness of any information posted to third party web sites.

Thank you for your interest in BMO Global Asset Management.

You are now leaving the BMO Global Asset Management web site:

The link you have selected is located on another web site. Please click OK below to leave the BMO Global Asset Management site and proceed to the selected site. BMO Global Asset Management takes no responsibility for the accuracy or factual correctness of any information posted to third party web sites.

Thank you for your interest in BMO Global Asset Management.