How Advisors Can Increase Retention with the 80/20 Rule


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When you work in financial services, it can be extremely difficult to juggle all of your responsibilities at once.

To keep your business afloat, you need to work to attract new prospects while frequently touching base with existing customers—not to mention all the hard work you put into actually managing wealth.

On top of all of this, you need to take great pains not to run afoul of compliance, which can feel like a full-time job in itself.

Given that there are only so much hours in the day—and all the hoops you need to jump through to keep things running smoothly—how do you find time to maintain solid, personal relationships with your most valued clients?

Simply put: you show commitment to their well-being. Yes, that means investing their money wisely and giving them sound financial advice. But you can increase trust even more by communicating regularly with your clients and following the 80/20 rule.

What’s the 80/20 rule?

The 80/20 rule (also referred to as the Pareto principle) is the idea that 80 percent of results are driven by 20 percent of causes. For example, 80 percent of your business comes from 20 percent of your clients. By focusing more on those clients, you can increase your profits. This principle extends to other areas, as well—including marketing and client communications.

How does the 80/20 rule affect client communications?

When applied to client communications (e.g. email, phone calls, social media), the 80/20 rule dictates that you should give more than you ask for. In other words, you want to reserve 20 percent of your communications for conducting business, while the other 80 percent should be about building trust and offering value to your clients.

This might sound counterintuitive, at first. After all, your clients are looking to you for financial advice. Shouldn’t you be talking about their investments more often than not?

While you certainly should be as transparent as possible when it comes to your client’s portfolio, it’s a mistake to only talk to them about your business transactions. At the end of the day, they’re entrusting you with their financial well-being. You need to earn that trust by not only investing their money wisely, but also connecting with them on a human level.

Connect meaningfully with your clients.

Ideally, you want to get in some regular facetime with your clients. Taking someone out for a meal or to a sporting event can go a long way in building rapport and increasing customer loyalty. Of course, both you and your clients have busy schedules, and connecting in person isn’t always possible.

That’s where 80/20 comes in. You’re probably already using methods like email or social media to stay in touch with your clients. There might be temptation to only use these platforms to share general financial industry news or other things that relate in some way to your business. You should resist that urge.

Focusing entirely on financial matters is a bad idea for multiple reasons. For one, your clients likely aren’t thinking about their money 24/7. They have other interests and other desires, with money as more of a means to an end. When you focus only on business, you’re missing out on valuable opportunities to connect over other topics.

Download a PDF sample of American Lifestyle to stay in touch with past clients.

Then there’s the fact that every piece of marketing you put out into the world is subject to intense regulatory scrutiny. Instead of struggling with compliance issues, why not consider offering up value that isn’t directly related to finance

You can show commitment to your clients’ overall well-being by sharing some of the following:

While these things won’t necessarily bring you more business in the short term, they will help keep you top of mind with your clients by reminding them of the value you add to their lives. This also increases the likelihood that your clients will think of you when the opportunity arises to give a referral.

Most important of all, your obvious commitment to your clients will go a long way should things go awry with their investments.

While you obviously can’t afford to make repeated, expensive mistakes with your clients’ money, the reality is that not every investment will be a winner. Your clients are much more likely to be sympathetic to occasional misfires when you’ve established a close, trusting relationship built on regular connection and exceptional value. Rather than submitting an ACATS request, it’s more likely they’ll consider this situation a fluke—knowing, based on your track record and regular communications, that you’ve got their best interests at heart.

To learn more about how you can use the 80/20 Rule to improve the efficiency of your business and increase your revenue, check out Perry Marshall’s appearance on our weekly sales and marketing podcast, Stay Paid.

Listen here:

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