Why Jerry Maguire is Wrong

“And suddenly it was all pretty clear. The answer was fewer clients.” — Jerry Maguire

Translation: “I’m abandoning the people who need me the most for the clients who can afford to pay a lot for my time.”

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 Some advisors would agree, finding the logic simple and obvious:

My business is dependent on heavy personal contact, so I can’t just keep bringing in more and more clients. Therefore to make more money I have to replace my current clients with wealthier clients.

It’s also a lifestyle choice that reflects what you want to get back emotionally: staying in close personal contact with a smaller number of clients is personally satisfying.

I’m not going to argue that this is a wrong choice, but I will argue it’s not the only choice. And there are broader implications that you should think about in terms of the impact on the profession and for society as a whole: middle-income and mass-affluent clients will continue to lose good advisors to wealthier people.

It doesn’t need to be that way.

You can build a business to serve any client segment you choose. But you need to check your assumptions at the door. Particularly ones like “we meet with every client, every quarter” or “we have one deep planning process we use for every client”. If you drop these assumptions, you wind up with substantially more flexibility in serving clients to meet their needs. That opens up the potential to serve more clients well.

However, that’s just the potential. To actually do it requires a different way of organizing your business: one-size-fits-all technology and business processes don’t work any better for advisory practices than a one-size-fits-all planning process works for your clients. Make no mistake, it can be done.

Figuring this out starts by answering simple questions: Why did you get into this business? Who do you want to help? Once you know that, build your business to support that goal. If you want to serve the mass-affluent, design your business model to work for that client segment and do the work to document and test it.

The reason so many advisors struggle is a mismatch of service model, value proposition and client segment: a broken business model. And they assume their business model can’t change — so instead they change clients to those who can support that model. But those clients are often not the ones that motivate you, the ones you wanted to help when you got into the business.

The way you do business isn’t etched in stone, but it’s easy assume there’s only one model for being an advisor. Don’t. Almost anything is possible with clear thinking and a willingness to let facts guide you. The sooner you start to align the parts of your business model, the sooner you’ll begin seeing results.

Jerry Maguire was wrong about needing to have fewer, wealthier clients. But he was right that he could change the way he did business. You can too.

 

So how do you get started? How do you rethink your business model without spinning your wheels for hours? How do you avoid making changes that don’t really address the problem? In coming posts we’ll talk about designing a scalable advisory practice business model and avoiding common traps.

For now: what do you think? Why did you get into the business? Who are you working to serve? And what things have you done to make your practice scalable?



John Prendergast John Prendergast is the co-founder and CEO of Blueleaf. He serves on the board of WiredTiger, a developer cloud optimized databases. He is also the founder and organizer of the Lean Startup Circle Boston. In addition to his decade and a half as an entrepreneur, John spent nearly a decade as an investment banker and financial advisor.

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