Episode Transcript
The COO Roundtable
with Matt Sonnen
Episode 74 – The Importance of Client Segmentation
[00:00:00] Matt Sonnen: Welcome everyone to Episode 74 of The COO Roundtable. We're pausing from our normal interview format today, and I'm going to give a bit of a monologue on an important topic I recently wrote about in RIABiz.
[00:00:27] I think this topic is so important that I wanted to go into further detail here on the podcast about it, in addition to the article. We've done these monologue episodes at different inflection points, both in my career and in the industry. I spoke to all of you in Episode 52. When I first joined Coldstream, I wanted to explain how and why I had decided to go back into the COO role myself.
[00:00:49] And then I introduced The COO Society, our online training and community platform for COOs. We did that back in Episode 32. And then way back in February of 2020 with Episode 14, I wanted to pause our normal format and speak to RIA buyers. At the time I thought: too many buyers were simply focused on the economics of the deal and not focused enough on post-merger integration.
[00:01:13] So I spent Episode 52 talking about the fact that if your RIA is already struggling from a capacity, people, and technology perspective, and you can't support your own business's organic growth today, running out and acquiring another firm is not going to go well. Back in 2020, I thought that it was an important message for buyers to hear as we were just starting that - that streak of every single year we were breaking the previous year's record of M&A transactions in our industry. And it's still an important message for first-time buyers to hear, even now in 2025. So, if you are contemplating getting into the acquisition game, I'd recommend you go back and listen to that one.
[00:01:55] But today's topic is also focused on capacity and how to best scale your businesses. More from an organic than an inorganic perspective. To me, the primary function of a COO is to allocate resources, both between people and technology, across a growing client base in a way that allows every client to feel they're receiving white glove service.
[00:02:17] So, how do you have your 101st client feel as valued and as well taken care of as your very first client? And the answer to that conundrum lies in how closely your firm is adhering to your client segmentation process. And what I wrote about in RIABiz back on January 13th was the fact that many advisors and RIA owners are blowing up their client segmentation processes due to the fact that they have this misconstrued concept of the fiduciary duty in their own heads. The Investment Advisors Act of 1940; that's the federal law that states that wealth managers must prioritize their client's interests ahead of their own and avoid conflicts of interest that could impact the client's financial goals.
[00:02:59] So for example, an advisor can't recommend certain investment products that generate higher fees for themselves if those products aren't in the best interest of the client. Or another example, an advisor must disclose any financial relationship with the issuer of a product before recommending it to a client. And that guarantees transparency prior to the client's investment.
[00:03:21] And no one can argue with these policies and practices put in place to protect the client. Thankfully, whether mandated by regulation or not, most advisors in our industry do put their clients well-being ahead of their own. And as the growth of the RIA industry has shown, putting the client first is simply good business, because this is how you earn trust and build reputation as a client-first advisor.
[00:03:44] But unfortunately this principle has been misinterpreted and in many cases has led to unintended consequences that have hindered the effectiveness of client service and the profitability of RIA businesses. Somewhere along the way, fiduciary duty has evolved into this belief that if a particular service can be offered, it must be provided to all clients, regardless of their size or fee structure.
[00:04:09] This mindset can create a paradox where advisors feel compelled to extend complex and costly services to clients without ever contemplating the profitability of each relationship. And I'd been thinking about this for a while, but I truly felt that I was onto something when I mentioned this to an industry mentor of mine, and he agreed with my interpretation.
[00:04:30] And in his words, he said, "fiduciary has become synonymous with charity." And that kind of opened my eyes as, okay, I'm onto something if he agrees with me. And then I've also heard Fidelity say something similar. They've analyzed a firm's fee structure and the costs to serve clients. And I've heard them say, you know, you're running a nonprofit. They say you're working for free for these clients that you're over-servicing compared to the fees that they're paying you. I just think too many advisors and RIA owners are missing this important point.
[00:05:03] They think it would be evil and unfair for me to offer tax planning or offer complicated alternative investments that require all kinds of reporting nuances. It would be evil and unfair for me to offer that to some of my clients, but not all of my clients. I've heard firms for years - they'll say things like, you know, we don't offer alternative investments to clients with less than $5 million to invest with us. But then when you look across their book of business, somehow, you find there's all kinds of $2 1/2 and $3 million clients with alternative investments in their portfolios.
[00:05:36] And this means that the operations and performance reporting teams have to scramble to manually update performance reports ahead of every meeting with these clients, or the client service teams have to rush to locate the K-1s at the end of the year for each of these investments, and then coordinate the delivery to the clients' accountants.
[00:05:54] The advisors never think of the extra work involved with these investments. That additional work means your internal costs are going up for those clients. But no one seems to think of profitability. They only focus on the revenue side of the client equation. There's an old RIABiz article about client segmentation, and in that article, Brooke Southall wrote, "client segmentation is a controversial process that some RIAs have called cherry picking, cream skimming, counterproductive, or just plain mean," is what he wrote.
[00:06:26] And I think that meanness comes from the belief that only a money grubbing RIA that's thinking profits first and clients second would ever consider a client segmentation exercise. But in my mind, that just isn't true. While I applaud the intent behind this misconception, as it is driven by a client-first mentality, and again, we should all be focused on that, but I actually believe that client segmentation is about serving more clients and serving them better. I don't think this is a money grubbing exercise at all.
[00:06:56] As I stated earlier, with client segmentation, you're asking: how can our firm allocate its finite resources across an ever expanding client base in a way that every client feels they're receiving our best service? I just don't see anything wrong with this. And I think this should be front of mind for RIAs. At the end of the day, you're running a business. And if you continue to add more clients and you aren't thoughtful about your service offering and the manner in which you're delivering those services, you're going to need to hire more and more people, which is going to eat into your profits and prevent you from having money at the end of the year to invest in the business. Your business is going to be hard pressed to grow without the ability to invest in the infrastructure needed to support that growth.
[00:07:40] Another big misconception around client segmentation is, as an operations nerd, this really bothers me: it's that too many RIA owners think client segmentation is merely a marketing exercise. They think, well, this is really about what our pitch deck says and what our pitch deck should say for this type of client versus what it should say for that type of client. And that's just - that's always bothered me.
[00:08:03] Several - several years ago, Fidelity put out an amazing white paper titled "Segment for Success: Secrets from Firms Doing Client Segmentation." And they laid out four primary benefits for firms who do segmentation successfully. If you get segmentation, right. Fidelity says:
[00:08:19] You'll have a better client experience.
[00:08:22] You'll have better resource allocation.
[00:08:25] You'll have a better understanding of your business.
[00:08:28] And you're going to have better overall business fundamentals.
[00:08:32] And when I created the client segmentation course inside The COO Society, I pointed out to all of our members: I said, guess what your job is as a COO.
[00:08:41] You need to create a better client experience. You need to allocate resources effectively. You need to have a full grasp on the intricacies of your business, and you need to drive improved business fundamentals. So this is an operations exercise, not a marketing exercise.
[00:08:56] Our Board of Directors at Coldstream, they ask me all the time, Hey, Mr. COO, how are you using technology to drive scalability in the business? And I always respond that: hey, technology is great. I'm happy to talk all day long about technology, but if we're going to scale this business, we need to focus on client segmentation first and foremost.
[00:09:16] Because Coldstream is like all of you, we over-service our small clients, which means - because there are only 24 hours in a day, if you're spending too much time on your small clients, it just, it's a simple mathematical equation - if you're spending too much time on your small clients, it means you're under-serving your larger clients. And you want your referrals coming from your larger clients. They're the ones you need to keep happy. You want your new business opportunities to be with larger clients. If you can shed three small clients for every large client that comes in, keeping your overall revenue constant but reducing the number of clients that your firm is serving, that's the definition of scalability right there.
[00:09:54] So to go back to Fidelity's white paper: Fidelity writes that segmentation allows you to tailor your offering to each tier of clients according to their needs. So they focus on "according to their needs." I think you also need to add "according to what they're paying you." Fidelity put out a more recent research report that says that the national average cost to serve a client is $9,222. That's the national average. Coldstream, we're on the West Coast: our employees cost us more than the national average. So our cost is even more than $9,222 to serve a client household. But we've said: look, for argument's sake, let's just stick with that $9,222 number. It's in writing, Fidelity's put it out: let's just go with that number. So we've spent a lot of time getting our wealth managers to focus on that and reconsider prospective clients that are asking for all kinds of services, but aren't willing to pay us or don't have a portfolio large enough to pay us more than $9,222 per year. Or if we have existing clients paying us less than $9,222, we're trying to get our wealth managers to reconsider the service offering, cut back on some of the services if they're not paying us that minimum number. If a client is paying us $7,000 per year, for example, yes, we can do tax planning, but we aren't going to offer tax planning embedded in our RIA management fee if the client isn't paying us over $10,000 or over $9,222. We have to charge separately for tax planning if a client is only paying us $7,000 a year.
[00:11:29] In terms of better resource allocation in the Fidelity Report, they say, "segmenting allows you to match the right advisor with the right client, thereby increasing advisor productivity by allocating the right amount of time and money to each client based on his or her needs." Most RIAs are on the eat what you kill model, which I totally agree with.
[00:11:49] We tell our advisors, go get clients and we'll pay you a percentage of what those clients generate from the firm. That's what the industry, you know - that's how we've sort of have set it up in our industry. But if advisor Bob Johnson - just a random name - if advisor Bob Johnson finds a prospective client who's a retired Delta pilot, for example: if you have an advisor at your firm that specializes in Delta pilots, Bob shouldn't try to service this client himself.
[00:12:16] He should hand it off to that specialist. And then they can have some kind of fee-sharing agreement or some kind of introductory fee can be paid to Bob. So that's based on the needs of the client, but you also want to assign clients to advisors based on the fees that the client is paying. So Bob may have a minimum fee of $25,000 because he's more experienced - he's more further along in his career. If a prospective client is only going to pay $15,000, Bob should find a more junior advisor that can manage that client. He shouldn't bring that on himself. He should stick to: I will only work with clients $25,000 and above.
[00:12:52] Everything I'm talking about here is leading to a better understanding of your business. In the Fidelity Report, they write, "knowing your business better can help you plan better, including knowing which segment drives the greatest growth, and letting you focus greater resources in that area, in the area that's driving the greatest growth. In the early days of your business, I get it: you take all clients, anyone that's going to pay you.
[00:13:15] But over time, you may wake up one day and say, wow, we have 12 Delta pilots as clients. And because they are relatively the same, their needs are relatively the same. They're super efficient for us to service. We should go all in on this segment and create a marketing campaign, specifically targeting Delta pilots.
[00:13:34] Fidelity also says that nine out of ten firms with a segmentation strategy believe it helps them identify clients who are not a good fit for their book of business. So after conducting your client segmentation exercise, you may wake up and realize: you know, we've taken on a few clients outside of our expertise, and they're always asking for customized reporting, or they always require a ton of money movement. They're just very labor intensive, whatever it may be. And you may realize they're not profitable for your business. And then lastly, in terms of better overall business fundamentals, Fidelity research shows that firms with a segmentation strategy had higher assets under management, were more likely to have grown, had more higher value clients, and reported higher compensation per advisor.
[00:14:22] And again, all of this comes down to the fact there's only 24 hours in a day. You can only make so many phone calls. You can only have so many meetings. You can only do so many asset allocation analyses in a given day. If you're spending your time and energy on smaller clients, it's just going to make it really hard to grow.
[00:14:42] Julie Littlechild is a, is an RIA consultant. I'm sure a lot of you know Julie: she runs a firm called Absolute Engagement. And I'm a big fan of Julie's. I worked with her a lot during my consulting days. She's actually done some work with Coldstream, with a client survey that we just recently sent out to our clients. Years ago, Julie wrote an incredible article on kitces.com titled "11 Action Steps to Design an Extraordinary Client Experience." And near the beginning of the article, she lays out four important steps firms should take when determining capacity of the team and profitability of the clients. So she lays it out in these four steps.
[00:15:18] Number one: assess the time required to deliver service to different levels of your clients by team member.
[00:15:26] Number two: assess team capacity. Based on an evaluation of the hours available to do the client work and the time required to service your existing clients.
[00:15:37] Number three: assess profitability by client segment by assigning a cost to the time that you calculated in step two and allocating your other business expenses to each client segment.
[00:15:49] Now, Fidelity has already done this, right? They've said $9,222 is the industry average. So you could just go with that one, but in a minute, I'll show you how you can come up with a more precise number specifically for your firm. And then her step number four is: refine your service matrix based on your capacity and profitability analysis.
[00:16:09] Julie is saying that when you lay out the time each employee is spending on various activities, you can see which employees are over capacity and which employees have some bandwidth. And by getting your team's capacity correct, you ensure that all clients are being serviced appropriately and nothing is going to slip through the cracks.
[00:16:26] Again, our goal is to add more clients to the firm, but ensure each client receives a consistent experience. So now, let's look at a few different ways that you can calculate profitability at the client level if you don't want to use Fidelity's national average. So most RIAs make the mistake of assuming that the highest AUM is naturally the best client, but obviously you need to take into account the fees that they're paying.
[00:16:51] So a $100 million institutional client paying you 20 basis points isn't necessarily better than a $30 million individual client that's paying 75 basis points. So revenue is important, but that's not the only part of the story either. You can't just assume that the highest paying clients are necessarily the best clients, because you also have to calculate the hours that your firm spends servicing that client.
[00:17:14] Your institutional client may only require one hour of work per week, whereas that individual client might require 15 hours of work per week. So you can track this very scientifically, or you can do it in more of a qualitative fashion. The scientific method is to begin tracking at quarter hour increments - so every 15 minutes - exactly how much time your team is spending on each client. I was able to do this in my consulting days because I was never juggling more than ten clients at a time. So I know it was way easier for me to do that than for you, but I would have a weekly timesheet that sat next to me and it had all of our clients listed on one page.
[00:17:51] And then I would just jot down how much time I spent on each client every day. So if I had a 30-minute phone call with a client, I would jot that down. If I spent 45 minutes researching something for a client, I would just mark that down. And then we would report our hours every Friday to Sandra on our team.
[00:18:07] And then she would load those hours into QuickBooks. And then Reese, my wife - and she was our COO and CFO - she then calculated a profit margin for each client. And that analysis then helped us determine which service offerings were working and then which ones weren't. It was also helpful in determining how to price our engagements with clients, by having these profitability numbers that allowed me on several occasions to not simply turn away business. I was able to say, I can't offer you this amount of service at that price, but if that's your budget, I can offer you this amount of service. Does that work for you? When a prospective client would say, well, I really need all of your services, but I'm really only willing to pay you half price for it, having these profitability numbers in the back of my head based on previous engagements that were similar in nature, that would give me the confidence to say, well, I'm sorry, that's just not going to work, but let's figure out a way to work together. And then we could continue trading services for dollars until we found kind of an intersection of my amount of services and his or her amount of dollars.
[00:19:09] We could find an intersection that would work for both parties. So that's the scientific way of calculating it. And I know that's easier for me, with, you know, juggling ten clients at a time versus your firm juggling hundreds of clients. So if that feels too daunting, but you want to come up with some kind of metric to calculate hours spent on each individual client, you can sit down with your team and you can ask them to rank every client on a scale of one to five: one being a client that rarely calls the office, and five being that client that calls the office multiple times a week with money movement needs or other various service requests. And once you have all of your clients ranked one to five, now look for discrepancies between their time score and the revenue they generate.
[00:19:53] So are there some clients ranked a five, meaning they call all the time with service requests, but they're not generating very much revenue for your business. If you identify those, I think a conversation with that client might be in order. You don't necessarily need to cut ties with the client altogether, but a discussion around fees and or the amount of time your team is able to dedicate to that particular client would be in order.
[00:20:17] Maybe you simply need to ask them to contact a different team member, someone who has a lower hourly rate, for example, or you can show them how to access some of their requests by using your client portal instead of calling the office all the time. I think it's very logical to call up a client and say, hey, we love working with you, but if you require this level of high touch service, we're going to need to raise your fee, or we can show you how you can access this information online. Give the client the choice, make sure he or she understands that the same information is available, but you just simply can't offer that high touch service based on the amount of money they're paying.
[00:20:56] So that's how most people think about client segmentation, all about the numbers, but keep in mind that client segmentation: it's not simply about ranking your clients from revenue generated - you know, top to bottom - and then just firing the bottom 10%.
[00:21:10] That's not what we're looking for. And it's not about instituting a higher minimum fee, and then simply saying we won't work with clients that pay less than X. At its core, client segmentation is about analyzing through multiple lenses that all-important question: does the level of service we're providing our clients make economic sense for our business? I just don't think enough RIAs are doing that.
[00:21:33] In order to answer that question, you must incorporate some qualitative factors to your analysis in addition to those quantitative factors. Part of your segmentation process should ask the question, are the fees we receive worth the abuse that this client is putting us through?
[00:21:49] When our son Luke was seven years old, he read a book called, "Have You Filled a Bucket Today? A Kid's Guide to Daily Happiness." And this has always stuck with me. The book talks about: when you do something nice for someone, it fills your emotional bucket. And when they do something nice for you, it also fills your bucket.
[00:22:07] And then it talks about if you want to be happy in life, you need to avoid people that are constantly emptying your bucket and making you feel bad. So if after interacting with client X, you and the staff feel depleted and it takes you another 30 minutes just to get back on track, maybe the fees that client X is paying just aren't worth it.
[00:22:28] On the other hand, if client X makes you feel fantastic, and after you hang up the phone with them, you feel energized and you tackle the day with more energy, maybe you should be paying client X for the benefits he or she is bringing to you on a daily basis. Maybe you're okay with them paying a lower fee in relation to the services you offer them.
[00:22:49] At the end of the day, likability, I think, needs to be part of your client segmentation analysis. And this can simply be a yes / no field, or you can rank clients on a similar one to five scale, like we did with the time allocation. You can track likeability however you like, but just make sure you're accounting for whether or not the client fills your emotional bucket.
[00:23:09] Another important qualitative factor to consider is whether or not the client takes your investment advice. Do they share your investment philosophy, so to speak? Or do they constantly turn down your investment recommendations and require customization to their portfolio? Is this client constantly asking you to research investments that are outside of your expertise, which takes up a lot of extra time and also poses a compliance risk for your firm by requiring different asset classes or different types of investments in their portfolio? Is this client requiring you to spend money and time on different reporting software or a different reporting methodology maybe? If this client is going outside your normal investment recommendations, is there a chance of litigation should some of these investments go poorly? You can call this category whatever you'd like - follows advice or shared investment philosophy, or you can even call it litigation risk - however you want to capture it, but I think this is another important qualitative factor to consider.
[00:24:08] And the next is simply: do you have commonality with the client, right? I'm a guitar player and this client is a guitar player and we like geeking out on guitar playing, or maybe it's golf or food or wine or skiing. Having that commonality - it creates a bigger bond with the client, makes the relationship that much stronger, and frankly, it fills your bucket when you interact with them. It also helps you assign different advisors to different clients based on these common interests.
[00:24:35] I talked about that earlier with - ah - Bob Johnson was his name, right? If he finds a prospective client that loves skiing and you've got another advisor that's a big skier, your firm might have a stickier relationship with that prospective client if you give the relationship to the skiing advisor, as opposed to Bob trying to fit a square peg into a round hole, so to speak.
[00:24:59] It also helps you focus on potential client-centered marketing events, right? Having common interests with a client may not be a criteria by which to rank clients, so to speak, but by capturing this type of qualitative data while conducting your client segmentation process - it's valuable.
[00:25:16] And then the last two qualitative factors that I'll talk about - these are the two most often cited when RIAs discuss client segmentation - it's referability and growth potential of the relationship.
[00:25:27] So if client A is paying your firm $10,000 per year, but they've also referred two other clients that collectively pay your firm $75,000 per year, you obviously need to take those referrals into account when you're ranking the value of Client A. And if Client A has the potential to refer even more business, they should rank even higher.
[00:25:47] And then the last one again is growth potential. Maybe the client has a small investable portfolio today, but they have a high income that could result in a larger investment portfolio in the future. Or maybe they don't have a lot of income today, but they own a business and they may be able to sell that business in the future, and that would result in a financial windfall that would make building the relationship today - even if it's unprofitable right now - that would make it worthwhile in the long run. Maybe the client only has half of their investment portfolio with you. And you're confident that if you service them appropriately, you have a good chance of winning additional wallet share over time. That would also make it worthwhile to service this client today, even if it's unprofitable in the near term.
[00:26:29] So again, I'll let you determine how you want to rank each of these categories - whether you assign numbers from one to five, or you simply rank each category yes or no, or if you want to rank clients A through D on some of these categories - it's entirely up to you. The important thing is to find an objective way of ranking your clients on both qualitative and quantitative factors.
[00:26:50] So now that you've done that, how do you then turn this all into a service offering that Julie was talking about in her article? You'll want to build some kind of matrix of client service tiers.
[00:27:02] So your platinum clients, your highest clients, they'll receive the most white glove touch points that your firm has to offer. You're going to give them more in-person meetings at whatever location the client prefers. They'll have a more complicated investment mix. You'll also be willing to dedicate a larger service team to these clients.
[00:27:21] Again, think about that $9,222 number from Fidelity. These clients are obviously going to be more expensive for your firm to service due to the complexity of their relationship, but that should be justified by the fees they're paying. You'll also be willing to offer specialty services to these clients: bill pay coordination, invitation to events, reviewing their company benefits, reviewing their philanthropic gifting, reviewing insurance and estate plans. You'll offer customized financial statements to these clients. You may offer trustee support to these clients. So that's your top tier.
[00:27:56] Then are the next tier, diamond clients, or whatever you want to call them. They'll receive fewer touch points throughout the year than your platinum clients. Those meetings may be at your office rather than at the client's location, or they may be virtual rather than in person. And you'll want to automate their portfolio a bit, which will allow you to dedicate fewer employees to these relationships than your platinum clients.
[00:28:19] And then the next tier down, gold - or whatever you want to call those clients - they may get an automated monthly email in addition to maybe only one in-person annual review per year, as opposed to multiple that you're offering those higher tiers. It's entirely up to you what service level to offer, but when making that determination, it's important to think of both the economic viability of your firm, but also the unique needs and wants from each of these client segments.
[00:28:45] When you're thinking through all of this, it's important to keep the 80 / 20 rule in your mind: the top 20 percent of your clients generally generate 80 percent of your revenues. And with client segmentation, you're trying to force your wealth managers to focus less on that bottom 80 percent. And a lot of times that's the squeaky wheel that always seems to get the oil.
[00:29:05] But with client segmentation, we're trying to force people to focus on the top 20 percent. There's a very popular book, which I'm sure many of you have read: "10 X is Easier Than 2 X" by Dan Sullivan and Benjamin Hardy. The subtitle of the book is, "Achieve More by Doing Less." And that's really the goal of client segmentation: achieve more by doing less.
[00:29:29] When Dan Sullivan works with entrepreneurs one-on-one through his strategic coach platform, he asks them, if you were to eliminate the bottom 80 percent of your clients, how long do you think it would take you to get back to your current income level? He's talking about eliminating 80 percent of the client base. And the surprising answer to his question - how long will it take to get back to that level of income after you fired 80 percent of your clients - it's relatively short. It's more than two years, but it's less than three. So in less than three years, you're back to the same level of income by focusing on that one client niche.
[00:30:04] You know, I mentioned Delta pilots earlier by firing every other client and only focusing on that one niche, you'd be back to your current income in less than three years. Or maybe not as drastic or scary as firing 80 percent - just get hyper-focused on larger, more complex clients and slowly exit your smaller clients.
[00:30:24] So again, you're exchanging three smaller clients for every large client that you can bring in. So in the book, you know, if you have a hundred clients - we'll make the math easy - you have a hundred clients - it's scary, but just as a mental exercise - imagine firing 80 clients and you only hang on to your top 20 clients.
[00:30:44] The idea that they talk about in the book is in three years, you're back to your same revenue, but you only have 50 or 60 clients. You didn't have to go all the way up to a hundred because you're now focused on larger clients, or you're focused on clients that you can service more efficiently.
[00:30:59] So you have deeper relationships with these clients, right? You've cut your relationships in half. So you have deeper relationships with these clients. You can do more for those clients. They're happier with you and you're more fulfilled in your career because you're only working with bucket fillers at this point.
[00:31:14] And then by the time you do get back all the way to 100 clients, you haven't just doubled your revenue: those 50 additional clients - they're larger than your average clients were before. So now you've 10 X'd your revenue. That's the whole concept of the book. 10 X is easier than 2 X.
[00:31:32] And then as the book recommends, you're back to a hundred clients, you've 10 X'd your revenue. We'll do the whole process again: fire the bottom 80%, you're only looking at your top 20 clients, and then you continue to exponentially grow your business. It's a fantastic book and very relevant to any discussion around client segmentation.
[00:31:50] So to recap, we're all constrained by the fact there are only 24 hours in a day. So whether you're physically capped at 100 or 80 or 120, whatever that cap is, there is a cap on the number of clients that you can work with. The challenge lies in reconciling this misguided interpretation of the fiduciary duty with the practicalities of client segmentation. It's essential to shift the narrative from one of that regulatory obligation to one of strategic service.
[00:32:21] By recognizing that not all clients require the same level of service, nor can all clients afford the same level of service, advisors can better allocate their time and resources. This approach not only enhances client satisfaction, but it allows firms to operate more efficiently. By adapting our understanding of the fiduciary duty to embrace segmentation as a means of better serving clients rather than excluding - remember this isn't about firing clients, it's about better serving your clients - firms can fulfill their fiduciary obligation while improving overall service quality, not to mention their firm's profitability.
[00:33:00] So thank you for listening to my monologue on this topic. As you can see, I think it's an important one for all COOs to get right. This is really the driver of your role at the firm.
[00:33:10] It's going to be an uphill battle to get your firms to embrace this, but hopefully you can forward this podcast around the office and slowly start the process of redefining fiduciary duty and embracing a more strategic approach to service delivery.
[00:33:25] So that's a wrap on Episode 74. We'll talk to you all soon.
[00:33:29] Thanks so much.
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