1. T H O M S O N F I N A N C I A L Effective Use of Technology in Prospecting Your Book Eric Jones, CFA Senior Product Manager Thomson Financial Financeware Advisor Call February 2, 2004 T H O M S O N F I N A N C I A L

2. February 2, 20042 Introduction

3. T H O M S O N F I N A N C I A L February 2, 20043 Today’s Agenda What is Prospecting Your Book? Broadening Your Client Base –Technology Needs –Basic & Advanced features –Data Analysis Penetrating Your Client Base –Technology Needs –Traditional and Best Practice Methods –Holistic Analysis of Book Other Uses of Technology Summary and Q&A Agenda

4. T H O M S O N F I N A N C I A L February 2, 20044 What is Prospecting Your Book? First, Define Your Book…  It should be more than just existing clients  Friends and Family  Past Clients  Related Parties (attorneys, accountants, investment managers)  What do you want it to be?  Small businesses  Physicians  Retirement age teachers  Define your niche! What is Prospecting Your Book

5. T H O M S O N F I N A N C I A L February 2, 20045 What is Prospecting Your Book? Second, Define Your Major Prospecting Objective… Two Ways to Prospect Your Book: 1)Expand Client Base = New Clients 2)Expand Product / Service Base = Existing Clients And you can always do both….but make sure you understand why!!! What is Prospecting Your Book

6. T H O M S O N F I N A N C I A L February 2, 20046 Expand Client Base What is Prospecting Your Book Joe & Sally Miller Joe’s Co- Worker Sally’s Parents Miller’s Church Joe’s Uncle Bob Sally’s Social Club

7. T H O M S O N F I N A N C I A L February 2, 20047 Penetrate Client Base What is Prospecting Your Book Joe & Sally Miller Variable Life Policy Estate Plan Hedge Plan for Co. Stock 529 Plans “Key Man” Insurance

8. T H O M S O N F I N A N C I A L February 2, 20048 Expand Client Base Key Goal = get more clients Key Point = technology will not get the clients…you will Expand Client Base

9. T H O M S O N F I N A N C I A L February 2, 20049 Key Technology to Expand Your Client Base Ability to manage contacts, activities and schedules: –CM (Contact management) –CRM (Customer Relationship Management) –SFA (Sales Force Automation) Same animals, increasing level of functionality This presentation is not about selecting a CRM system Keep in mind two schools of thought for selection: –Research every detail because feature differences do matter –Pick something and then adapt to the system Expand Client Base My Preference

10. T H O M S O N F I N A N C I A L February 2, 200410 CRM-type systems – a few names to consider: Microsoft Outlook ACT! Act 4 Advisors Goldmine SalesForce.com Junxure-I Protracker And don’t forget your firm-provided solution… –Ability to export data? –Ability to customize to your preferences to your business model? Expand Client Base

11. T H O M S O N F I N A N C I A L February 2, 200411 Basic features – CRM application: Track current clients – demographics & contact info Track referrals – demographics & contact info Call activity – notes, follow-up tasks, time spent, expenses Calendaring – appointments, reminders, conference calls, ability to schedule another calendar (Admin support) Expand Client Base

12. T H O M S O N F I N A N C I A L February 2, 200412 Advanced features – CRM program: Create workflow “programs” for existing clients (as well as prospects) –Marketing campaign for leads –Initial steps for new client relationships –New product campaign for existing clients General service initiatives to “Delight the Client” Targeted programs for a sub-set of clients Expand Client Base

13. T H O M S O N F I N A N C I A L February 2, 200413 Marketing campaigns for leads Create a scripted program for any new prospect that enters your “pipeline” –Mailing campaign –Phone calls –Emails (be sure to avoid “spam”) –Meeting solicitations –Etc. Use CRM to trigger activity and track timing in-between events Track responses and refine your marketing campaign Facilitates workflow with admin support and para-planners Expand Client Base

14. T H O M S O N F I N A N C I A L February 2, 200414 Initial programs for new clients Detailed steps to effectively integrate a new client into your practice: –First meeting –Profiling session and material –Steps to complete financial plan (incl. internal activities) –Investment implementation process –Confirmation letters –Etc., etc. New product campaigns for existing clients –More to follow on this topic in next section Expand Client Base

15. T H O M S O N F I N A N C I A L February 2, 200415 “Delight the Client” initiatives – best way to drive a solid referral program Examples of data to track and what to do with it: Client vacation destinations – email new vacation ideas Private business names – call to congratulate owners on positive news Clients in mid-60s – mail educational info on RMD law changes Client’s children’s birthdays – send token gifts Clients with children – email educational material of child tax credits New car purchases – send recall notice reminders Pets – send list of pet hotels in area Expand Client Base

16. T H O M S O N F I N A N C I A L February 2, 200416 Advanced Data Analysis – related benefits of CRM Track “problem” clients –High service demands / low ROI –Make sure ROI gives the entire picture of client value (production/fees + referrals + community ties) If these clients are not meeting your ROI objectives, prune them from your business Why? Time spent servicing existing clients is the biggest obstacle to prospecting activities Expand Client Base

17. T H O M S O N F I N A N C I A L February 2, 200417 Advanced Data Analysis – related benefits of CRM Track trends in your business –What do you always have to follow-up on after a meeting? –What are clients always asking for? –What is your assistant always doing? All good questions, but in order to answer them you must: –Have a system to collect the data –RELIGIOUSLY enter that data into your system (or make sure someone else does it)! Expand Client Base

18. T H O M S O N F I N A N C I A L February 2, 200418 Expanding Client Base - Summary To get referrals, you have to ASK!!! (and technology won’t do that for you) 1st priority – ensure your existing clients are happy!!! –Best way to get referrals –Every time you “delight” a client, you are closer to a great referral CRM Systems can also: –Manage referral programs –Improve productivity (which helps with everything you do!) Expand Client Base

19. T H O M S O N F I N A N C I A L February 2, 200419 2 nd Broad Approach to Prospecting Your Book Expand Business with Existing Clients “Penetrate” Your Book “Do more, with less” In most cases, requires breadth of services & product knowledge Requires careful analysis of profitability Penetrate Client Base

20. T H O M S O N F I N A N C I A L February 2, 200420 Financial Advisors don’t penetrate their book Example...Insurance Products Evidence…penetration of insurance sales among “non-insurance” reps is extremely low Variable Life Insurance sales occur in:* –4% of wirehouse brokers –5% of regional brokers –20% of financial planners Insurance Product Sales (in general):* –1% at wirehouses –1% at regionals –5% at independents Penetrate Client Base * Source: Registered Rep., June 2003, pp. 58

21. T H O M S O N F I N A N C I A L February 2, 200421 Key technology need Portfolio Management System, Portfolio Accounting System, Broker Info System Contrary to CRM, in many cases you don’t have a decision on which application to use Higher cost per application and fewer viable options that are not “firm-provided” Key features: –Data query functionality –Export Data –View portfolio data “across book” Penetrate Client Base

22. T H O M S O N F I N A N C I A L February 2, 200422 Funds Available / Cash Balance Penetrate Client Base

23. T H O M S O N F I N A N C I A L February 2, 200423 Total Account Value Penetrate Client Base

24. T H O M S O N F I N A N C I A L February 2, 200424 Upcoming Bond Maturities Penetrate Client Base

25. T H O M S O N F I N A N C I A L February 2, 200425 Specific Security Position (across book) Penetrate Client Base

26. T H O M S O N F I N A N C I A L February 2, 200426 All Securities Positions (across book) Penetrate Client Base

27. T H O M S O N F I N A N C I A L February 2, 200427 Market / Security Alerts Penetrate Client Base

28. T H O M S O N F I N A N C I A L February 2, 200428 Lets Talk about Better Approaches Make technology really work for you You will need more than just a Portfolio Accounting system In some cases you need three systems: –CRM –Portfolio Management –Wealth Management (Wealth Care, Financial Planning) Ideally, all your systems will “talk” to one another The following ideas will differentiate you from the next Advisor Innovative Approaches

29. T H O M S O N F I N A N C I A L February 2, 200429 Interactive Goal Planning Sessions Example = Financeware Help clients make important decisions about Spending, Asset Allocation, Retirement Age, and Savings… all within the context of their most important Life Goals What better way to penetrate your book and manage a greater % of your client’s assets? Also uncovers key issues like Insurance needs, Estate Planning strategies, and Investment implementation approaches Innovative Approaches

30. T H O M S O N F I N A N C I A L February 2, 200430 Interactive Goal Planning Sessions – Make the technology work for you Get a big flat screen monitor in your conference room! Clients love interactive sessions & immediate feedback Why wait 4 weeks for the 3-ring bound financial plan? If you are comfortable using the technology, you can create a plan “real-time” and have it printed before you client leaves the office Create a powerful message to move forward with the next steps – THE CLOSE Innovative Approaches

31. T H O M S O N F I N A N C I A L February 2, 200431 Interactive Goal Planning Sessions Innovative Approaches Identify and Analyze what is really important to your clients

32. T H O M S O N F I N A N C I A L February 2, 200432 Interactive Goal Planning Sessions Innovative Approaches Illustrate the Most Critical Trade-offs…

33. T H O M S O N F I N A N C I A L February 2, 200433 Interactive Goal Planning Sessions Innovative Approaches And how they impact your overall plan

34. T H O M S O N F I N A N C I A L February 2, 200434 Next step – Real-time implementation Now that the client is sold on The Plan, why not take the next step? Too many things can go wrong if you let the client walk-out the door with their ACATS forms? –Buyer’s remorse –Feel obligated to research other options –Analysis Paralysis (my favorite) –Get confused by the paperwork –Get too busy –Another Advisor calls them –Their son-in-law has a different opinion –They decide to buy a new car –Etc. So, why do we let them walk out the door with their new account paperwork!!! Innovative Approaches

35. T H O M S O N F I N A N C I A L February 2, 200435 Next step – Real-time implementation How many of you have the client fill-out the appropriate paperwork “online”? –Why not have your assistant come into the conference room and walk the client/prospect through the account opening forms? Or the Life insurance application? Or the ACATS forms? Even if the client has to mail in a check later, you can have much of the paperwork done before they leave your office –Why not make it as easy as possible for them to transfer the $$$? Use this online technology to the extent possible As a client, I would gravitate toward a simpler process!!! Innovative Approaches

36. T H O M S O N F I N A N C I A L February 2, 200436 Holistic Analysis of Book What better way to “prospect your book”??? Determine your very best clients…and focus on them! Requires a combined set of data from CRM, Portfolio Management, and Wealth Management systems Question – what would happen to your production if you reduced your total accounts serviced by 80 or 90%? The answer may surprise you… Innovative Approaches

37. T H O M S O N F I N A N C I A L February 2, 200437 One approach to analyzing your book… Source: Attract and Retain the Affluent Investor, Stephen D. Gresham and Evan Cooper, Copyright 2001 A Case Study… “George K” When he started the process to review his book, he had 631 accounts. George identified a series of screens/filters to determine his best clients Innovative Approaches

38. T H O M S O N F I N A N C I A L February 2, 200438 11 Screens to Finding Your Best Clients Innovative Approaches *Source: Attract and Retain the Affluent Investor, Stephen D. Gresham and Evan Cooper, Copyright 2001. Screen *Evaluation / Tracking System 1. Account by production reportComp System / Port Acct 2. Value of assets reportPort Acct 3. List of priority clientsSubjective / CRM 4. LikeabilitySubjective / CRM 5. Approach acceptanceSubjective / CRM 6. Financial wherewithalSubjective / Wealth management 7. Premier client capabilitySubjective / Wealth management 8. Hard-dollar profitabilityComp System / Port Acct 9. Soft-dollar profitabilityComp System / CRM / Time-tracking 10. Price-value testSubjective / CRM 11. Opportunity for future growthSubjective / CRM

39. T H O M S O N F I N A N C I A L February 2, 200439 11 Screens to Finding Your Best Clients* Innovative Approaches *Source: Attract and Retain the Affluent Investor, Stephen D. Gresham and Evan Cooper, Copyright 2001. What happened after the 11 screens were reviewed and applied? 631 accounts became 100 accounts (33 clients) Gross production went from $422,000 to...$383,000 83% reduction in accounts…9% reduction in production Would this help your prospecting efforts?

40. T H O M S O N F I N A N C I A L February 2, 200440 Other ideas for how technology can help Innovative Approaches Self-produce CDs with your personal message –Digital video camera –Video editing software –CD burner Web sites for your practice Mutual Fund databases Separate Account Manager databases Online Investment Research Online Education & Training Programs

41. T H O M S O N F I N A N C I A L February 2, 200441 In summary, there are three main technology applications that will assist you in prospecting your book: Summary Contact Management, CRM, SFA Portfolio Management / Accounting system Wealth Management / Planning application Ideally they all work together! And remember, the technology does the facilitating…You do the asking!

42. T H O M S O N F I N A N C I A L February 2, 200442 Questions? Q&A Eric Jones Senior Product Manager Thomson Financial eric.jones@thomson.com 301-545-4596