How We Can Revolutionize the Way

We Handle Our Client Relationships

By Dominic Pedersen
 Table of Contents:

Executive

Summary…………………………………………………………...2

Problem at

Hand………………………………………………………………..3

Proposed

Project………………………………………………………………..5

Cost

Analysis…………………………………………………………………

…...6

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Assessment

Strategy…………………………………………………………..6

Conclusion………………………………………………………………

………….7

Appendix:

Memo………………………………………………………………..8

Executive Summary​:
The heart of Stansberry Asset Management’s mission is helping people. We
work tirelessly to provide our clients with exemplary wealth management services in
order to help them achieve their financial goals.

Along with proper management of the client’s portfolio, proper management of

client relationships is an incredibly important pillar of the services that we offer. Making
sure that our clients feel valued and looked after is the difference between failure and
success. We make sure our clients ​receive detailed written communications, invitations
to live events where they can speak directly with investment decision-makers, and a
dedicated Client Relationship Manager to answer questions and help with any
operational requests.

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 These client services are not enough, however. Despite positive growth in the
performance of our portfolios, our retention numbers are dropping at a concerning rate.
This is a direct result of not managing our client relationships with energy and analytics
that is characteristic of our mission.

I propose that we adopt the Fisher Method of client self-classification in order to

more effectively assign our relationship management efforts. Additionally, these efforts
will broadcast to our clients how much we are willing to do in order to provide them with
excellent service that is catered to them, not a cookie-cutter portfolio management
strategy. Also, a restructuring of our Client Relationship Managers’ compensation model
in response to the implementation of the Fisher Method will allow for employees to be
rewarded for their efforts more accurately.

This slight restructuring of the way we go about dealing with our clients on a
personal level will cost us nothing and provide us with smarter data with which we can
allocate our resources more effectively.

Problem at Hand​:
One of our main success metrics is our client retention rate. The main barriers to
our goal retention rate of 98% are negative market volatility and a lack of proper client
relationship management. A negatively volatile market influences our clients to place
less trust in our wealth management strategies because they are more pessimistic
about the future performance of their portfolios. The market, however, is not subject to
our control. What we can control and work to improve upon is our level of contact we
keep with our clients.

In the way of client relations, we currently offer ​detailed written communications,

invitations to 12-15 live events a year where they can converse with investment
decision-makers, and a dedicated Client Relationship Manager to answer questions and
help with any operational requests.

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 Figure 1:

It can be seen in Figure 1 that our portfolios are performing better than ever
before, historically. Being that our portfolio performance is incredible at the moment, it is
strange that our retention rates have dipped as dramatically as they have. Figure 2
illustrates our largest problem. Our retention rates are at a three-year low after our
high-level performance in 2017.

Figure 2:

From this, it can be deduced that while our portfolio management is flourishing,
the client services side of our firm has a sizable amount of room for improvement.

Part of this problem can be attributed to the way Client Relationship Managers
are incentivized. Our only metric is retention rate which, although important, is
extremely simplistic and does not provide with adequate information that allows our
team to allocate their time and energies as well as they could be. Solely awarding
performance-based bonuses according to a manager’s individual retention rate does not

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accurately reflect the true impact of their work. Employees could be undercompensated
for doing a spectacular job changing a previously-unhappy client to a thoroughly
satisfied one. They could also be overcompensated for not doing much work in keeping
a client happy when there is little to no risk of them being displeased.

We are not doing business in a smart enough manner.

Proposed Project:
To address the previously stated issues and service our 452 clients more
effectively, I propose that we adopt the Fisher method of ​client self-classification in
order to more effectively assign our relationship management efforts and
simultaneously improve our retention rates at no financial cost to the company.

The Fisher Method has been in use at Fisher Investments for years and has
assisted them in becoming a reputable wealth management firm that has been ranked
as a top adviser by Financial Times for the past five years in a row.

When initially implemented, the Fisher Method caused Fisher’s retention rate to
skyrocket from 87% to 93% over the course of one year. This magnitude of change was
unheard of for the firm up until that point.

The method consists of Stansberry Asset Management sending out an electronic

survey to ascertain the state of our clients’ thoughts about our interactions with them. By
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asking them to identify their own satisfaction level, we will be attaining information that
will allow Client Relationship Managers to allocate their time and efforts more efficiently.

We will provide four classifications for the clients to identify as:

● A - Been with us for 2+ years, is completely happy with our services
● B - Been with us for less than 2 years and is completely happy with our
services/Been with us for 2+ years, needs to see improvement
● C - Been with us for 2+ years, needs to see immediate improvement/feels
somewhat neglected by firm
● D - considering different money management firm/feels extremely
neglected

Once clients identify which classification they fall into, Client Relationship
Managers will better understand how to adjust their efforts to better serve their clients’
needs. C and D-level clients will receive more correspondence from Stansberry in order
to assure that they are satisfied with their service. ​These efforts will also signal to clients
that we appreciate their business and will provide them with excellent service that is
catered to them, not a cookie-cutter portfolio management strategy.

Regarding Relationship Managers’ incentivization system, this new data will

allow us to more aptly assign bonuses. In lieu of our current system which is only
dependent upon managers’ retention rates, we will develop a system that is able to
account for differing levels of effort. Relationship managers will be rewarded for
upgrading clients to higher classes and be put on notice if their client begins to drop in
satisfaction levels.

Cost Analysis:
There are pretty much no costs associated with this proposed adoption of the
Fisher Method. Since our client surveys will be electronic, there will be no costs for
paper and all the financial bonuses awarded in the newly reformed compensation
system will be the same amount already allotted for bonuses so there is no need to
consider that as a cost.

The possible return on this investment of effort is incalculable financially but

socially it is enormous. This initiative would greatly contribute to a rise in client retention
similar to Fisher’s jump when they first adopted the method.

Assessment Strategy:
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 The immediate impact of the adoption of these changes can be seen in the
improvements in client retention rates and client satisfaction. Clients will feel more
looked after and as if Stansberry truly values them. The success of this initiative will be
clearly visible in our assuredly vastly improved retention rates.

The long term effects will be seen through the growth in our client base that will
occur as a result of more of our clients electing to stick with SAM. This will result in
more revenue and profits for the business and will also be easily assessed by viewing
the client retention rate. Also, looking at the percentage of high-level clients that left us
will allow us to determine how well our Client Relationship Managers are performing
with the new classification system.

Conclusion:
Proper management of client relationships is an titanically important pillar of the
services that we offer that has fallen by the wayside as of late. ​Despite positive growth
in the performance of our portfolios, our retention numbers are dropping at a concerning
rate.

To counteract this drop in client retention, I propose that we adopt the Fisher
Method of client self-classification in order to more effectively allocate our relationship
management efforts. Additionally, these efforts will broadcast to our clients how much
we are willing to do in order to provide them with excellent service that is catered to
them, not a cookie-cutter portfolio management strategy. Also, a subsequent reform of
our Client Relationship Managers’ compensation model with respect to the
implementation of the Fisher Method will allow for employees to be rewarded for their
efforts more accurately.

This slight restructuring of the way we go about dealing with our clients on a
personal level will cost us nothing and provide us with smarter data with which
Relationship Managers can allocate their resources more effectively and we can more
accurately assess our client relations success.

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 Appendix: Memo

TO: Stansberry Asset Management Client Relationship Managers

FROM: Dominic Pedersen
DATE: February 26, 2019
SUBJECT: Fisher Method Adoption

Relationship Management Team,

I am pleased to announce that as of right now, Stansberry Asset Management is

adopting the Fisher Method of client self-classification in order to reinvigorate our client
retention numbers and recommit ourselves to our customers.

We will be ​sending out an electronic survey to ascertain the state of our clients’
thoughts about our interactions with them. They will self-identify into one of four classes
that will communicate their overall satisfaction with our services. By asking them to
identify their own satisfaction level, we will be attaining information that will allow you all
to allocate your time and efforts more efficiently. You will be able to allocate your time
and efforts between clients more effectively since they will be telling you which ones you
should reach out to more.

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 Your incentive-based bonuses will also be improved in that they will take this new
information into account. You will be rewarded for working hard to keep our clients
happy with regard to the class system. Improving a client between satisfaction levels
through your dedication and initiative will be rewarded!

Fisher Investments saw their retention levels skyrocket 6% in the first year of this
method’s implementation. I am confident that if we use the new information that we will
attain from the surveys to attack client relations with vigor and tenacity, we can see a
similar improvement in retention.

More information regarding the specifics of this implementation will follow within
the week. If you have any questions please feel free to reach out via email at
dpedersen@scu.edu​ or swing by my office at any time.

Best,
Dom