September 1, 2001

Hired Hands

To keep their practices thriving, some advisors ge

Editor's note: The cover story of the August 2001 Investment Advisor ("Blowing Your Own Horn") focused on the importance of marketing for advisors, and how they should go about doing it. One path to marketing success is to sign up professionals to handle that duty, either as employees of the firm or on an outsourced basis. That is the focus of this story.

Consider the logic that recently led planner Warren Mackensen to hire a full-time professional marketing employee for his firm. He's meeting with clients and researching investment products and generally occupied by the duties of running an advisory firm to the extent that he cannot worry about marketing. At the same time, there are numerous groups holding luncheons and benefits around his local area; there are writing opportunities galore; and there are community events at which he or another representative of his firm could be lecturing. All of those venues could bring his face and the name of his firm--Mackensen & Company in Hampton, New Hampshire--before potential new clients. But who's concentrating on all of these things?

With this in mind, many planners have concluded that it's not practical to have the same person who works with clients, builds and rebalances portfolios, and works up financial plans also to be constantly on the road, going to Rotary Club meetings, searching for the next lunchtime speaking engagement, or writing financial makeovers for consumers in the local newspapers.

These planners have taken the step of either hiring an in-house person who focuses on nothing but marketing or contracting out such d

First Impressions

Nike has its swoosh symbol and its associations with a hip, carpe diem lifestyle: "Just Do It!" Ford Motor Company conjures up images of proletarian men who work hard during the day and then come home to the American dream at night. "A company can be two things," says planner Chris Cooper of Toledo, Ohio-based Chris Cooper & Company. "You can just be a regular firm that does its job, or you can have some sort of identity or niche that distinguishes you from the rest."

With this in mind, some planners have contracted with professional marketing firms to develop a brand, an identity--a niche, if you will--for their firms, in addition to doing the more plebian aspects of marketing. Chris Cooper, whose fee and commission firm manages $187 million for 300 clients, says the marketing firm he hired in the past began its services to him by conducting an interview. Some of the questions the firm asked Cooper:

o What do you do?

o Can you say it in a simple sentence?

o What kinds of things do people

perceive when they see you?

o What do you do for them?

o What do you perceive sets you apart?

From the answers to these questions--as well as a great many others--the marketing firm was able to determine exactly how Cooper wanted to present himself. Eventually the firm came up with a brand designed to project CFP Cooper's image as a community professional similar to a doctor or minister, a person who was well-schooled to provide financial advice, a person who would help people achieve their life goals rather than make a certain amount of money in annual returns each year.

Then, with that brand in place and in mind, the marketing firm went to work writing press releases and stories for various community publications and the firm's Web site.

In the case of Al Coles of Financial Design Associates in Stinson Beach, California, the marketers dug into the past of his firm to come up with heartfelt stories that could most elicit a response--emotional and otherwise--from the reader. "You get professionals who really know how to write when you hire a marketing firm," Coles says. "They know how to come up with an identity for your firm and then deliver that message."--Mike Jaccarino

uties to a professional marketing firm. "I just can't tell you how great it feels to have someone out there every day working to bring business into your practice," says Joe Kopczynski of Universal Advisory Services of Albuquerque, who hired a full-time marketing employee about a year ago.

Along with the piece of mind of having someone out there beating the bushes for new clients, advisors might find it interesting to know that many of their confreres--and competitors for that matter--have extended their professional marketing endeavors to more specialized areas like niche creation and branding. In this vein, advisors are formulating identities for their firms that make them stand out from the pack (see adjacent sidebar). After all, professional marketing firms will tell you that there is a big difference in perception between a simple but very competent pair of sneakers, and one from, say, Nike that conjures up images of athletes like Michael Jordan. The products aren't different, but the way a consumer--or client in the investment advisory sense--views them certainly varies.

Not Just the Big Guys

You might think that such professional marketing efforts are only feasible for big firms with large amounts of capital, but the truth is that there are many "smaller" firms leading this trend. Among those are Mackensen & Company, with $55 million under management and 150 clients, and Stinson Beach, California-based Financial Design Associates, which manages $35 million for about 50 clients. "Professional marketing is not something solely for the larger advisory firms of the world," says Al Coles of Financial Design Associates. "It's something everyone should think about." Coles suggests considering the money spent on professional marketing not in terms of a cost, but rather in the form of the new business it could potentially generate. "Making an investment of time on your own for marketing is easy and most advisors don't even do that," Coles says. "I can see where they might balk at actually spending money on it."

Should you decide to take the plunge, there is a whole spectrum of marketing services that can be delivered by professional firms and freelancers. The more intricate and scientific the work, of course, the more expensive it will be. For instance, Lou Stanasolovich of Pittsburgh's Legend Financial Advisors Inc. recently hired a full-time, 22-year-old marketing professional who had just graduated from nearby Duquesne University. A few months later, he hired another college student who will serve full-time on the marketing staff during the summer and then part-time during the school year. Accordingly, Stanasolovich, whose practice manages $110 million for 130 clients, is careful about what he will allow such inexperienced employees to do. "They don't really do anything that I wouldn't be able to do on my own if I sat down and had the time," he says. "Really, it's just a matter of them doing the legwork."

The new employee contacts various Web sites in the area to request that a link to Legend's own site (www.legend-financial.com) be placed there, and works on having Legend's name appear when a search for advisors in the Pittsburgh area is done on search engines like Yahoo!.

Also, Stanasolovich's marketing people will handle any referrals that come in from NAPFA, the National Association of Personal Financial Advisors. "All of these things take a lot of time and effort," says Stanasolovich. "It's nice to have someone else take care of it."

The Mackensen Approach

Warren Mackensen also hired a full-time marketing staffer this spring, a 29-year-old former restaurant maitre d' named Melissa Gagne. And while Gagne didn't have any previous marketing training, she is given a bit more to handle because of her age and experience with running a restaurant. For instance, Mackensen tells the story of a NAPFA referral that came into his practice in December. "We responded with marketing materials but didn't hear [back] from him," Mackensen says. "But Melissa sent out an e-mail the other day and the guy wound up calling to schedule a consultation. The man is worth over $7 million in assets." The inference, says the planner, is that if there had not been a full-time marketing employee on staff, the level of attention devoted to such details would never have been sufficient for the follow-up e-mail to be sent.

Gagne has also built a database of all the community groups in the area, along with their contact people. Mackensen says that she will later use such information to set up speaking engagements, as well as to find out when networking events will take place. "We've identified about 75 groups so far," he says. "She'll now keep track of all of them and the opportunities that each present us with." Should the opportunity come in the form of a speaking engagement, Mackensen is well prepared, having had Gagne write up seven different speeches with accompanying PowerPoint slides.

As for the networking functions, Mackensen says Gagne will keep track of when such events are taking place and will present him with a list of which ones he might want to attend. Then she will accompany him to the event and help pass out business cards and form relationships with potential clients.

Finally, there may be opportunities with respect to the various publications these groups maintain. "She is always trying to find places for us to write a column or do something like that," Mackensen adds. "It's all about trying to find opportunities for us to get our name out there."

Hire a Professional

Then there are those practices that have hired a marketing firm with trained representatives. These firms help build public awareness, much like the in-house approaches of Stanasolovich and Mackensen, but they also extend the concept to advanced marketing notions such as branding and niche creation.

Al Coles hired a freelance marketing professional on a month-by-month basis earlier this year who helped focus his business on a small group of people--and thus effectively create a niche. The marketer did this by interviewing Coles to determine what his firm was about, where his business was coming from, and where his best chances for future business lay. Subsequently, by reviewing Coles's accounting ledgers and reading several studies on the industry and on demographics in general, the marketer came to the conclusion that Coles should market to older women and their children. "That's where the money is," says Coles. "Think about it: The husbands are going to pass away and who is going to be left with the money? The widow and her children are going to need someone to step into the void."

With this in mind, the marketer developed an entire identity for Coles's firm, which incorporates many of the ideals that he believes older widows and their children would find appealing. "We want to focus on providing trust and someone you can rely on to handle your finances," says Coles. "Older women are going to want both of those things in their situation."

Also, an advisor may already have a sense of what his firm is about, but may need assistance in developing the vehicle that will deliver that vision to the consumer. For instance, take the story of Sheryl Garrett's Overland Park, Kansas firm, Garrett Financial Planning. Garrett believed strongly in serving middle-income clients on an hourly basis, but couldn't articulate her vision sufficiently until hiring a freelance writer, Marie Swift, for $75 an hour in 1998. The writer used her creative vision and verbal talents to convey Garrett's ideas in a poignant and evocative fashion.

Selling the Firm

Other advisors have increased the sophistication of their marketing efforts to the point that what Mackensen thought of as marketing has actually been divided into two endeavors. The first consists of building a brand and identity, and developing the advertising materials and other media sources that will convey this identity to the public. The second is the hiring of salespeople who will focus entirely on forming interpersonal relationships with potential clients and centers of influence in the community.

Two personifications of this approach are Charles Haines of the Birmingham, Alabama-based Charles D. Haines Inc., and Joe Kopczynski of Universal Advisory Services. In Haines's case, in addition to hiring a marketing firm, he also hired two salespeople who spend their days going to events frequented by high-net-worth individuals. "They'll go to things like benefits and luncheons at the local yacht and country clubs," Haines says. "They will also spend a lot of time going to intimate social engagements to which they are invited." At these events, Haines says that his salespeople will try to form the relationships that will later bring new clients to the firm. "So far it's only been five months so I really can't say as yet," he explains about the value of this new initiative, "but I'm fairly confident that this will be a good investment down the road."

Haines's salespeople will also form relationships with local centers of influence, such as estate attorneys, CPAs, and other professionals who work with high-net-worth individuals and might be in a position to refer business to the firm. "This is all stuff that's very necessary to the development of a practice, but things that I don't have to do now that they are going out to do it."

It's too early for Haines to give a picture of how his new salespeople are working out, but it's been two and a half years since Kopczynski hired an 18-year brokerage house veteran as a salesperson. Today, Kopczynski's firm has $280 million under management, and he believes that a full $100 million of that amount can be attributed to the efforts of his one-man sales department.

What's It Cost, Anyway?

But despite such gushing testimonials, what is all this costing? Most of the advisors who have hired an in-house, full-time marketing person seem to have had a good idea of what they wanted that person to accomplish before consulting with their new staff member, saying it was really a matter of legwork and focus. In this vein, both Mackensen and Stanasolovich didn't hire professional marketers, but, respectively, a restaurant maitre d' changing careers and a recent college graduate. Mackensen wouldn't comment on his marketer's salary, but Stanasolovich says, "It's what you would pay a college grad--in the $30,000 to $35,000 range."

Contracting with a marketing firm or professional freelance marketer could be a bit more expensive. Coles says his man gets $10,000 a month, or $120,000 per year. Haines, on the other hand, says his firm paid a straight fee of $25,000 to $50,000 to develop a brand and identify a niche.

That said, hiring salespeople, like Haines and Kopczynski did, seems to be the costliest of all these endeavors, with Haines proclaiming that the salespeople should be the best-paid employees in the firm."If there's no business brought in, than the technical people aren't going to have anything to do," he says.

Haines wouldn't elaborate any further on their exact salaries, but said that he has set certain goals--in the form of assets the sales force brings into the firm--that will, to some extent, determine their overall salaries. As for Kopczynski, he merely says that his man is "very well paid."

All of this talk about marketing and sales brings up the question of why these advisors decided to take the step to hire professional marketing personnel. "I just felt that I wasn't taking advantage of all the opportunities that were out there," says Mackensen. "It's been something on my mind for a while."

Indeed, the advisors interviewed for this article repeatedly mentioned two reasons for using professional marketing personnel: they saw a great opportunity to grow their practices, or they saw a necessary step crucial to ultimate survival in the marketplace. On this point it's worth noting that many said they had read the Undiscovered Managers' reports on the future of the advisory business, which advanced both arguments.

Reports and perceived opportunities aside, these advisors say they had a fairly straightforward way of deciding whether they should get involved with professional marketing. "We know that marketing works, so it's a matter of whether you can afford the money," says Kopczynski. "Really, it's a question of where you want to go with your practice," he argues. "You have to ask yourself, do you want to grow and become something very large and special, or do you want your firm to slowly die out over time?"

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