Fresh Perspective, New Opportunities: Practice Edge, March 2009

One of the defining characteristics of successful businesspeople is the habit of seeing challenges as opportunities. "It's through curiosity and looking at opportunities in new ways that we've always mapped our path at Dell. There's always an opportunity to make a difference," says Michael Dell, who developed the world's most profitable computer company.

Dell began his business out of his college dorm room in the 1980s, assembling customized computers from stock computer parts. When faced with the challenge of selling his computers through a third party, Dell found a way to better serve his customers and reduce his expenses by selling directly to consumers, which also enabled him to further customize his products.

By taking a page out of Dell's playbook, advisors can likewise learn to turn the turbulent market environment into an opportunity. Bringing a fresh perspective to marketing is one way to uncover opportunity. Here are some ways to more effectively reach current and prospective clients--often, at very little expense.

Client Segmentation = Better Resource Management

While using client segmentation is one way to make client relationships more profitable, it's something many advisors don't do. According to the AdvisorBenchmarking survey, client targeting is seen as a difficult task by respondents: it was rated 2.38 on a scale from 1 to 4, with 4 being the most challenging marketing activity. Taking the time to segment your clients--by portfolio size, number of referrals, and services you provide to them, for instance--will not only help you know them better, but will also help you work more effectively by ensuring that you're spending the bulk of your time on your best clients.

Using Online Marketing

Smarter use of online marketing can enhance virtually every aspect of your business and help you to position your practice by proactively communicating with your clients on a regular basis. However, when it comes to attracting new clients, a large majority of advisors do not employ Web-based marketing--even though it is a relatively inexpensive and highly measurable way to reach specific audiences. Many advisors (73%) say that none of their clients was acquired through online marketing. "Advisors are so busy with day-to day tasks that they don't focus on marketing--they are not being strategic," says Andrew Gluck, president and CEO of Advisor Products Inc., a Westbury, New York-based company that develops Web sites, client newsletters, and marketing brochures for advisors. The company also invites advisors to attend their weekly educational webinars for free. "In this market, when assets under management have been cut in half, advisors need to differentiate themselves in a marketplace. If they don't manage the situation, it will manage them," added Gluck. We think that given its comparatively low cost, e-mail marketing is likely to become a bigger piece of many advisors' marketing mixes this year.

The good news is that ongoing client communication was rated by investment advisors as "the least challenging marketing activity," giving it a score of 1.46 on a scale from 1 to 4, with 4 being the most challenging marketing activity. The "most challenging" for investment advisors, on the other hand, is direct mail to solicit new clients--advisors rated the degree of difficulty for this type of marketing as 3.05 on a scale of 1 to 4, with 4 again being the most difficult.

Here are some suggestions on how to use online tools to service existing clients:

  • l E-mail an online newsletter on a periodic basis-- investors are hungry to hear their advisors' thoughts and opinions.

    l Post educational content on your Web site from well-respected sources-- many investment providers offer such content to advisors at no charge.

    l Consider holding conference calls with clients on a regular basis to supplement one-on-one meetings--some advisors even invite a guest speaker from a product provider firm to speak on an educational topic.

To attract potential clients, consider using some of these tools:

l Create an account for yourself on Facebook, MySpace, or LinkedIn to reach younger potential clients the way they want to be reached.

l Write a blog. Blogging is one of the easiest and most cost-efficient ways to connect with your potential clients online. Many potential clients now seek out blogs before they meet an advisor.

l Pitch an article to electronic magazines in order to extend your reach to new clients.

l Use visual design to get a competitive advantage. Using tools like Google Ad Words, you can create text or graphic ads at very little cost. They're more measurable than advertisements in traditional print media, and you are charged only when someone clicks on the ad. Additionally, you control how often your ad appears through the selection of keywords and set a budget for the amount you wish to spend. Advertisers also have the flexibility to see how their ad is performing and can make adjustments at any time.

Network, Network, Network

In this challenging environment, exchanging ideas with your peers and even with professionals in other industries will increase your knowledge base and help you come up with creative solutions that may help you differentiate your business.

Some ways to stay plugged in are joining an industry association, attending local conferences, or joining (or forming) local discussion groups. Social networking Web sites also present an opportunity for promoting your business or networking with other financial professionals. According to our research, 77% of the advisors surveyed don't use social networking Web sites to promote their business or to network with other professionals such as CPAs, lawyers, and other RIAs. Only 21% of advisors use; 8% are on Facebook, 3% use, and 3% have a MySpace presence.

Today's turbulent market conditions and high volatility mean that investment advisors face tough client retention challenges. Segmenting clients and utilizing online marketing will enable savvy advisors to more effectively communicate with current clients and extend their reach to prospective ones. These two practices--in addition to networking with peers and with those across industries--are valuable ways for advisors to upgrade their business practices at little or no cost and, like Michael Dell, to uncover opportunity for their businesses.

Maya Ivanova is a market research manager with Rydex She can be reached at

About Rydex AdvisorBenchmarking, Inc., an affiliate of Rydex Investments

AdvisorBenchmarking is a free practice management program designed to help RIAs better manage and grow their firms. The analysis on Rydex is based on the number of completed surveys and reflects only information from those surveys. This information is intended to be general, and these overviews are no substitute for professional, legal or consulting advice. This information should not be construed as advice from Rydex Investments or any of its affiliates.

Reprints Discuss this story

Most Recent Videos

Video Library ››