What are the biggest challenges facing financial advisors today? If you're like me, you have either asked yourself one (if not all) of these questions, or you’ll soon be taking them into consideration:
- How do I grow my business?
- How do I manage changing technology and make sure my firm has what it needs?
- What's my succession plan?
- What can I do to increase my firm's profitability?
In this, the first in a series of blogs, I'll address each of these burning questions and offer a few ideas from my own experiences in the industry. First off: let's cover how to build new business, including shifting your focus from relying only on referrals to more aggressive sales and marketing channels.
In My Day...
I'm dating myself, but in the late 1980's, the concept of financial advice was wildly different than it is today. All clients were new clients to the industry, and advisors needed only to rely on referrals for new business. ‘Marketing’ was a foreign concept outside of answering the phone, and there was no such thing as competition.
How times have changed. Our industry has matured and expanded so quickly over the past five to ten years, with advances in technology, the explosion of social media, mergers and acquisitions and a talented new crop of advisors entering the field. Competition for new business is fierce (potential new clients now interview two to three advisors for the job), margins are shrinking and compliance regulations change often. Add to that an aging industry (on average advisors are in their 50s) and you’ve got a sea change on the horizon that will determine which firms rise to the challenge and which ones sink to the ocean floor.
So what's an advisor to do to remain successful?
Time to Get Pro-Active
Gone are the days of relying on referrals and waiting for the phone to ring. New clients may stumble on your website (which you should invest in, by the way), but it's critical that you do your homework and pro-actively do some outreach to build new business. Here is a four-step approach that we've implemented in my firm:
Step 1: Focus on marketing efforts and messaging to new clients
Over the past several years we have become much more disciplined and strategic in our marketing efforts and messaging. This included working with a marketing firm to re-develop our website and instituting a coordinated advertising strategy with local magazines.
Step 2: Train advisors on the business development/selling model
In today’s landscape there is a lot of interest in your experience. I attended a session at an industry conference awhile back and the presenter spoke about how his firm went from a single rainmaker to a culture of selling. It was the game changer for the firm and yet there’s still this belief that service advisors can't sell. The reality is advisors today have to sell—their credentials and their experience as well as the firm’s—to stand out from the crowd. Train your advisors to rethink the business model and communicate to prospects accordingly.
Step 3: Enhance activity tracking of advisors
You've invested in technology for your office, so use it to your advantage! Your CRM, for instance, should not only store the minutest details of clients, but it should also track capacity to help set goals for your advisors. Use reports to stay on top of activity and firm efficiency. Use your system to monitor results, both firm-wide and among individual advisors.
Step 4: Transition from a service culture to a service to sales culture
As a leader in the firm it is critical for me to communicate the need to grow and develop business, and that this commitment does not conflict with providing great service! I simply stressed the dependence on our growth to continue to provide great service. In other words, if we don’t grow and aren’t ourselves financially successful we won’t be around to provide great service to others. This for us was not a tough thing to sell internally and we have had great success moving to this mindset.
No matter the size or success of your firm, growing your business is a constantly evolving process. In my next blog, I’ll discuss how to manage the ever-changing world of technology and not get left behind.