Zelda Fitzgerald, speaking of the power of advertising, said she came to believe that “one can learn to play the piano by mail and mud will give you a perfect complexion.” Advertising, public relations, and other selling tools can make believers out of independent financial advisors, too, by delivering on the promise to bring them sundry new clients. But few take advantage of marketing’s willful resolve. In today’s bear market, rationalizations of why many planners don’t self-promote, some of them historically valid, are being rapidly eclipsed by compelling reasons why the time has come that they should.
Misperceptions to the contrary, a lot of marketing techniques can be practiced on a shoestring, including the use of so-called guerrilla tactics. And on the drawing boards of some proactive planners are proposals for cooperatives that would utilize shared resources to promote the virtues of fee advisory services in a manner loud enough to be heard above the din of big-budget wirehouses. Independent advisors, especially long- established ones who embrace the status quo, are not likely to go out of business if they refuse to energetically sell themselves (though some industry watchers predict their impending extinction), but they may end up selling themselves short. Richard Sincere, who runs a Boston-based distribution firm serving the independent RIA, puts it this way: “If you stand on the sidelines, the world won’t fall apart on you, but you’re going to lose in the long run because someone else will be more successful.”
When Al Coles of Financial Design Associates, Inc. in Stinson Beach, California, says of his peers, “nobody is doing anything,” it’s not that he or like-minded planners deem self-promotion superfluous to their practices. Rather, they view it as a vital component of their business plans that is stymied by money and time. What happens with many small advisory firms like his own, Coles admits, is that they “get a little marketing thing together” and begin signing on new clients, only to find themselves so busy servicing these clients that any marketing effort falls by the wayside. “Then we lose some clients and have to get marketing up and going again,” says Coles, adding: “This is insane.”
Sincere agrees. But based on his experiences with RIAs, he doesn’t buy the advisors’ lament about money and time. “Quite frankly, that’s an excuse not to do anything,” he says. He thinks advisors need to take a day out of the week or month to focus on the marketing side of their business. “Turn off the phones and think through it alone or with your staff: What are we going to do to build our business?” The biggest mistake advisors make, he believes, is not formulating a strategic marketing plan. “Instead of rushing in and saying, I’m going to do PR, radio, or whatever, figure out what you’re going to try to accomplish in the first place. Don’t start with tactics; know what image and what message you want to send out; know what you’re strong at and what you’re weak at.”
Unfortunately, says Sincere, advisors often don’t know themselves any better than they know their clients. Advisors haven’t bothered to analyze who are their good, mediocre, and poor clients. “Who adds value? Who do they want to work with for the long term, not just because they’re bringing in a lot of revenue, but because they’re easy to work with and will be there for the business going forward?”
Not for Sale
Advisors don’t dodge self-promotion simply because direct mail and radio and television spots are costly. Rather, it’s usually because they’ve never had to, having relied solely on word of mouth to more than fill their client rosters. Lou Stanasolovich of Legend Financial Advisors in Pittsburgh cautions advisors who totally eschew self-promotion in favor of referrals, saying that “as time goes on, it’s nice to have referrals, but the reality is that people refer clients like themselves, and that may not always work out for you.” Nonetheless, referrals, from both other planners and clients, have long been independent planning firms’ best new-client resource. As Steve Moeller, Investment Advisor’s marketing columnist and president of American Business Visions in Tustin, California, contends: “Word of mouth is the most powerful marketing there is on the planet.”
No one would agree more than Lisette Smith of Smith Rapacz Comprehensive Financial Planning in Boston. But, as she discovered, referrals aren’t always forever. Smith reports that already the volume of professional referrals is down from when she and a partner launched their practice in June 2000. She reasons that some planners who had raised their minimums during the height of the financial boom are now willing to work with clients whom they had formerly referred out to firms such as her own.
Utilizing referrals doesn’t necessarily mean running a passive business, however, especially if the referrals are cultivated more than counted on.
“When people say they don’t do anything and rely on referrals, that’s never a 100% true statement,” says planner Mike Knesh of Hauppauge, New York. Steve Kanaly of Kanaly Trust Company, Houston, Texas, and newly elected head of the National Association of Personal Financial Advisors, reports that a general rule of thumb in regard to NAPFA members who successfully serve wealthy clients is that these advisors receive about one referral per client per year.
Yes, referrals can require work, something that even presently referral-rich advisors should take more to heart, Kanaly believes. “It’s a mindset to ask for business, and it’s something that some of us have never had to think about before.”
Moeller agrees, maintaining that advisors, buried as they are in service work, aren’t even looking at the referral issue correctly to begin with. “It’s not about referrals,” he says. “It’s about being referable.” The epiphany comes when an advisor realizes that clients are referring friends not to help the advisor, but to help the friends. “You need to be the type of advisor that inspires clients to think their friends will benefit more than you, and to tell these friends they’re missing out if they’re not working with you,” Moeller argues. “It’s an important mental shift, and a lot harder, but effortless when you get there.”
For some planners, the present bear market has actually increased their referral business. Bernie Kiely of Kiely Capital Management, Inc. in Morristown, New Jersey, reports that he is receiving a lot of calls from victims of corporate downsizing in the Garden State who are now in search of financial advice. “My name is at the top of their list because they have heard of me,” he explains. Scott Leonard of Leonard Capital Management, El Segundo, California, a strict practitioner of the art of asset allocation, says that in the past year or so his planning approach has made “true believers” of his existing clients. At the end of S&P’s greatest run in history, his clients’ hotshot, do-it-yourself friends were suddenly looking for someone to hold their hands.
As an aside, Leonard posits the notion that had the market not swung south, he might even have lost clients, never mind landed new ones. As an asset allocator, clients might have begun to wonder why they were paying him to underperform the market. “When large-cap growth stocks were doing really well, especially relative to value or small-cap or international stocks, clients were starting to say, ‘I realize diversification makes sense and I understand why we’re doing it, but come on! Why am I only getting 15% when the
|Hear Ye, Hear Ye!|
| With direct mail you pay for more than what you get, right? Not according to Response Mail Express, a division of Direct Mail Express in Tampa, Florida. RME sells a financial seminar package designed with a financial planner’s prospects (e.g., senior citizens, pre-retirees, and potential investors) and “behavior” in mind. The company claims that over 2,000 financial planners have successfully used RME’s program nationwide, enjoying higher-than-average results.
RME sees its product as an antidote to the common problem advisors have of too few leads or prospects, an over-dependence on referrals, and weak attempts to market themselves. The company points out as well that the majority of advisors design a direct mail piece they think will work, not one pre-tested to elicit “the proper emotional response.”
According to RME’s strategic marketing director, John McCloskey, the turnkey program, which is now in its eighth year, was adopted from a highly successful automobile program, and then applied to financial advisors.
A 5,000-piece invitation mailing will typically generate 120 to 250 qualified responses, or in this case reservations for a social dinner event at an upscale restaurant of the advisor’s choosing (RME research shows, by the way, that Tuesday and Thursday evenings are the best nights to hold these dinners.). “Our expertise is driving large amounts of qualified attendance to your seminars,” explains McCloskey. “We don’t get involved in what you say or do; that’s up to you.”
RME notes that it handles 95% of the logistics and other work involved in the mailings. The program includes a mailing list created using advisor criteria concerning prospect age, income, and Zip code. Mailings are said usually to generate between a 2.5% to 5% response and cost “as low as” $30 to $35 per lead. By comparison, McCloskey says, the per-lead cost of newspaper ads is about $240.
A typical RME promotion runs $0.65 per invitation based on an average mailing of 5,000, for a total cost of $3,250. Factoring in seminar meals (a national average of $10-$20 per attendee), the advisor will spend between $5,000 and $6,000 on this option.
Actual conversions from prospects to clients are a “numbers game,” says McCloskey. A typical advisor (not using RME) will lure 30 seminar attendees; a normal 30% conversion rate will result in 10 actual appointments, with three being the average to sign on as new clients. Since the average RME seminar will draw 150 seminar attendees, the advisor has a good chance of signing on 45 new clients, McCloskey reasons.
Response Mail Express can be reached at 800-795-2773; or on the Web at www.seminarsuccess.com.
Another marketing product worth listening to and looking at (literally) is iMediaPro, a self-described “multimedia business card” that evolved from the Audio Business Card introduced 14 years ago. ImediaPro (the “I” stands for the power of one) is designed with a financial advisor’s “demanding, computer-savvy” (and high-net-worth) clientele in mind. Delivered in the form of a CD and/or DVD in conjunction with a new interactive Web site, the product, released in March, was created by Stephen W. Anderson’s company, Cold Call Cowboy Productions, based in Palm Desert, California. As Anderson explains it, with audio, video, animation, text, graphics, and images, the advisor can impact prospects with multimedia features that otherwise would not be available to them. Calls regarding cost were not returned by press time.
For more information on the iMediaPro Personal Marketing System call 800-226-9269, or visit the Web site at www.imediapro.com. –Cort Smith
market’s getting 32% and my neighbor at the cocktail party says he’s getting 50%?’” During the peak of the market boom, Leonard was getting few referrals at all. Now recent retirees, reeling from the battering their portfolios have endured and now forced to consider going back to work, are knocking on his door and seeking his help.
Not My Thing
Virtues of referrals notwithstanding, some planners actually have a problem with them in certain circumstances, and for reasons having to do more with personality types than logistics. For example, Leonard doesn’t have a problem getting referrals, but he does have a problem asking for them. “I don’t want my client afraid to take my phone call because I’m going to end the phone conversation with, ‘Who can you refer me to today?’” he says. “I’m soft on the sales side.”
Being strong on the sales side, oddly enough, though it may aid in garnering referrals, can be an impediment to a planner’s self-promotion efforts (or an aid in ignoring them), especially when sales is a cornerstone of a planner’s experience and skills. Like many advisors, Financial Design Associates’ Al Coles came to independent financial planning from a sales environment (he was trained at Merrill Lynch). As a fledgling advisor he knew he was “pretty good at sales but didn’t have a clue about marketing,” which meant he could sell to clients if he could find the right ones to listen to him. “We moved from sales to offering advice, and in doing so we had to increase our competence and get more degrees. And we did, and got better,” he explains. “But now we have to move from a sales mentality of getting clients to a marketing mentality–and there’s a lot more to it than I thought.” Books on marketing would point him in the right direction without telling him exactly how to get there. “Where’s the infrastructure? Where are the tools? Who can I get in to do this with?” he’d ask.
Then there’s the matter of aptitude. Most planners come to the profession lacking marketing skills. Bernie Kiely is quick to admit that his background as a CPA was of little help in finding new clients. “CPAs don’t have any self-promotional flair at all,” he says, adding that in terms of building an accounting firm, it didn’t much matter: “You start an accounting business and one client tells another.” But as an advisor, it matters greatly, he says.
Prevailing wisdom has it that with the present lackluster economy and an enemy at the gate in the form of media-armed wirehouses, there’s never been a better time for independent planners to strike with a marketing plan–as individuals or en masse. But as we’ve seen, planners have not been especially proactive in this regard, treating marketing as an afterthought and giving scant thought to branding. Mark Hurley and June Slowik, who spearheaded the controversial 1999 and 2000 Undiscovered Managers research reports on the future of the financial advisory business, attribute this blas? attitude to “a benign operating environment [that] has lulled industry members into a false sense of security and harmony.” A 1999 report on RIAs by Cerulli Associates in Boston states that financial advisors typically do not use direct mail campaigns and spend little on marketing collateral, with the exception of very large practices ($300 million-plus in assets under management). Cerulli adds that advisors who do have marketing materials (which Cerulli says tend to be “very brief and non-inclusive”) generally use them simply to inform referrals or potential clients of their qualifications.