What’s the biggest challenge for independent financial advisors? Is it staying compliant, finding and motivating employees, smartly using technology, or transitioning a practice? While all of those areas befuddle many of you, the single biggest bafflement for most advisors is marketing. A new Schwab Market Knowledge Tools report puts it succinctly: Despite increasing competition, many financial advisors have trouble finding time to focus on business development. According to Cerulli Associates, advisors today spend less than a fifth of their time acquiring new clients. . .the best-managed independent financial advisory practices–those that are profitable and enjoy high productivity and strong client relationships–spend approximately 2% to 3% of annual revenue on client development.
That may be a nice financial benchmark, but on what should you spend that money? The answers will vary with each advisor’s business model, and there is no single path to wisdom, but in the pages ahead we proffer marketing wisdom from a plethora of pros, and warn you of marketing foolishness.–James J. Green
Mitch Anthony: Talk About Your Journey
“The value proposition for the next decade or two is wisdom,” says Mitch Anthony, president of the Financial Life Planning Institute in Rochester, Minnesota. “Find a way to describe your personal wisdom, your experience.”
Instead of seeing yourself as a supplier of products and services, find a way to convey the “wisdom that you’ve gathered in your lifetime and in your tenure in this business.” He suggests you “get more personal,” and ask yourself why you got into this business; what you like working on; and what your joy is in helping clients. Then share your unique point of view with prospective clients.
If you can say, “‘I’ve been there,’ or ‘I’ve seen that,’” you can differentiate yourself from other planners who speak more generically. Stress “return on life” rather than return on investment. “Financial planning is becoming commoditized. The best marketing is a conversation that resonates, a dialogue that’s outstanding, distinguishable from a competitor. If you’re just advertising what you do in terms of process, and what you sell in terms of products and services, you’re one in a trillion,” he warns.
Anthony says that the typical brief introduction to clients is a common marketing mistake. “One of the big problems I see out there is the 30- to 45-second elevator speech–they all sound the same.” Instead, reconsider who you are, he suggests, and dare to be different.–Kathleen M. McBride
Joan Bloom: Have a Clear Plan
In her career within and without Fidelity, where she is senior VP at the firm’s RIA unit in charge of strategic marketing and segment management, Joan Bloom has seen both the retail and institutional sides of marketing. The best tip she says she can give: Have a clear marketing plan.
The biggest mistake advisors make, she says, is to not have one. Advisors should start their plan by determining their goals, asking what already works for them, and how they get business now, then focus their marketing efforts in those areas.
If you get most of your referrals from existing clients, run seminars and entertainment events that focus on topics that are of interest to them. People who have similar interests to your clients, including their friends, are likely to be interested in the same topics. In addition, “expand your spheres of influence” with other professionals, including estate planning attorneys or CPAs, Bloom counsels, by working with them in offering seminars, using your own expertise, and leveraging it to attract groups of people–doctors, women–whom you already serve as clients.
“You don’t have to think big” when it comes to marketing, she says, by running expensive ads or using direct mail. Instead, your marketing efforts “should be highly focused, even narrow.” Regardless of the size of your practice, she counsels, “you must always be thinking about marketing.”–James J. Green
Richard Capalbo: Specify Goals
With a long career in the securities industry, Richard Capalbo knows loads about advisor marketing. “Develop an intelligent marketing plan,” he advises, then hone it, and carry it out.
Being specific about your goals is critical to building a successful marketing plan, says Capalbo, now a principal with the Quantum Group, a Los Angeles-based consulting firm. If you want to market to high-net-worth professionals, for example, it’s not good enough to call yourself a wealth advisor. Better that you define your mission thusly: “I help one-stock multimillionaires to diversify their assets,” or
“I help Fortune 500 executives with their pension funds.”
Before you put your plan into action, you also need to decide where your business should be in three to five years. That means not only deciding on your goals, but also bolstering your credentials. “What gives you the right to tell anyone anything?” asks Capalbo. Whether you’re a CFP, CFA, or carry other designations, “go back and constantly add to your credentials,” he says. “That gives you authority.”
To have an effective marketing program, you also must make some tough decisions about your clientele. Capalbo believes that “the biggest mistake financial advisors make is they open up too many accounts. This is what they have been taught–it’s their mantra.” But “60% of your accounts do only 4% of your business,” he maintains. “I can’t figure out how any financial advisor can service more than 200 accounts or family units,” Capalbo says.–William Glasgall
Larry Chambers: Wield a Mighty Pen
Perhaps it’s no surprise that Larry Chambers is a big fan of the written word, since he’s authored some 40 books (not all under his own name) and close to 2,000 magazine articles. He believes that an advisor who becomes “a local celebrity, even on a simple topic” by writing pieces for a local newspaper or a trade magazine will reap benefits in two ways: the process of researching, writing, and editing the articles will help you focus on what you know and what you can offer clients; and the articles will continue to serve as marketing vehicles for years to come.
When interviewed for this story, for example, Chambers said he had just attracted a new client for his Credibility Marketing program who had read a book Chambers had written six years ago. Appearing on radio and television might be good for an advisor, but Chambers points out that unlike most broadcast media, the written word lives on in many databases that are just a Google away from a prospective client who may be searching for an expert in a specific area.
As for marketing mistakes, the biggest one, he says, “is to do nothing” and think that the flow of passive referrals common in the go-go 1990s will return. “You have to have a proactive marketing process,” he counsels, and you have to be persistent if you want to be recognized as an expert.–James J. Green
Andrew Gluck: Devote a Day Each Quarter
Andrew Gluck, an Investment Advisor editor-at-large and CEO of Westbury, New York-based Advisor Products Inc., says that your No. 1 task is modest yet all-important: Spend one day each quarter on marketing strategy. “Marketing is a lot like dieting or staying in shape,” says Gluck. “You have to work at it.”
At that strategic retreat, create and execute your marketing plan. Gluck, whose firm works with advisors to create client newsletters, brochures, Web sites, and marketing copy, suggests you cover these topics:
Create a dedicated marketing budget. Then spend it.
Pick a niche and focus your effort there.
Rewrite your brochure copy at least once a year. Do the first draft yourself, but then hand it over to a professional.
Find a newsletter vendor.
Learn how to send e-mail newsletters.
Learn how to use your Web site provider’s back office, which lets you control your site.
Plan your Web site; creating an effective site takes planning.
Gluck says the biggest mistake advisors make is to fail to put together a marketing plan. Industry surveys suggest that only a third of advisors have such a plan, and at one meeting of broker/dealer reps Gluck recently addressed, only 10% of the attendees answered affirmatively when asked if they have a marketing program. Without a marketing plan, Gluck says, “they don’t have an identity–they have no brand.”–William Glasgall
Susan Hirshman: Reel Them In During the Summer
Do you deliberately stop marketing in the summer because you feel that prospective clients are so involved in holiday-making that they are just not interested in weighty financial matters? That’s a big mistake, says Susan Hirshman, wealth strategist at J. P. Morgan Funds in New York. “Don’t forget marketing in the summer,” when people are on vacation and making plans for the rest of the year. “They’re at their most relaxed–what better time is there to talk with them?”
One way to get prospective clients’ attention is to “unleash the power of your book” of business, she says. You could host an outing where clients bring qualified friends. This can be something “as typical as golf or fly fishing, or more esoteric,” such as an evening of “face and wealth preservation” to which one advisor invited a select group of clients, their friends, and a plastic surgeon.
Advisors need to think about “who can give you access to other people you want to get in front of,” according to Hirshman. A gathering of birds-of-a-feather could be an effective way for your clients to refer their colleagues. You would invite a group of clients, say, doctors, and ask them each to bring a colleague to the occasion. A variation of this is to host a networking event where clients in different professions could meet and potentially do business together. The key is that they all are asked to bring a qualified colleague or friend to the gathering.
Hirshman says the biggest marketing mistake she sees is when advisors don’t follow up after an event. “I can’t tell you the number of times I have asked, ‘How was your event?’ and the advisor says, ‘The event was fine, but nobody called me,’” she says. “You have to make the calls.”–Kathleen M. McBride