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NAIFA's 'Four Under Forty' Winners Touch On Keys To Early Success

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What benefits accrue to the advisor who has a well-formulated market niche? Why is charging a fee advantageous? When is the right time to hire a staff person? Answers to these questions, among others, absorbed the better part of a 90-minute panel discussion at the recent annual convention of the National Association of Insurance and Financial Advisors, held here. The session brought together “Four Under Forty” winners, all advisors under the age of 40 who have developed successful practices. The editorial team of NAIFA’s monthly magazine, Advisor Today, selected the four to be featured in its June 2006 issue.

One key to their success, several of the panelists said, is discipline in pursuing business objectives and in keeping to an established routine. Tim Harrison, a wealth management advisor with Northwestern Mutual Wealth Management Company, Omaha, Neb., said he consistently meets monthly benchmarks, collectively dubbed “100 points,” with respect to appointments, case openings, fact-findings, case closings and referrals.

For John Enright, a private wealth advisor with Sagemark Consulting, Syracuse, N.Y., playing the numbers game initially meant time mostly spent on the phone. During the first 18 months of his career, he made 100 cold calls to prospects, 7 days per week. Included in his starting prospect list were 200 people he knew in his community, plus former fraternity buddies and college alumni.

Jennifer Alford, a vice president at Creative Financial Partners, Perrysburg, Ohio, said she hates cold calling and so has depended almost exclusively on referrals since she got her start. To generate qualified leads in the early years, she devoted 10 hours per week to meeting with prospects and clients, another 10 hours per week networking and 5 hours per week doing volunteer work.

As her practice matured, Alford developed alliances with other female entrepreneurs with a view to exchanging leads. Today, she has 4 referral partners who generate 90% of her business. And, she said, they’re all highly qualified because she regularly meets with the partners (typically one hour per week) to discuss prospects.

“I tell referral partners how to establish the insurance need and what to say to prospective clients,” said Alford. “They’re completely trained on my business, as I am on theirs.

“I only accept high-level referrals through face-to-face introductions,” she added. “Because they came to me through the partners, these prospects know exactly what I do and what I’m about. So I don’t have to sell myself during the first interview.”

Clients themselves generate most of Enright’s referrals. To that end, he uses a 13-point introduction process, during which staff members canvass for names of prospects from clients. During a final meeting, the client and Enright narrow the list to the most promising individuals. Thereafter, the client selects one of three methods of introduction: e-mail, a phone call, or a letter followed by a phone call.

Underpinning Enright’s client acquisition strategy, like others described during the panel discussion, is the ability to identify and stay focused on a target market. Whereas Alford works exclusively with female small business owners, Enright interfaces with owners engaged in construction, specifically individuals having a net worth of $5 million, $1 million in investable assets and $250,000-plus in income.

One advantage in developing a market niche is that advisors become well-versed in the operation, vocabulary and culture of targeted businesses. Harrison, who started his professional career as a CPA and counts many accounting firms among his clients, observed that executives at these firms are disposed to meeting with him in part because he speaks their lingo.

Working within a target market can also produce more leads. Alford said clients have an easier time identifying candidates when asked if they know of, say, female owners of hair salons in town than when pressed to name family members or friends who may also be good prospects.

Qualified or otherwise, these prospects will only do business with them, the panelists agreed, if they demonstrate the necessary expertise to formulate a financial plan customized to the client’s situation and financial objectives. Hence, the value of continuing education in insurance solutions and advanced planning concepts.

“If you’re not constantly learning and trying to stay ahead of the curve, you’ll wake up one morning to find that you’re behind the competition,” said Brent Spicuzza, a certified financial planner and principal of The Planning Association, St. Louis, Mo. “The CFP designation, I believe, is crucial, as the public has grown to recognize these marks more than any other.”

Sometimes, financial prowess isn’t enough to close the deal. The way to get otherwise indecisive individuals to take action, several panelists said, is to charge them a fee.

Says Enright: “If [prospects] are really serious about working with you, even if you start with a $200 fee, they’re going to show up at the meeting and listen. If they’re not willing to write a check, then they’re just shopping around or dragging their feet.”

Panelists also pointed up the importance of hiring an assistant when client administration and servicing eats too much into time the advisor could more productively use acquiring new business. Harrison pegged this threshold of activity at 20 new cases per month.

Spicuzza observed that the right administrative staffers–and an appropriate incentive package–can contribute significantly to the success of a practice. Spicuzza offers his employees, including an office manager and marketing person, a base salary plus bonus tied to company performance. If they remain with the firm for 3 years, they’ll also receive a private equity stake in the firm.