What is the greatest challenge advisors face in today’s marketplace? If you guessed “attracting new clients,” then you’re in good company.
Advisors contacted by National Underwriter uniformly cite client acquisition as a top challenge in their own practices. So, also do some 600 producers that Windsor, Conn.-based LIMRA International surveyed earlier this year. Nearly 53% of the advisors polled in the LIMRA Producer Panel said that winning new customers is a major challenge–the only issue on which a majority of those surveyed agreed.
Why are so many encountering difficulty? Insurance professionals finger a range of hurdles, including increasing competition from financial advisors in related (and once distinct) fields, heightened consumer skepticism about financial seminars and the difficulty of making time for prospecting.
Key to dealing with the time issue, advisors say, is the ability to systematize activities that yield new business opportunities: making phone calls, networking, following up on marketing-generated leads and, not least, acting on referrals.
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Mark McCandless, vice president of RAV Financial Services, Beachwood, Ohio, says that his “close rate” on referrals from existing clients and friends is greater than 90%. Nearly as effective, he adds, are referrals from partnering advisors, such as certified public accountants and estate planning attorneys.
Developing these business relationships is no small matter. At least 40% percent of advisors polled by LIMRA flagged this as a “major challenge,” comparable to the percentages cited for insurance compliance, developing one’s own expertise and identifying a successor.
As more CPAs, attorneys and investment advisors add life insurance and financial planning services to their portfolios, the challenge becomes all the greater. The difficulty, McCandless observes, lies not only in finding a partner but also in ensuring the alliance is of mutual benefit. His concern is most acute with respect to CPAs.
“The model of 10 or 15 years ago–that you would cultivate CPAs and they would send their best clients to you–is rapidly becoming a myth,” says McCandless. “People should recognize that CPAs are already in the financial services business.
“While not doing comprehensive financial planning, they are doing planning and selling product,” he adds. “They’re not going to make many referrals in cases where they can service clients themselves.”
Even when fellow advisors don’t offer competitive services, the uninformed among prospective clients often think they do. That perception continues to be widespread, say insurance professionals, with respect to brokerage houses. Why, some clients ask, pay a fee to a financial planner when a stockbroker at Merrill Lynch or Bear Stearns will do?