Six months have passed since I became an independent advisor and it has proved to be a very interesting period, to say the least. At the beginning of the year, I had the security of working for a large institution with a steady income. I could go home at the end of the day and forget about things until the following day. Then, on April 1, I jumped off the cliff (metaphorically speaking), hoping my parachute would prevent me from crashing and burning. There have been moments when I’ve soared and moments when I could see the ground rushing up at me. You see, now when I go home, I no longer have the luxury of forgetting about things. These days I find myself frequently thinking about all the things that need to be done. Please don’t misunderstand. I’m not complaining, but I am experiencing a period of adjustment. All things considered, I’m very glad I made the decision to become an independent. I’m equally glad I chose to work as an RIA instead of running my business through a broker dealer.
I remember thinking, when I still worked for someone else, that I would create such a well-designed business plan that all I would have to do is execute it and success would be mine. In theory I still believe this to be possible but in practice it may not be entirely realistic. This is because you cannot possibly anticipate every obstacle. There will be situations along the way that will require you to make tactical adjustments. Here are some of the issues I’ve encountered.
One of the biggest obstacles was in the area of technology. As we all know, technology is great when it works, but when it doesn’t, it can really increase stress. When I bought my laptop, it was equipped with Windows Vista as its operating system. I soon found out Vista was not compatible with many applications I was using. I eventually switched back to XP and learned a valuable lesson in the process. Never buy a new operating system as soon as it shows up on the market. It’s best to wait until the flaws are ironed out. Fortunately, for my sanity, there’s a highly qualified technical expert in close proximity who has helped me on more than one occasion.
One of the more demanding challenges I’m facing at the moment is due to the fact that there are so many different ways to structure the business. Operating as an RIA requires you to spend more time on infrastructure issues. Someone once explained it to me this way: As an RIA, you have a storefront and will need to build out the interior. Because there are so many ways to proceed, you should think it through carefully before beginning to build. What services will be offered and how will they be priced? What processes will be needed and how will they be implemented? Frankly, there are so many facets of our business that it’s difficult for one person to get a handle on everything. Also, when do you add personnel? Should you incur debt to hire staff or wait until the cash flow will support it? These are just some of the decisions that you’ll need to make.
In the first few months, I had plenty of business. Looking back, I was so busy working with clients and getting established that I neglected to market my services. As most of us know–or will eventually learn, marketing is the lifeblood of any business. So far, my marketing effort has consisted of apprising a few attorneys of my practice. Specifically, I would demonstrate my financial planning tool, discuss my process in working with clients, and hope they would see the benefit for their clients. Remember, they need to be assured that when they put their name on the line by referring someone to you, the client will be more than satisfied with what you offer. So far the results have been good. I’ve met with three law firms and one accounting firm. I’ve received multiple referrals from one of the law firms and one referral from the accounting firm. In each case it has resulted in a new client. Again, you must be able to deliver what you promise or it will reflect badly on you and your referral source.
I sometimes laugh at the thought that I might be one of the most stealthy advisors around. You see, other than what I’ve mentioned above, I haven’t really attempted to get the word out. But that’s about to change as I’m adding one additional prong to my marketing plan. I plan to mail thousands of pre-printed postcards to selected individuals on a regular schedule. The postcards will contain a photo, a brief message, and of course, contact information. I’ll mail these postcards to a few hundred people at a time. Here’s how it will work. Let’s say we’re working with a list of 900 qualified names. I’ll break them into three separate groups. Each person in each group will receive a postcard with a different message every three weeks. Specifically, group one will receive a card in the first week, group two will get the same card in the second week, and group three will receive it in the third week. Let’s call that phase one. Phase two will contain a different message, as will phases three and four. This process will be repeated until each person receives a post card at least three or four times.
You can use direct mail to either announce an event or to get your name out in the marketplace. I plan to begin with the latter. While I’ve done hundreds of seminars in the past, this particular strategy is designed to put my name in front of the recipient. Then, at some point if I decide to hold some type of event, they will have seen my name and perhaps it will increase the chance that they’ll attend. If this strategy happens to generate some phone calls now, then great, but that’s not my intent. So you might ask, “Why would you spend the money on this if you’re not trying to get business?” That’s an excellent question and I’m glad you asked. Unfortunately, since I don’t have enough space to explain it here let me suggest reading the book, The Brand Called You, by Peter Montoya and Tim Vandehey. It is an excellent manual on marketing. In it they discuss this type of approach as an important precursor to the more common type of direct mail in which the recipient is invited to an event.
When it comes to marketing, you have to decide which approaches you’ll use, how they will coordinate together, and how much it will all cost, which leads us to the next topic, expenses.
I thought it might be helpful to provide an estimate of the expenses I incurred to get started. For my office I purchased two desks, two bookcases, two filing cabinets, three printers, two printer stands, a some side tables and a lamp, a laptop computer, computer software, office supplies, filing fees, printing, and graphic design. As can be seen in the chart at left, this came to approximately $8,700. The graphic designer created a coordinated look for my business cards, letterhead, envelopes, covers for my financial plans and proposals, and the aforementioned postcards with plenty of white space for my message. I’ve been pleased with the work she has done.