Three principals of CEG Worldwide, John J. Bowen Jr., Patricia J. Abram and Jonathan Powell, present the key strategies top advisors rely on to succeed in their new book, Breaking Through. The authors note that competition is keen: There are approximately 765,000 registered financial advisors in the U.S., with about 400,000 of these working with individuals. “If these 400,000 advisors are chasing 2.7 million wealthy households — those with more than $1 million in investable assets — then simple math shows that there are fewer than seven such wealthy households per advisor,” they write.
Bowen, Abram and Powell write that it’s not wise for advisors simply to seek out as many clients as they can and sell them as much product as possible. Rather, it’s better to work with fewer but wealthier clients. The authors suggest not only defining a niche (self-employed professionals, for instance), but also creating an ideal client profile, “a detailed description of the clients within your niche with whom you want to work.” Advisors then should position themselves as an expert and create a compelling value proposition, a positioning statement and an elevator speech — “a brief, persuasive speech that motivates prospective clients to explore doing business with you.”
A recent CEG Worldwide study of more than 2,000 financial advisors showed that almost half identified themselves as wealth managers, even though only 6.6 percent actually are wealth managers. Wealth managers, they write, tend to have fewer clients than investment generalists do. “Even more revealing is the fact that wealth managers, on average, earn more than three times as much as investment generalists ($881,000/year vs. $279,000).” However, the greater wealth of the clients, the more they expect from their advisors. “Client-relationship management…means forging in-depth collaborative and consultative client relationships,” write the authors. Relationship management involves three key tasks:
- Understanding the clients’ most important financial challenges and dreams.
- Assembling and managing a network of experts (including lawyers, insurance experts, and so on).