Traditionally, Independent advisors don’t market. This has always bothered business consultants, who have used periodic market downturns to proclaim that now (whenever “now” was) is the time when independent advisors have to act like other industries and begin marketing their services to successfully compete. So far the pundits have been wrong nearly every time.
It’s a record of management advice so consistently wrong, that it seems foolhardy to even suggest the gurus might ever actually get it right. Yet, I have to reluctantly admit, I truly believe “this time it’s different.” It is, in fact, finally time for most independent advisors to get serious about marketing their firms and services, to make a concentrated effort to actively attract new clients, and continuously remind existing clients why they want to remain as clients.
This Time It’s for Real
I believe it’s different this time, because the financial markets are different. For one thing, the bear market itself has been unusual, with virtually all asset classes falling at the same time, recovery slow to materialize, and the entire financial system shaken unlike any time since 1929. It’s also been an unusually tough down market for financial advisors: Not only did the market drop taking assets under management to unprecedented lows, but highly publicized scandals involving financial advisors–Bernie Madoff, Allen Stanford, and other high-profile RIAs–have shaken the investing public’s confidence in alternatives to Wall Street’s “advice.” As a result, many financial consumers have been left paralyzed, uncertain which way to turn. And that has meant fewer new clients for independent advisors than they usually get during bad markets (such as 2001).
As a result of this unprecedented pressure on independent firm economics, I’m seeing two related trends that signal a coming of age both for NexGen advisors who are getting their first exposure to the harsh realities of owning a small service business, and for the independent advisory industry as whole, which has lost some of it’s “white knight” luster, and now has to reestablish it’s value proposition for the first time since the collapse of it’s tax-shelter roots, more than 20 years ago. Like most giant steps forward, both are somewhat painful lessons that will strengthen the business foundation of independent advice. It will also prepare the NexGen for the responsibility of assuming ownership and leadership of the independent advisory movement as the baby boomer generation begins its exit.
We’ve Got Explaining to Do
For the first time in my nearly 10 years (oh my, it really has been that long) working with independent advisors, I’m seeing advisory firm owners focus on marketing like never before. Virtually all of my clients (except a couple who at the winding down stage in their careers and practices) and an inordinate number of other advisors that I’ve talked to, are asking questions about actively increasing referrals, building their brand, focusing on a niche, and yes, even creating strategic marketing plans.
Their motivation is simple: For the first time since, well, maybe ever, financial consumers need to be convinced to seek out genuine independent advice. For most advisors, that means taking their message to the public rather than simply waiting for referrals or for new clients to simply walk in the door. I know it’s hard to believe, but it seems as if independent advisors are finally being forced to market their services. And they know it. While this new direction will require a significant adjustment in the way advisory firms are structured and managed, it’s also a major step in the maturing of the advisory industry as a whole.