Marketing Reboot

“We challenge the two of them to find a quality referral to give one another, one that will benefit from the financial planner’s services and one that will benefit from the lawyer or CPA’s services,” Smith adds. “Another important benefit is that I get to hear my young associate tell the story about who we are, what we do and why we’re different. I get to hear this in front of a senior tax partner, i.e. my buddy. He now knows our story just as well as my junior associate knows our story.”

The Message
And what, exactly, is that story? A four-part plan Smith has developed that relies heavily on his expertise and years of experience advising clients.

“It’s a conceptual presentation we’re now using as opposed to the old standard presentation, which was we do financial planning and then take a fee-based approach by managing the managers,” he explains. “That’s a story everyone is telling.”

To differentiate the firm, Smith talks in circles (so to speak). Circle One is not about managing investments, but rather about achieving goals, he says. Circle Two is about managing risk, which is more important than getting higher returns.

“We tell them the biggest risk is the space between your ears,” he says with a laugh. “We talk about the emotional aspect of investing and planning and then address some of the academic concepts behind it. One can get into all of sorts of discussions of portfolio volatility, but by far the most critical aspect of the drawdown stage of one’s life (meaning needing income off the portfolio, minimizing the number of loss years, etc.) is understanding that you can’t eliminate [risks], but you can minimize them. This notion is far more important than the statistical measurement of volatility that we learn in college.”

Circle Three is the idea that individuals can’t control markets or interest rates, but they can control taxes and investment costs, so they should focus on controlling what they can.

The last one, Circle Four, involves monitoring everything and revising as necessary.

“On that monitoring side, I think one of the things that differentiate us from other financial advisors is that most advisors, if not all, rely upon the custodian to provide rate of returns to the client,” he says. “That information is spotty, at best.”

The two elements of return that are important in managing wealth are, first, the dollar rate of return, he adds. It’s important to cross check against the client’s retirement goals or financial planning goals because it becomes the “internal rate of return and we want net of all fees.”

The second element is in determining whether the portfolio is delivering below average, average or above average, or results also known as time-weighted return. The calculation should be made not only for the client’s joint account, various IRAs and college funding, he says, but also for consolidated dollar and time-weighted rates of return.

“Very few advisors spend the energy and the resources to provide it,” he says. “I can assure you that brokerage firms aren’t doing it. They might do it on trust account ‘A,’ but they won’t consolidate trust account ‘A, B and C.’ We want our clients to understand what portfolio measurement and monitoring really entails, because the industry has pretty big gaps in their ability to give the most meaningful data.”

The Payoff
For anyone tempted to dismiss it all as a good idea with little follow-through, Smith is all too happy to relate a string of recent successes that are filling his referral pipeline.

“I had this same conversation on the subject of next-generation business building with a senior tax partner of one of the largest law firms here in town,” he says. “Just like at lunch today, he rolled his eyes and said ‘Oh Mark, we’re having the same struggle.’”

Smith says the conversation expanded and he walked the senior tax partner through the same proposal. They agreed to reconnect in a few weeks time. When Smith called, the lawyer asked if it was OK to include the firm’s senior managing partner on the call. The three of them got to talking, the senior partner liked the idea and as Smith turned the call over to his assistant to set the time for the junior partners to meet, the lawyers asked if he’d mind if seven additional senior attorneys were at the meeting.

“I’m thinking I couldn’t pay money to somehow be asked to come into one of the largest law firms in town to tell them (without coming across sales-y) who we are, what we do and why we’re different,” he marvels. “I’ve done the same thing with a large accounting firm recently. We’re presenting to some of the biggest, most respected CPA and law firms in town, all in an effort to genuinely help the next generation of advisors learn to build relationships and develop business building skills. I’m pretty excited about it, and we’ll be top of mind when opportunities arrive.”