Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Building Your Business

3 Ways to Find New Clients More Efficiently

Your article was successfully shared with the contacts you provided.

Getting and keeping clients. It’s the lifeblood of an advisory business, regardless of what’s happening in the markets, and often a factor in whether practices rise or fall. That’s because winning clients is a source of fees, and often a way for advisors to find other assets and clients, which together help drive business growth. No wonder, of all the things advisors do, client meetings and acquisition takes most of their time—about a fifth, according to the latest Rydex AdvisorBenchmarking report. The survey has seen a trend in the shift in how advisors spend their time, suggesting that the industry may have settled into a “new normal” with a strong emphasis on relationship basics, including spending more time on client communication and client relationship management.

The focus on clients is not surprising, since advisors also report that their largest challenge is getting new clients. According to the most recent study, the biggest threats to RIA practices have remained consistent for the past couple of years, except that technology concerns have become less of a priority, replaced by issues relating to market impacts on assets and managing client expectations.

Among a list of potential threats to advisors’ businesses, client acquisition was number one, trumping even the need to meet the demands of compliance and deal with the continuing impact of a bear market. Assets are still hard to come by. Clients remain cautious and require a lot of handholding. And in the wake of investigations into the causes of the financial collapse, the entire financial services industry has come under greater scrutiny—including RIA firms, which potentially face more stringent regulation and higher compliance demands. The result is that management demands on advisors to run their businesses increasingly conflicts with their role “in” the business working with clients and prospects. 

For many advisors, there’s no better way of acquiring clients than through referrals, which usually stem from strong relationships with existing clients and with “centers of influence,” such as accountants, lawyers and trustees who are often asked by their clients for financial advice.

In fact, respondents in the latest AdvisorBenchmarking survey said referrals from existing clients are expected to be the key driver of growth over the next five years.

Three Key Points on Client Acquisitions

Acquiring clients could easily absorb every minute of an advisor’s day. But keeping the following points in mind may make the time spent obtaining clients more productive. 

Point No. 1: Ensuring Your Practice Is Compatible With the Prospect

A critical aspect of acquiring new clients is determining their compatibility with the advisor’s business model. Some independent advisors, for example, often encounter prospects who feel it’s important to be associated with a large national brand. Other prospects may not understand the value proposition of an independent wealth management advisor; for example, that it holds client interests at heart and has fewer conflicts of interests. Also, an independent advisor provides a greater opportunity set to clients than does the sometimes limited shelf space of a large broker/dealer.

The asset level of potential clients, while important, may not be the overriding factor in deciding to pursue them. A client persuaded to transfer assets over time based on product offering, the strength of the advice and service level may turn out to produce more loyalty among clients than one who turns over everything at once, but could bolt for no reason. Clients also may be more prized for their potential for referrals than the money they have. 

Point No. 2: Enhance How You Obtain Referrals

Start by being sure your current clients are aware of the service you provide, and how your services may differ from the competition. When soliciting referrals, let your current clients know what kind of clients you’re looking to bring on board. For example, if you have expertise on working with retirees or executives with stock options, ask them if they have any contacts or referrals that meet this criteria–which will focus their thinking on providing you with potential clients that might be a good fit.

Finally, develop a useful system for tracking your contact with prospects and gaining insight into the referral techniques and discussions that work. And while it may be obvious, make sure that you thank them for their help. A referral gift is also a nice touch.

Point No. 3: Spend the Necessary Time on Client Acquisition

One of advisors’ biggest challenges is working in and on the business at the same time. Also, recognize that it’s easy for a handful of clients to eat up a disproportionate amount of resources, so be prepared to delegate some client needs to other staff if possible.

Advisors skilled in acquiring clients say they don’t hesitate to delegate certain practice duties to an outside provider if it enables them to focus on building the business. Form partnerships or bring in third-party relationships to handle aspects of the business demanding more time or expertise, including investment management, research or compliance and recordkeeping. Efficient time management is the best way to take advantage of growth opportunities.

Expect your effort to find and keep clients to be challenging. But it doesn’t have to be a burden. Look for opportunities to explain your investment advisory approach and the satisfaction of your current clients. That can help distinguish your unique offering, while strengthening the core of a successful practice.

AdvisorBenchmarking is a research and analysis center focused on the registered investment advisor (RIA) marketplace. Study results quoted in this article are based on the 300-plus RIA firms that took the online survey in March-May 2011. The service is aimed at helping advisors grow and enhance their firms by comparing how their businesses fare against other advisors. Advisors also learn best practices of the most successful advisors in the business.

AdvisorBenchmarking is an affiliate of Guggenheim Investments. The analysis on is based on the number of completed surveys and reflects only information from those surveys. This information is intended to be general in nature, and these overviews are no substitute for professional, legal or consulting advice. This information should not be construed as advice from Guggenheim Investments or any of its affiliates.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.