As firms grow, the number of new clients who can be attracted by one or two rainmakers usually can't keep up with most firms’ growth goals. (Illustration: Carlo Giambarresi)

Almost 10 years ago, I wrote about a serious issue for advisors that I humbly believed was not getting the attention it deserved: the lack of career paths for young advisors. In this article, I present for your consideration another major issue that the industry, and especially owner-advisors, must address or suffer the consequences: the lack of an integrated marketing approach to grow their firms in the 21st century.

In February 2005, I wrote a cover story for Investment Advisor called “The Great Divide.” That story was about the lack of professional career tracks in the majority of independent financial planning firms and its primary effect: the failure to attract young professionals to the industry. While young financial planners applauded, I received a great deal of pushback from many owner-advisors and industry gurus who failed to see “the problem” at the time the article was published.

Since then, the planning profession has come to realize that advisory firm growth depends on adding young advisors, and most consultants became busy helping firms create career tracks to turn young, next-generation advisors into lead advisors and, eventually, into owners.

Ten years later, we see the same scenario playing out around a different but related area in the advisory community—marketing. Most of today’s independent advisory firms were started decades ago and are still managed by “rainmakers.” These are owner-advisors who out of necessity or natural inclination focused on attracting new clients as well as providing advisory services to them. Consequently, most advisory firms today are structured to support those “rainmaking” efforts and as a result desperately need to replace those rainmakers in their firms.

The advisory business, however, has changed dramatically over the past 25 years, as have advisory firms. Firms are larger, ownership succession is at crisis levels, online advice is driving fees down and, due to a serious talent shortage, recruiting—especially young advisors with rainmaking talent—is nearly impossible.

To continue to grow in this new reality, advisory firms will have to let go of their rainmaking roots and shift the way they bring in new clients. How? By redesigning themselves and their firms to embrace an integrated marketing approach where the firm itself markets for the advisors, instead of advisors marketing for the firms.

I predict that within the next seven to 10 years, the consultants who are now human capital gurus will also add marketing gurus to their teams. Many of the firms that don’t become integrated marketers will be absorbed by those that do.

Looking Back

Twenty-five years ago, most independent firms were relatively new. They were run by their founding advisor(s), had less than $250,000 in revenues and had very limited resources. Naturally, their growth largely depended on rainmaking by their owner-advisors. Today’s advisory firms are older, larger, have more clients and are either run by successor advisors or are in the process of being turned over to successors.

But as firms grow, the number of new clients who can be attracted by one or two rainmakers usually can’t keep up with most firms’ growth goals. Consequently, the importance of rainmaking decreases, while the importance of bringing in new clients through target marketing, client referrals and great client service (to keep existing clients happy enough to refer their friends) significantly increases.

There comes a point for most firms when a solid marketing plan and client referrals become more important than the rainmakers. Five years ago we saw this happening around the $1.2 million mark in revenue; today it’s closer to $750,000 or so in annual revenues.

The rainmaker’s importance continues to shrink as firms grow, and eventually the need for a rainmaker disappears. Owner-advisors who want their firms to grow beyond a small or mid-size firm into a business with more than $1 million in annual revenues will need to adopt a structure that supports growth well beyond rainmaking. That structure must include a comprehensive marketing strategy, firm-wide integrated marketing and great client service.

Marketing Mistakes

Some advisory firms grasp the need for marketing, but many retain a rainmaker mentality. That mentality leads to poor results. Client service is mediocre compared to their peers, and clients’ experience with the firm is inconsistent. The way they describe their firm and what it delivers to clients varies widely from person to person and even rainmaker to rainmaker. Consequently, they’re often quickly disappointed with their marketing efforts and hastily conclude that marketing doesn’t work.

In some cases, these disappointing results stem from amateur mistakes or bad execution. The biggest mistake we see is failing to consistently communicate meaningful differences about their firm. Rainmakers understand intuitively how to tell a prospect how they (the rainmakers) are different, but have a very hard time communicating how their firm is different. These differentiators must resonate with retail investors. If you are still uttering any of these common phrases about your firm—“We’re independent,” “We’re fee-only,” “We take care of our clients,” “We have personal relationships with our clients”—you’re not communicating how you differ from your competitors.

These pathways to failure are symptoms of a larger problem. In our work [Disclosure: I have merged my consulting firm with an advisory marketing firm], we’ve come to realize that the root cause of most advisory marketing failures is the lack of a foundation to make marketing plans successful. Yet owner-advisors often resist any suggestion that their short-sighted rainmaking approach to managing their firm is their biggest roadblock to success.

Laying the Foundation

To create a dynamic advisory business today, owner-advisors need to turn their firm into a marketing machine. That is, they must create a business that markets itself and thus supports and enhances its marketing strategies. In both larger and smaller firms, it’s important to get the whole firm and all of its employees involved in “marketing.” That approach must begin with the owners, who need to change their perspective from rainmaking to firm-wide new-client acquisition.

Advisors need to create a dynamic firm-wide marketing process designed to maximize both client and prospect awareness of the mission of the firm in order to encourage referrals and attract the interest of targeted prospects. To do this, marketing strategies must be built around five integrated elements.

  1. Consistently Great Client Service. The first step is changing the firm’s (and its owner’s) focus from bringing in new clients his or herself to delivering great client service consistently. This requires a major shift away from emphasizing rainmaking and toward viewing the firm’s client service people as the “heart of the house” where they deliver great service and key messaging that gets the client talking about the firm.

  2. Consistently Good Client Experience. To give every client the same great experience every time, advisory firms need to create a “client care” process, which details what each member of the firm should do and say at every point of client contact. That includes prospects’ initial contact with the firm, their sales meetings, closing the prospects, onboarding them as new clients and during each phase of delivering client service.

    Every employee should know exactly what they are supposed to do at every step in the client process and how they are supposed to do it. You cannot have certain groups of people working in their own way. It has to be cohesive and consistent.

  3. A Consistent Firm Message. Back in the day of the rainmaker, it was sufficient that the owner-advisor (or other person responsible for bringing in new clients) knew about the firm and what the firm does for its clients. In the new world of firm-wide marketing, the emphasis has to shift to the firm’s culture. That requires not only that all employees know about their firm’s mission, but that they’re able to articulate this message to clients, prospects and everyone else with whom they may come into contact.

  4. Employee Training. A clear and consistent firm message won’t happen by accident. The first step is to create one; the second step is to make every employee a marketer by teaching them the message and training them why, when and how to use it across all channels and at all times.

  5. A Targeted Marketing Plan. After laying the foundation to support an integrated marketing plan, owner-advisors who want their firms to grow need a consistent, holistic marketing plan. Creating a plan doesn’t have to be expensive. The goal of the marketing plan is to leverage all of the firm’s assets to create a marketing machine that delivers an unfailing community presence that will further increase referrals, new leads and new clients.

Close rates on referrals and prospects will increase dramatically when prospective clients have already heard about a firm. In the old days, the best marketing tools were seminars, speeches, columns in local newspapers or magazines, TV or radio appearances, and newsletters. To make those tools effective today you have to couple them with maintaining an online presence and cohesive messages across many avenues using blogs, discussion boards, email blasts and social media, to name but a few.

The good news is that in today’s sprawling online world, even introverts and non-natural marketers can become good marketers. The best results come from matching marketing efforts with a firm’s marketing message, culture, service model and target clients. With a good firm foundation and a successful marketing plan, new clients will find you.

In our experience, successful marketing plans include the following five elements:

  1. Sending the Right Message. Does the brand of the firm—the company name, logo, marketing message—match what the firm actually does for its clients? This may seem obvious, but you’d be surprised how many marketing campaigns end up not reflecting the firm they are marketing.

  2. Matching the Message to the Model. Do the firm’s pricing, revenue model and service model match the targeted clients? The best marketing in the world isn’t worth much if aimed at the wrong clients.

  3. Sending the Message to the Proper Prospect. Does the messaging in all the firm’s marketing channels resonate with the target clients? Are all the marketing channels, media outlets, social media efforts accessed by the target clients?

  4. Communicating in the Right Places. Does the marketing plan include meetings, gatherings, conferences, social media, etc., that are attended or used by the target market? The goal is to make your target market feel you understand their business—that the advisory firm is part of, and has expertise in, the same circle. You need to think of yourself as part of your target group, be passionate about who they are and know what they want to hear about.

  5. Making a Commitment. Advisors who “try” a marketing plan for a couple of months are doomed to failure. Most marketing efforts will take considerably longer, years even, to saturate a small market to the point where you’ll see results.

Moreover, most independent advisors don’t have the resources to saturate a mass advertising market for a long enough time to be effective. For most advisors, target marketing is a much better fit for their budgets and a much better way to reach their target markets. Regardless of your final marketing plan, it’s essential to make a long-term commitment to it.

Teaching Employees to Close

Once a firm is generating a steady stream of referrals and prospects with a solid foundation, delivering consistent client service with a good marketing message used by the entire staff, and is reaching their target market with a solid marketing plan, the biggest remaining challenge is to sign up a substantial portion of new client prospects. Even great marketing doesn’t matter if you can’t convert prospects into clients.

To make the transition from one-off rainmaking to successful marketing, today’s owner-advisors need to ask themselves: “Have you taught any of your advisors to close?” Most advisors haven’t because they believe rainmaking and selling is an art, not a science. However, today’s advisory firms need the consistency of a science. Looking at selling as a science is what has made great businesses across many, many established industries hugely successful. To get it, you have to create a successful sales process that anyone can deliver through their knowledge and skills.

In my years working with advisors who are outstanding rainmakers, I have watched these advisors close a prospect in as little as 15 minutes. They understand how to connect with the client, communicate to the client their value and get the client onboard in an instant. Those rainmakers know all the right buttons to push. How do you teach that?

You don’t.

To teach the whole firm to close, you have to have a sales process that is much more detailed than a 15-minute meeting. We usually recommend a three-step process for firms to use with prospective clients. That process usually involves these three general outcomes:

  • The first meeting is getting to know the client.

  • The second meeting is delivering something of value to the client.

  • The third meeting is a mutual commitment.

These three steps take on a different life at every firm we work with, and it’s what makes their firms appear truly unique to the prospect. At one of our client firms, in the first meeting, data is gathered to create a basic assessment of the client’s financial life. The second meeting assesses their financial picture and provides basic recommendations for improvement. The third meeting is to introduce the team of four people whom the prospect will be working with during their relationship with the firm.

In our experience, this process takes the pressure to sell off non-sales people and skyrockets closing ratios. It can even be used by customer service people to close successfully. The close ratio for the above firm is nearly 99%. I’ve even watched a lower-level administrative person close a client. How is that possible? She just followed the sales process.

Firm-Wide Benefits of Integrated Marketing

While we now have a new generation of advisors who may be good advisors but often aren’t rainmakers, with a solid marketing platform, they don’t have to be. Further, because most successions are financed out of firm growth, marketing is the key to succession financing as well.

As with my 2005 article about young advisors and career tracks, I believe the new frontier in the evolution of the financial planning industry is sophisticated, integrated marketing programs in firms, which will constitute the key to success for the next generation of advisors who will run those firms.

I also know that over the next 10 years, those firms that don’t kill the rainmaker mentality will be left behind, very similar to how we are seeing firms that don’t have career tracks for young advisors being left behind today.

Within the next five years or so, the rest of the industry will believe me.