By Beverly Flaxington and Michael Slemmer
Most financial advisers use a process to determine how best to invest client money. That process could include an intake session with the client, a goals-setting exercise and a review of current holdings. Ultimately, investment decisions are made using information gained in the process. Why, then, do so few advisers use a process for attracting new clients and growing their businesses? Doesn't it make sense to employ the same rigor and approach to managing your business as you apply to managing a portfolio?
After 50-plus collective years of working with financial firms, from the smallest one-person practice up to the largest firms in the industry, we've noticed a common theme when desired growth levels are not obtained-the absence of a disciplined and implemented business-building process. And, as small business owners ourselves, we don't advocate a process that strangles or confines, but rather one that clarifies and helps a business owner see what's working and what's not.
Apply What Works
Applying successful sales experience from many different industries, we found that the unique nature of wealth management prevents many traditional sales approaches from working. Classic sales techniques such as prospect marketing, cold calling and other forms of direct selling do not work well in a referral-based industry where trust is the keystone. Observing what does work in wealth management, we created a model for the seven steps to effective business building for advisers.
Why seven steps? Why not four or 20 steps? Too simple isn't effective, but too many become so cumbersome that most firms can't implement them. The seven steps are clear guidelines to help a firm identify its missing links and make modifications or enhancements where they will have the highest impact. The seven steps won't address all aspects of running an advisory business, such as operational efficiencies or the best technology for new client integration, but they do cover the necessary components for firms wanting to grow.
Build the Foundation
We will focus on the first three steps, which are often the hardest ones to accomplish. The last four steps we call "the menu of options." These are the choices a firm has once it has completed the first three steps.
Step 1: Define the goals of the firm. The research is clear that over time, people or firms that know where they are going and have captured their goals in writing reach those goals more often than their counterparts with vague ideas. However, it's astonishing how few advisers have taken the time to write down their goals. And, those who have written their goals and seem pretty clear about where they want to go often haven't communicated the goals to the rest of the firm.
The first important step is to take the time to gather the information you need about where you are and where you want to go. Confirm your firm's definition of success. It may change over time, but write it down, communicate it, and monitor it.
Step 2: Know how your firm is different. This is perhaps the area advisers struggle with the most. The reality is that most advisers are doing exactly the same things for their clients. They are providing excellent client service (why so many firms depend on client referrals), investment expertise and are likely providing some extras-be it outstanding communication, education or a unique process.
Firms struggle because they are either communicating the same old thing, thinking it's unique, or they want to say something different, but can't figure out how to do it.
Good marketing comes into play here. Every firm has a unique differentiator about what it does, who it is or what it offers. It's the process of uncovering what matters to clients and then figuring out how to translate that for people. What does it feel like to do business with your particular firm? What is the experience? It's not about facts and data; it's about bringing the firm alive to those who haven't yet worked with you.
Step 3: Create a new client acquisition plan. This step involves looking at what's been done to grow the business, what's worked and what hasn't. Ask the questions: Who is best suited to sell in our firm? Who will create the sales plan, monitor it, guide it, implement it and track progress?
The new client acquisition plan should be a guidepost and a document that helps the firm, and anyone involved with bringing in new business, know their roles and understand what's working and what's not.
Vague ideas won't work here. The document has to be written, and it has to be clear so the firm knows what it is committed to and how it will get there.
A Menu of Choices
Steps four through seven are the menu items. These steps give the firm the choices available in the high net worth market for gaining new clients. For example, cold calling is not a menu choice. While many brokers and others may have built businesses years ago using this method, it's not sustainable now or in the long term. There is simply too much competition, too much noise and too many people opting for do-not-call lists. Only a very good salesperson can make consistent inroads this way.
However, many strategies do work, including implementing a client referral strategy, expanding your center of influence reach and using public relations or client communication as growth tools. The important thing to understand is that none of these options are quick hits or the proverbial silver bullet. Asking a lawyer to lunch and hoping he or she will refer clients is an exercise in futility.
What does work is identifying which strategies the firm wants to pursue, capturing them on a plan and implementing them step-by-step. Even advisers who gain significant client referrals, for example, often want to do better. Looking at the strategies being employed, measuring them and taking steps to make them more effective will always provide some incremental gain.
Ultimately, the process is about having some discipline and rigor. Just as a portfolio needs attention and modification, so does the business-building process. If we liken it to investing, a "buy and hold" approach will leave the adviser watching other firms grow and their own client base at risk. However, the adviser who takes an "active" approach and creates a plan, follows it and figures out how to modify it for greater success will be rewarded with the growth he or she desires over time.
Beverly Flaxington and Michael Slemmer are principals of The Collaborative, which, along with its division, Advisors Trusted Advisor (www.advisorstrustedadvisor.com ), is a consulting, coaching and training firm exclusively serving the financial industry.
Attract Profitable Clients in 7 Steps
In the 7 Steps to Effective Business Building for Financial Advisers program, author Beverly Flaxington takes the successful approach she has used with her clients and puts it into a program that any financial adviser can incorporate into his or her own business. The program includes a book, workbook, CD and access to the 7 Steps blog. A discount is available to FPA members. Visit www.ShopFPA.org for more information.