If doing what you've been doing for years isn't working like it used to, you're not alone. More planners than ever before are discovering their practices need a tuneup, their operating procedures could use streamlining and their client rosters could stand some serious editing. Then there's the growing necessity of prospecting for new clients-a task some advisors have never undertaken before.
"The truth, in the last 10 years, is that most planners have let most of their marketing skills atrophy," says Mark Tibergien, a principal at Seattle-based Moss Adams LLP, a consultant to independent financial professionals. "They got clients by default and believed they were invincible and everyone loved them. Now they realize that they have to be effective in differentiating themselves."
Different times require new business models. Here are tips from experts across the country for getting back on track and targeting your efforts so that you're once again building a business that is as rewarding as it is profitable.
Be Your Own Consultant
When you get to the point at which you can step outside of your practice and see it as objectively as a consultant would, you're on your way to zeroing in on your firm's weaknesses and correcting them.
"If you're on a plateau and are trying to get to the next level of success, what do you need to do differently? To know, you have to analyze your business and understand what your work flow is," says Kip Gregory, president of the Gregory Group, a Washington, D.C.-based consulting firm that works with advisors.
That's targeted business improvement, which involves creating processes and systems that are repeatable. Once you can analyze work flow and see the parts that make up the whole at your firm, you'll be able to create systems that enable your firm to do the right thing repeatedly, producing greater results with less effort.
Making the time to do business improvement planning is key. "Set aside time to talk about where you're going and where you want to go," says J. Michael Martin, a partner in Financial Advantage Inc., in Columbia, Md. "The challenge is to break the processes at your firm down into parts and tackle a few at a time," says the former vice president of research at T. Rowe Price.
Get started by drawing a blueprint of your business as it exists today and the way you want it to be. "Define the greatest challenges you're facing in growing your business," Gregory says. Next, assign responsibility for each activity and determine what tools or systems are needed to get the job done-whether the job is staffing, client prospecting, pricing or client service.
Don't forget to include staff in meetings, or you won't get their insight or be able to move forward as a team.
Clone Your Best Clients
When the six planners and the new director of business development at Regent Atlantic in Chatham, N.J., had a brainstorming session earlier this year, the goal was straightforward: find the type of clients they wanted to target over the next decade.
By the end of the day, after identifying all of their top client groups, including retirees and business owners, they had a consensus: They've decided to target women age 45 and up, preferably delegators who can afford the firm's minimum annual fee of $10,000. "It was an easy decision," says Margaret Prentice, the firm's business development director. "We do well serving women, especially newly single women. At the same time, there are more women in the population, they live longer and they're underserved."
Cloning desirable clients means deciding who your best clients are, what they look like, think like and have in common. Knowing who you want to target helps you differentiate yourself and develop specialized marketing programs. Even staffing, advertising and time-management decisions can flow from a decision to target primary client groups.
And it makes it easier to tap the targeted educational programs that some financial services firms are offering. "Increasingly, our wealth management group is doing seminars for advisors' clients on subjects from raising financially responsible kids to working with the appreciated stock options," says Frank Maiorano, director of RIA Development at Nuveen Investments in Chicago. The company tailors seminars to run from one hour to a weekend. It's clear that when you select your clients of choice, the options increase for offering relevant and precise services.
Ask Or You Won't Receive (Referrals)
Prospecting for new clients is becoming a serious business at Greenbaum and Orecchio. To reward existing clients who refer prospects, the Old Tappan, N.J.-based firm is creating a program to give $500 donations to the charity of the client's choice. (They're working with their attorney to avoid having the donations look like rebates.)
"We think it's a good way to say thank you to clients, who are our second-largest source of new business," says Tom Orecchio. The largest source? Attorneys and accountants, who are reached with a novel approach. They offer clients a 25% discount in fees if they bring their advisor on visits to their attorney or CPA. "We think it's win-win for everyone: We get to ensure that other advisors work in coordination with us, the client is better served and we believe CPAs and other advisors will feel more comfortable referring clients to us," Orecchio says.
The firm also has begun delivering brochures to clients at its annual meetings, asking if they have friends or family members who need assistance.
To increase prospecting, the six advisors at Regent Atlantic have networking lunches with CPAs and attorneys. "We're trying to establish a marketing culture here. The idea is if you're eating lunch at your desk, you're not networking. We're trying to have two lunches or breakfasts a week with centers of influence," Prentice says. Newsletters and e-mail updates also are good places to ask for referrals in an unobtrusive way; simply ask clients to pass relevant information along to friends and family who can use it.
Communicate and Systematize
Even if the rest of the world is hibernating, you can't afford to. Ignoring or ducking clients makes them far angrier than market turmoil does. That's according to a recent Phoenix Companies' survey, which found that 33% of advisors believe their clients blamed them for portfolio losses, while only 9% of clients actually do. However, 11% of clients reported that their planner was ducking them or had failed to explain what was happening with their assets.
Failing to communicate is often the primary reason that clients cite for firing their advisors, says Gregory, author of the upcoming Winning Clients in a Wired World: How to Leverage Technology and the Web to Grow Your Business (John Wiley, 2003).
He suggests finding your top 10 to 25 clients and building your communication plan around them by identifying their common goals, dreams or interests. Maybe they're all retirees or work in a similar industry or have grandchildren or a vacation house. "Then you can begin to find valuable content for them, and your ability to ask for referrals to similar clients gets easier," Gregory says.
As you build an automated communication strategy, don't forget the high-touch benefits of actually listening. "Don't feel like you have to blow your horn so loud, you turn clients off," Martin says.
When firms start to grow at an abnormal pace, creating a consistent client experience becomes challenging. The Arkansas Financial Group in Little Rock has added about 40 clients in the last 12 months and CEO Rick Adkins says the firm could never have handled the surge in volume if it had not made a decision to "systematize, systematize, systematize."
The firm now has a script for "virtually every" situation that might arise. While many planners might object to this approach, it permits employees to respond in a uniform way to client questions and communicate the message that the partners want them to deliver. Without scripts, employees might end up trying to reinvent the wheel every time a problem arises and resort to winging it, an alternative fraught with potential pitfalls.
Get Paid For A Big Brain
When an elderly couple came to Gay Abarbanell earlier this year, their decimated portfolio in tow, it became clear in minutes that they no longer had the assets to generate the income they needed. And while their house was worth more than $700,000, they simply didn't want to move. The couple had already done much of their homework and discovered that reverse mortgages just wouldn't give them the income they needed. So Abarbanell got on the phone and started calling local charities, pitching her form of a charitable annuity, which pledged their home (after both passed away) in return for at least $2,500 a month in lifetime income. At press time, several charities were doing final reviews of Abarbanell's proposal, which would provide the couple with close to $3,000 in monthly income. Talk about thinking outside the box. "I charge an annual advisory maintenance fee that goes beyond assets under management," says Abarbanell, a planner with National Planning Corp. in Culver City, Calif. "It's for my brain. I do pretty complex estate planning."
News that planners have implemented charges in addition to the typical 1% annual assets-under-management fee is greeted warmly by Tibergien. "I've been critical of asset-based charges for years because I don't think they properly value advisors' deliverables," says Tibergien, who conducts the Financial Planning Association's annual compensation and staffing survey. "We're starting to see a trend toward value billing for time and projects, in addition to asset management fees. It's a fundamental change in what I think was a wayward pricing strategy," he says. Advisors' greatest hurdle to increased billings? "Their own lack of confidence," Tibergien says.
Pay Your People-A Lot
"I want everyone to be overpaid," says Brian Nevans, a partner in the Rancho Palos Verdes, Calif., firm of Nevans, Britt and Associates. While some planners have been known to scrimp on staff salaries, a new breed of advisor is finding that better-paid employees create better businesses. "If we're working hard and the business is successful, there's plenty to go around," add Nevans, who instituted a bonus-based plan that has resulted in more money for all of the firm's staff.
Nevans and other advisors who are tying staff income to the success of their businesses are finding better morale, an enhanced feeling of ownership and teamwork, and reduced staff turnover. The effect is a more efficient, effective, client-centered firm.
If you're prone to underestimating the power of incentive-based compensation, consider this: Firms that didn't have a profit sharing plan managed $15 million per professional, while firms that did have one managed $24 million per professional-a whopping 60% more assets, according to the FPA's annual 2001 compensation and staffing survey. Only 31% of firms use a profit-sharing plan, while 81% use a less-defined bonus plan.
Work The Media
Maybe it was his gig as lead singer of the rock band One in the 1970s that gave Ray Lucia his drive for fame. Now as a San Diego-based planner, he has become a veritable one-man media circus. He does a daily three-hour nationally syndicated radio show for Business Talk Radio that airs in 70 markets. He appears a few times a week on the morning news on ABC's San Diego affiliate (KGTV), where he chats about economic news with the anchor and fields viewer questions. And to further disseminate his views, he published his first book, Buckets of Money, in February. (He's already sold 5,000 copies.) "This has helped us build a national practice," says Lucia, who credits media exposure with assisting him build his firm over the last 12 years from zero to $500 million in assets under management.
You may not get interviewed on CNBC right out of the gate, but you can still launch a media outreach program that adds credibility to your marketing efforts, says Dan Sondhelm, a partner in SunStar, a marketing consulting firm for financial services firms.
"There are two approaches to getting media: Let reporters write about you or offer to write an article or column yourself," Sondhelm says. Since neither is likely to happen overnight, you should view proactive outreach to reporters and editors as long-term business building. Introduce yourself to select writers and editors and try to get to know them. Send them your client newsletter, offer to take them to lunch and pitch interesting story ideas (not infomercials). The same strategy works with radio and television reporters and editors. Local media can attract clients and act as a launching pad to national coverage.
"Develop a structured program," Sondhelm says. "Identify who in the media you want to go after and go after them."
And don't forget to leverage coverage you receive. Cite articles and interviews on your Web site and in your newsletter. Send them to reporters and frame them on your wall. At its core, media coverage is a third-party endorsement that lends credibility, stimulates leads and shortens the sales process.
See Your Firm From Clients' Eyes
Have you ever sat in your reception area and just listened? It might be a challenge to look at your practice with the critical eye of a prospective or existing client, but it's a critical step toward understanding what goes right and wrong. More progressive companies like Commonwealth Financial Network have developed a step-by-step process to help planners see their practice through a client's eyes. "Start with the obvious," says Joni Youngwirth, Commonwealth's vice president of practice management. "What do you see when you walk in the door? When you sit in the reception room? Are the reading materials relevant for clients?"
Making sure your office is clean and aesthetic is just the beginning. How are clients greeted and ushered into meetings? What do they hear in your offices?
It's crucial that staff and planners are thoroughly prepared for meetings. "Clients don't have time to burn," Youngwirth says, so running efficient and effective meetings is important.
Are clients given paperwork or binders that are easy to organize or update? What happens after the meeting in terms of follow-up and implementation? Having a pre-meeting checklist, a meeting checklist and a post-meeting checklist ensures that clients get the same treatment and that you develop the kind of standard operating procedures that enable you to grow a business, not just a practice, Youngwirth says.
And don't forget to ask clients what you can do for their families-both children and parents. It's not only a way to add value to your relationship but also to add to your client roster.
For additional insight into client perceptions, make it a practice to track how phones are answered, how quickly clients get responses to their questions and how well your Web site works. Of course, if you really want to know what clients think, ask them at the end of meetings and in annual client surveys.