In a similar fashion, some advisors are already working to educate and support the financial goals of underserved markets: widows, divorcées, younger clients, the South Asian medical community, the middle class. For some, it may be as simple as taking advantage of research and program materials already offered by brokerage firms, such as OppenheimerFunds' Women and Investing, which Densen continues to chair, or the new program he is working on with Merrill Lynch Investment Managers.
"We're still doing research on the consumer shortfalls that could drive an advocacy program, but we know it should be comprehensive, thoughtful, and linked to our core business so that we have a demonstrable and credible way of providing value," says Hannah Grove, managing director and chief marketing officer. "And it should run like a nexus through all our efforts, including sales visits, educational seminars, media, PR, and at the same time make sure we have appropriate products and services that match up."
Densen and Grove believe financial advisors can apply the same rigor, albeit on a smaller scale, in their individual practices-and that such advocacy platforms make particular sense for fee-only advisors. "Advocacy programs can develop reputational awareness, goodwill and integrity, and that's good for the advisor. But there should be a bit of philanthropic inclination in there, too," he declares. And depending on the topic-from cancer research to the environment-an advocacy platform can give advisors a whole new target market to mine.
In a commodity business, do-good programming can be a powerful differentiator. For financial advisors, the need to stand apart in the marketplace may be even stronger than for large corporations, says Cathleen Stahl, a senior consultant at Tiller. "Many advisors need to inject more passion into their marketing effort," she says. "Instead of getting a mailing list of all the rich women in town and sending your business card to them, it's picking some substantive issue that's meaningful to you and to them and finding a way to affiliate with this group in a meaningful way," she says. "Then the services become a benefit you bring to the table as an offshoot of a real relationship."
That's true for Stewart Koesten, CFP, of Koesten Hirschmann & Crabtree in Overland Park, Kan. Of the $90 million managed by Koesten's firm, roughly 30% of it comes from what could be called Cause Commerce. "My goal was to find things that I was really passionate about and then get involved, not for the purpose of doing business but because I felt strongly about them," he says. "An upside is that people really get to know you and your character, and they seek you out to do business."
Koesten's passions are scouting, the arts and his classic car collection. He admits that scouting has not brought in much business, but that being involved in the arts and classic cars has placed him right in the midst of his target clients, executives of public companies. He has also set up referral programs with the local arts council, Jewish charitable organizations and classic-car clubs.
Clients often have causes in which they are interested, and an advisor certainly can help them support those causes. "Like clockwork Americans give over $240 billion to charity every year, and our research shows they are looking to their financial advisors for guidance," says Chris Blunt, former head of strategic planning at Oppenheimer. These days he is CEO of GivingCapital Inc., a distribution company that partners with companies such as American Express, JP Morgan, Bank of America and Salomon Smith Barney to provide donor-advised charitable gift funds.
Blunt says he has raised $50 million for charities by helping advisors market these philanthropic instruments, which act almost as private foundations while helping investors avoid capital gains taxes. "I know that there are probably at least a trillion dollars worth of appreciated securities that Americans are sitting on, one reason being that they don't want to absorb the tax hit. What gets me charged up is that even if 1% is freed up, that translates into $15 billion to $20 billion for charities, and at the same time investors are happy knowing they have donated to charity and avoided the 15% to 20% in capital gains." It's these win-win situations that Densen and Blunt urge advisers to seek out.
Charitable giving comes naturally to Laura Tarbox, CFP, of Tarbox Equity Inc., in Newport Beach, Calif. She now spends about 20% of her time volunteering. "When I had my daughter five years ago, I thought it was important to get involved in charities she could understand," Tarbox says.
So she switched her affiliations and became involved with Child Aid (to support literacy in Guatemala) and Canine Companions, an organization that trains helping dogs. Tarbox has already traveled twice to Guatemala, once with her daughter. "I meet a lot of people who are wealthy and have gotten good business out of it, but I regard that as a bonus. I do not get involved in boards where my heart's not in it."