A lot of advisory firms pay lip service to the notion of client acquisition. But if there are firms more successful at growing clients and assets organically than RegentAtlantic in Chatham, N.J., they are few and far between. To find out how the firm quadrupled its assets in just six short years, we recently sat down with Lauren Goldfarb, the firm's director of marketing, who told us bluntly: "Rainmaking at our firm is an organized, top-down effort."
What that means is that just about everyone's job at RegentAtlantic includes marketing duties and client acquisition, which in turn are tied to individual accountability and incentives, including quarterly reviews, annual bonuses and compensation. That tone at the top was set by the partners when RegentAtlantic formalized and underscored marketing and promotional duties by hiring its first marketing director back in 2002, one of the few, if not only, advisor firms to do so at that time.
In fact, marketing is 20% of the duty for each of the firm's 14 wealth managers, and their compensation is tied closely to that goal every year. Each is responsible for bringing in an amount ranging from $102,000 to $272,000 in annualized client revenue, according to his seniority and experience. The firm itself has a goal of bringing in nearly $2.3 million in annualized revenue-an accomplishment that is tied to a bonus incentive for the entire firm's staff, in addition to the bonuses for each individual wealth manager, Goldfarb says. How can a firm achieve such concrete results, year in and year out? "Each person needs to cultivate COIs [centers of influence] and be accountable for having at least two networking appointments a week," Goldfarb says. "Our president, David Bugen, says that we all need to eat lunch, so why eat by yourself when you built meaningful relationships with a professional?"
Not everything RegentAtlantic tries works right out of the gate. For instance, the firm started out requiring that wealth managers schedule three professional lunches a week, which staff found to be onerous. So that requirement was reduced to two appointments a week, which has been working well for several years now.
"Over time, the criteria has changed, but the consistency has been the requirement for networking appointments. Today that amounts to 90 lunches and appointments per year, which comes to about two per week-with six weeks off per year for busy times, holidays and vacations," Goldfarb says. With 14 wealth managers, that comes to 1,260 lunches with centers of influence each year. While the firm won a significant amount of new business from client referrals last year-33 new clients-it won 38 new ones through friends of the firm and other professionals, and it closed 41% of all its professional referrals versus 33% of its client referrals. The professional referrals are credited with helping the firm grow its client roster to more than 900.
Unlike so many advisors who proudly tell us they rely solely on customer word of mouth for new clients and assets, RegentAtlantic has actively developed the professional channels, which in some ways the firm finds even more beneficial. Why? Because referrals from professionals are some of the most profitable and sticky, which is why RegentAtlantic emphasizes its centers of influence program in its annual incentive programs.
"The difference with professional referrals is the assets and type of client are much greater and the ratio to close is higher, meaning the recommendation from a professional has a higher profitability," Goldfarb says. "Professionals know who our appropriate fit is. You might not know your best friend's assets, but his or her attorney will." Currently, the firm's minimum asset requirement with new clients is $2 million in assets and their clients on the top end have up to $25 million, so professionals, including estate planning attorneys, insurance agents and CPAs who can drive 30 to 40 new clients to RegentAtlantic's door each year, are worth meeting with, Goldfarb adds.
"Our best clients are delegators, view us as conductors and value long-term relationships," she says. Other hallmarks of RegentAtlantic's ideal client: They live within their means, are in their midlife accumulation stage and are often transitioning from one phase of life to the next.
Another tool the firm uses to reach professionals is its "lunch & learn" educational sessions, which invite outside professionals to come in and demonstrate their area of specialty so RegentAtlantic can make referrals to them. "In a firm we're cultivating a relationship with, we'll invite a group of them for breakfast to discuss ways we can help each other with client issues," says Goldfarb, who adds that the firm also does networking lunches to introduce different professionals to each other. "For example, if one of us decides that professionals such as an attorney and accountant we know well would benefit from knowing each other, we'll set up a lunch to make the introductions. All wealth managers are encouraged to develop relationships with the type of professionals to whom they'd feel comfortable making referrals."
More firms today have their sights set on acquisition as a model for growth, and for a while, RegentAtlantic's partners gave that a try. They spent many hours and resources trying to acquire other businesses until 2002, but found only one smaller practice that was a cultural fit. "We found we were spending a lot of energy on finding the right acquisition partners, and it was a distraction from our growth and day-to-day work," Goldfarb says. Instead they decided to adopt the motto: " 'Shut up and do business.' We decided to forget about looking for acquisition partners and to focus our strengths on growing organically," Goldfarb says. It's a model the firm follows to this day.
When the firm hired its first marketing director, Margaret Prentiss (now a principal), back in 2002, it could have decided to make her the chief rainmaker. Instead, management determined to make rainmakers of each of its advisors, which it has consistently done over the past six years. That mindset creates multiple client acquisition channels, which are critical to fulfilling the firm's annual growth goals of 25% annually.
Another way the firm attracts new clients and referrals is by making each wealth manager responsible for developing niche expertise in certain business segments, and tying that to their annual incentive package. Each second-generation wealth manager, in particular, has a practice specialty and is focused on building that niche.
"This gives us differentiation from other advisory firms," Goldfarb says. "For instance, one of our advisors, Michael Steiner, discovered several years back that of all industries represented by his clients, most were from the pharmaceutical industry." So the advisor developed his expertise, which culminated in his writing a 2007 white paper on the effects that the pharmaceutical industry would have on individuals in the future. "The upshot is that today he is oft-quoted in leading publications such as The Wall Street Journal and has become the sought-after investment advisor when a pharmaceutical executive or scientist asks, "Who should I go to for advice in New Jersey?" Goldfarb says.
"That's what we seek in each of our specialties," she adds. Other advisors at RegentAtlantic who specialize are John Prokop, who focuses on widows and widowers; Jim Reilly, who comes from a family of physicians; Jane Newton, who attracts other female veterans of Wall Street like herself; and J. Brent Beene, who focuses on anesthesiologists. "We encourage doing what you know," Goldfarb says.
The firm has found over time that it pays to be creative when it comes to refining client acquisition events and programs. Not everything works right out of the gate. When the firm first started marketing, one of its initial programs -investment and planning seminars for prospects only-failed miserably. "We had a really hard time getting attendance," Goldfarb says. "It was hard to do."
So in 2003, the firm launched its "Asset Allocation Summit," an educational session designed to inform clients about investment changes and portfolio enhancements. At first, the sessions were for clients only, but the firm soon added professionals and prospects to the mix. "We've found that it's good to invite prospects, especially those who are close to signing with us, to come and learn more about our firm," Goldfarb says. "We found it was really great for them to see what it was like to be a client of RegentAtlantic. It helps move the prospect along to the next stage in the pipeline more quickly."
That first year, the firm hosted three asset allocation summits at its headquarters in Chatham. This past year, the firm held seven events at its Chatham headquarters and one in New York City. "We have about 50 clients, professionals and prospects turn up for each summit," Goldfarb says. "We've asked ourselves if we should move the sessions to a hotel or club and our answer has been: We lose the intimacy with clients if we turn it into a large event. We want the time to interact with them. And they really like coming to our offices."
To continuously shore up client referrals, the firm's marketing department has created a standard practice. "After client events, we always tell our clients that the No. 1 source of new clients is from existing clients and we thank them for referrals, but we don't ask for referrals from clients," Goldfarb says. "Instead, at each client's annual review, the wealth manager will hand the client a new information packet at the end of the meeting and say: 'If you know someone you'd like to give information about RegentAtlantic, we're happy to give you this information.'
"We can judge our client service on the amount of client referrals we receive and the number is always growing," says Goldfarb. Whereas 12 new clients came from referrals in 2002, last year the number of clients delivered to the firm by existing customers was 33."
Good service may be at the heart of RegentAtlantic's growth. The firm staffs up before there is an advisor or staff shortage. "We want clients knowing that you work with a team of professionals who are totally focused on you and your goals. And assurance that, even as the company grows, we never lose the intimate relationship we have with every client," Goldfarb adds.
That said, RegentAtlantic also wants to do everything necessary to fulfill its 25% annual growth goal. The firm redesigned its Web site in April to be more investor-friendly. The firm is also updating its prospect presentation. And last, wealth managers are hard at work on ways to shorten their lead time for turning prospects into clients. "We're working right now on refining our initial meeting so we decrease the time to close a new prospect and increase the hit ratio," Goldfarb explains.