Marketing has never been independent advisors' strong suit. Some even claim they don't do it or need it.
As in other professions, many believe reputation among peers and top clients should supercede sizzle. Everyone knows there's no better marketing tool than word of mouth, but sometimes that word of mouth needs a little push. So a number of referral networks are springing up to help advisors market themselves.
Earlier this year, Steven Lockshin and Charles Goldman, a veteran independent investment advisor and a former head of Schwab and Fidelity's custodial operations, launched Advizent-a venture to identify the best registered investment advisors and brand them so consumers can readily find them. So far, 122 firms with about $135 billion in assets have signed up to participate.
"An independent board of well-respected, high-profile experts is compiling [our] Standards of Excellence," explains Lockshin, whose career has included launching RIA-giant Convergent Wealth Advisors and Fortigent, an alternative investment platform sold to LPL Financial earlier this year. Advizent's board of experts is headed by Jack Bogle.
Membership on the Advizent list isn't free, although no firm will be billed until next year. RIAs will be charged annual fees ranging from $25,000 to $100,000, and those who sign up this year may receive discounts. In return, they will get branding and marketing support and there is talk that Advizent will try to extract volume discounts from custodians and other vendors that big advisory firms rely on.
When published in February 2013, those standards will herald professionalism and experience without conflicts of interest-attributes that consumers might assume their fiduciaries already hold, but in fact have never been codified or tested. Advisory practices will have to apply for this certification and allow Advizent to examine their operations. If all goes well, they can be verified as adhering to those standards within a matter of weeks. All those that pass muster will be listed on a Web site, where new clients can easily locate them and get referrals. It's a sort of Good Housekeeping seal of approval.
Putting Clients First
Many professional fiduciaries do have inherent conflicts, Lockshin maintains, that a lot of people don't know about, and he says consumers deserve better. "The industry tends to take care of itself before taking care of the consumer, and we need to put the consumer first."
Advizent's ultimate goal is to improve the industry's credibility and value to consumers, but it also wants to help advisors get the word out. Certainly for the practices themselves, the seal of approval could prove a valuable marketing tool.
"When consumers start hearing about this and asking for it, that will drive demand," says Lockshin. "We expect more advisors will seek us out."
Lockshin has enjoyed repeated success and has indicated he is willing to invest what it takes to make Advizent work. When it comes to promoting the advisory business, he isn't alone. The CFP Board of Standards currently is in the early stages of a multi-year, $40 million advertising campaign designed to enhance the value of the CFP brand.
Though Advizent's strict vetting and accreditation may be something new, it is far from the only marketing-referral network going. The Schwab Advisor Network, based in San Francisco, comprises some 200 pre-screened, independent, fee-based investment advisors who work in partnership with Schwab branches.
"Having worked with RIAs for over 25 years, we know there are many channels that advisors may use to grow their businesses," says Anita Fox, Schwab's director of corporate public relations. "Schwab offers ongoing marketing best practices, support and guidance."
That support includes educational and marketing brochures, advertising materials and public Web space. "We know that there are high-net-worth investors with complex financial needs who don't yet know about the benefits of working with an RIA," says Fox.
In addition, Schwab serves another 7,000 registered independent advisors through its Schwab Advisor Services, a separate business unit within Schwab Institutional Services.
Media-savvy branding is another key marketing tool on the rise. Back in 2009, LPL Financial, a subsidiary of LPL Investment Holdings, the broker-dealer and consultant headquartered in Boston, San Diego and Charlotte, N.C., saw "a need among our advisor practices for services and material to help build marketing and brand identity," says Joan Khoury, LPL's chief marketing officer.