"Sales” is a bad word in the advisory culture. We all know it happens, but we prefer not to talk about it. Salesmanship seems to go against advisors’ very image and identity. Yet without it, how viable are their firms?

That cultural problem will become even more significant as a new generation takes over the business. In the past, the “dirty job” of adding clients likely belonged to the founders at many firms. Founders at many independent firms may have despised the sales culture at the Wall Street firms they left, but they still possessed the skills necessary to win new clients. As they retire, the next wave of advisors may struggle to bring new clients on board, since many lack the training and track record of selling.

I purposefully use the term “sales” rather than “business development” to emphasize that whatever we call it, advisory firms need to attract new clients, and unfortunately in most firms that does not happen enough. Very few have a culture that emphasizes the importance of new business, and most do not have an established process for adding clients.

What Are Sales?
In my mind, sales are the process of converting a potential client into an actual client. They require you to convince a genuinely interested prospect that your firm has the right solutions for his or her needs. Sales are also the start of the client relationship, one that hopefully will continue for many years, and the process of bringing the client on board (transitioning his or her assets, completing all paperwork and beginning the planning and investment process). Sales are the last six miles of the marathon—which are the hardest. And if you can’t run the last six, the previous 20 don’t matter.

Marketing is different. It’s the process of cultivating awareness among potential clients and drawing those who fit with your firm’s strategy toward you. In other words, marketing draws prospects in, while sales convert them into clients. Marketing is the first 20 miles of the marathon—you have to run those to get to the last six.

Unfortunately, most firms’ activity focuses on just the marketing part. So does academic theory—there are more than a dozen courses on marketing offered in a typical MBA curriculum, but usually not a single course on sales. Management science seems to shy away from sales just as much as advisory firms do.

Sales And Culture
The issue starts with culture. In the value system of most firms, business development is not emphasized. My favorite definition of culture is that it is “what happens when no one is watching.” If that’s the case, in many firms, when no one is watching, no one is selling.

Ask yourself the following questions: Do you need to be good at selling to be a partner in your firm? Have all the partners in the firm demonstrated their ability to attract new clients? To be considered successful, do you have to bring in new clients? To be highly regarded, do you need to be a business developer? To be praised by your partners, do you need to bring in new business?

In most firms, the answer to these questions is “No.” The recognition is often saved for those with technical skill and client service expertise. Until sales activities get cultural recognition, they will never get traction and enthusiasm from the professionals.

Who Is Selling?
The problem may be in the word “we.” I have spoken to many partners at firms who say, “We should be better at networking,” and “We should spend more time generating referrals and leads.” I rarely hear, “I should be networking more and generating more leads.” In fact, only 34% of firms surveyed by Investment News had sales goals for partners, and only 29% had such goals for (non-owner) lead advisors. The sense that “someone” should be selling is there but the personal responsibility is not.

Even when firms define sales targets, the expectations are rather low—the median in business development expected from a partner is $10 million in new assets from new clients, hardly enough to grow a billion-dollar-AUM firm.

Advisory firms often struggle with the question of whether every advisor should be expected to develop new business. Many firms believe that it’s a rare talent possessed by only a select few. Perhaps people who are, say, great relationship managers but not natural business developers should be left alone and not tortured to do something they are never going to be good at. While I can see the logic, that doesn’t solve the problem of “who will sell?”

Many firms have contemplated creating a dedicated business development position and hope to just hire someone to do the selling. That way, the rest of the firm can focus on service. Unfortunately, this strategy has not been very successful. Good business developers are very difficult to find and rarely available. What’s worse, dedicated business developers are often no more successful in attracting clients than the advisors themselves.

The most practical and viable solution is to expect lead advisors to contribute new clients. They do not have to be exceptionally good at it, but every new advisor has to be able to add at least some. It is a bit like being able to shoot a basketball—not every player on the team has to be good at it, but every player has to have at least some reasonable level of skill and a range of shots they can take, otherwise the strategy of the entire team will be affected.

What Are We Selling?
What’s critical here is the very nature of the “product” being sold. Often, the client is mostly buying the skill and experience of one professional. The personal reputation of “Bob” attracts the client and then enables a group of service-focused advisors to work on behalf of Bob. Bob’s firm is viable as long as Bob is there. Clients are comfortable working with other advisors, only as long as Bob is overseeing their work. In those firms, it is very difficult for the advisors to sell because they have to sell Bob, and selling the expertise of a person who’s not even in the room can be tough.

It is much easier for advisors to develop new relationships when they are putting across their own personal reputations on top of the firm’s. That allows them to focus on a “product” they know very well—their own skill set—and complement that with the capabilities of the company.

The key question is, “Who is the client lead coming to? Is it to a specific advisor or is it to the firm?” The answer to this question will largely drive a firm’s sales strategy. If most leads are coming to the firm itself, perhaps through referrals from brokerages or banks, then the firm can use salespeople and a sales pipeline. But if most leads ask for a specific professional, then all lead advisors should participate and become “magnets” for new clients.

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