"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.

Lead Generation
Lead generation is the activity that firms struggle with the most. (In fact, it deserves its own article.) For most firms, the leads should come from a combination of the networks created by each professional, including existing clients and the firm’s “institutional network.” Firms that do not foster substantial lead generation from these networks (referral programs, banks, CPA firms, etc.) need to find a way to manage and encourage the networks of each professional.

Fortunately or unfortunately, networks are a lot like vineyards. Once planted, the vines need quite a bit of time to mature before they turn productive (three years or more, depending on the grape variety). The process of building a network needs to be patient but persistent. Unfortunately, many professionals do not invest the time in the network or become discouraged by the lack of quick results. But much like grapevines, professional networks can be very consistently productive once they are well established.

To help professionals network, firms have to find the right combination of encouragement but also persistence. Perhaps the answer is a sound process.

Sales Process
The process starts when firms and professionals document the leads they receive and follow the leads all the way until the client is either brought on board or the lead is closed as “dead.”

A surprising number of advisory firms have trouble with pipeline management, or tracking leads, by generating reports on things like 1) how many leads their firms had last year, 2) what was the source of the leads, 3) which professionals received the leads, 4) what happened to the leads.

In the absence of data, it might often be unclear to these firms why they are struggling. There is usually a sense that there are not enough leads, but there is not enough information to turn the sense into action.

Firms that have access to “institutional leads” (leads that arrive for the firm rather than for a specific professional) tend to be more disciplined and better at managing the sales pipeline and distributing the leads to the right professionals. Firms that rely on individual effort tend to not document and monitor the results. Instead, they leave that job for the professionals. This unfortunately rarely works with professionals who struggle.

Following A Sales Process
Like any activity in a firm, the more it is documented and the more it follows a process the more it can be replicated, improved, managed and taught. Most established business developers rarely think about their sales process, but it is very difficult to train professionals to sell without one. It is much like grammar in a language—most native speakers rarely think about the grammar rules, but any adults trying to learn a language need to learn those before they can forget them.

The sales process can be as simple as identifying the high level steps:
Discovery: in which the advisor learns about the clients and understands their situation. Standardized data requests and questionnaires can help here without turning the initial meeting into an interrogation.

Analysis: a collaborative process with the clients—in which the advisor considers their options and presents potential approaches—can help establish rapport and build the credibility of the firm.

Proposal: a written document describing the goals of the client, the general approach of the firm and the parameters of the relationship. This may help professionals think through and structure how they present what the firm does.

Feedback and changes: the point at which advisors collect the feedback on the proposal. Written or verbal feedback can improve the communication between the prospect and the firm and further establish a collaborative dialogue.

On-boarding: the clients’ process of joining the firm. As obvious as it may be, sometimes firms struggle with launching the client relationship. There is a sense of excitement when the client signs the documents but that can sometimes be followed by a loss of focus.

This process is both high level and basic. But it’s better than “We meet with the client and we listen to their needs.” It may be OK for experienced professionals to create their own processes, but the more there is to the process, the more you can train others.

Practicing Friction Points
In every sales process, there are always familiar points of friction with the clients, known in sales folklore as their “objections.” These include the clients’ hard questions about a firm’s fees or its investment philosophy. It’s hard for advisors to come up with comfortable explanations for these things, but it is essential to the success of the sales process. One of the best training ideas I can come up with is identifying those points of friction and practicing the solutions. This does not mean memorizing scripted answers, which is always ineffective and, in fact, counterproductive, but instead finding the right answers and then understanding the best ways to present them.

Sales Training
Though most large firms understand the need to train salespeople, they struggle to identify good resources for training. Sales coaches specializing in financial services are few. Those who understand the softer, more consultative approach are even fewer. The advice offered by business development books can be valuable, but it’s often described at a fairly high level. Applying it to the practical activities of financial advisors is challenging and a bit like giving advice on how to lose weight—it is well known what you need to do, but it is an entirely different matter to actually do it.

Perhaps training people in sales is more about encouraging the development of habits among professionals. The training is not so much about what is being done but about the frequency and the activity. The best function of sales training perhaps is to keep encouraging professionals to implement their marketing plans and, through a combination of praise and urging, steering them to the results.

Motivation And Compensation
Sometimes firms believe that if they offer a bigger bonus they will see different results from their professionals. But I have not seen that in my experience. The logic is tenuous and suggests that if you paid me more money, I could compete for a heavyweight boxing title. In the short term, this will just get me beaten up, bleeding and discouraged. In the long term, I may be able to achieve a little better result, but only after many years of patient training and dedication.

Compensation incentives work best when they amplify a signal that has already been sent by the culture of the firm—i.e., that business development is important. The incentive should be a patient one so that it can encourage the development of habits and not just the chasing of “shiny objects.” My recommendation to firms is usually that they create accountability and a process first before throwing money in the mix, and not do it the other way around.

Conclusion
Growth is vital for advisory firms. Growth is the fuel that powers careers and makes succession plans possible. Without growth, any firm will find that over time the “erosion” of assets and clients will slowly and painfully destroy any strategy or transition plan.

Every firm and professional is enthusiastic about growth, but few are enthusiastic about sales. Unfortunately, without sales there is no growth. Adding clients has to be one of the core responsibilities of the professionals in a firm and firms have to find a path that allows professionals to develop their sales skills without feeling like it undermines their professionalism or even their integrity. Firms that embrace business development as part of their culture will find that it is not nearly as scary or difficult as professionals may have feared.