Here's the good news: The financial industry is growing. In 2009, assets under management grew by double digits in every channel but one according to recently released survey data from Cerulli Associates. Of note, independent broker-dealers experienced asset growth of 27.4%, with RIAs up 26.6% over 2008 levels. It seems like a good time to be an independent advisor.
Here's the bad news: Another look at the Cerulli study reveals a very serious challenge for independent firms-increased competition. The number of RIAs, for example, grew 5.9% to 19,681. This raises a couple of obvious questions. How will investors find a firm? And if they do, how can the firm distinguish itself from other independent advisors?
Let's look at this through the eyes of an investor looking for an advisor. Where might he or she start? By asking friends and associates? Using the Internet? If it's the latter, they will find a dizzying array of choices:
Search Term Number of Results
Financial Advisor 12,500,000
Stock Broker 14,000,000
Wealth Manager 7,980,000
Source: Google, September 24, 2010
The investor will then encounter a handful of advisor Web sites and a set of seemingly undifferentiated, less-than-compelling choices. How can you guide an investor through this throng to your firm?
A good starting point is to create a formal practice development plan, with time-bound goals for getting new prospects and clients and growing revenue. A key part of this is client retention-one of the keys to practice development success means keeping the clients you already have. A stable, satisfied client base reduces the costs associated with turnover and increases the potential for referrals.
Within the plan, it is important for you to identify the type of investor your firm intends to target with outreach efforts. Are these investors mass affluent or wealthy? Are they individuals or small businesses? What geographic areas will be the focus? Will you focus on a particular segment, such as medical professionals or airline pilots? When you answer these questions, you'll know how to position yourself and allocate resources.
Does your firm have a Web site? Have you updated it within the last six months? Does the information on the site relate to the needs of your target client? If the answer to any of these questions is "no," then this is the first place you'll need to allocate practice development resources. Why? Because a Web site is an independent financial services firm's most important marketing tool-a window into the firm and the first line of communication with clients and prospects.
When it's made right, a firm's site can showcase investor-oriented content and allow the firm to display its resources and philosophies in a compelling manner. This will help your branding effort and set you apart. Open-source Web platforms offer you efficient, easy-to-use content management interfaces, making it easy and inexpensive for you to change and innovate on the site. You can add a blog, for instance, link to social networking sites or use Internet search engine optimization tactics to boost your firm's search rankings.
With this cornerstone in place, you can invite clients and prospects alike to the site and also establish a rapport with the prospects who find it on their own.
It's important to expand your reach and establish yourself as an expert on the subject matter while at the same time building trust and a rapport with the target. Consider this three-point plan:
1. Give potential clients great content. Investors are seeking information on topics that relate to their financial goals, risk-tolerance levels and time lines. If your firm can help quench their thirst for timely, relevant information, it will help solidify your position as their "go to" investment information resource. Your Web site is the receptacle, but it's great content that will fuel outbound marketing and social networking efforts.
You can get that content from people and firms you already have relationships with. Look to your broker-dealer, RIA platform provider or custodian to get an investment information pipeline if you're not using your own original content. It doesn't matter so much to the investors whether you're the purveyor or the author. What matters is that your firm is the one offering investment information they value.
2. Use e-mail marketing. Why? It's effective, cost-efficient, eco-friendly and convenient for the reader.
According to Epsilon's 2009 global e-mail study, the average rate at which people open e-mail from the financial industry is approximately 22% (though there's not a breakout for financial services such as advising in particular) and the average click-through-rate hovers at around 6%. At Evolutionize, I work with advisor firms that consistently achieve open rates higher than 35% and click-through rates two to three times the industry average. E-mail is also an effective client retention tool because it's a two-way communications vehicle that builds on relationships already established.
Thus, you can use it to get feedback through surveys, encourage readers to forward e-mails to friends and invite those friends to sign up and receive ongoing e-mails from the firm. This shows them you are interested in them and have an empathetic ear.
3. Extend your reach exponentially with social networking. As long as it is compliant with regulations, social media is an essential way for you to develop your practice. It can give you a massive visibility boost, increase traffic to your Web site and connect you with both referral partners and investors in a way that's convenient for them. Investors use social networking sites to query connections about a variety of topics-including financial advisors. In fact, according to a Spectrum Group survey, 36% of investors were open to receiving information from their advisors via social networks. And a 2009 study by HubSpot found that the cost per lead for social networking was 60% less than that of traditional marketing programs.
Not to be forgotten is the fact that 43% of advisors now use social networking as part of their marketing efforts and 60% of them indicated they had generated at least 16 prospects from their social media efforts.
Don't Delay
Developing and implementing a practice development plan need not be difficult or expensive. There are myriad tools to assist advisors in this endeavor and a handful of marketing firms working with financial services. So whether you pursue these marketing efforts on your own or use a third party, you risk losing crucial competitive ground if you delay.
Cliff Campeau is a Partner with Evolutionize, LLC and a regular blogger on financial services marketing "Best Practices." Evolutionize specializes in providing independent financial services firms with a suite of Web-enabled practice development solutions ranging from website development and outbound marketing tools to a comprehensive social media program management system. Questions? Call Cliff at (314) 863-3033, ext. 204 or reach him via e-mail at [email protected].