Advisors Who Market Their Business Do Better, Study Finds
Client referrals continue to be the primary way advisors take in new business, but some are finding additional growth through the use of extra marketing.
That was the conclusion of a new study by Tiburon Strategic Advisors that showed that advisors with comprehensive written marketing plans perform better than their peers.
The survey, for example, found that while about one third of independent reps have a written marketing plan, more than 75% of the most productive independents have both written marketing and business plans.
In terms of strategies, most advisors rely on passive client referrals, according to the study. About 43% of all fee-only financial advisor clients, and 36% of independent rep clients, come from passive client referrals, the study said.
The study noted that less than half of all advisors proactively seek new assets from their existing clients.
"Less surprisingly is that those who do, tend to do much better," the study's authors wrote.
An important, but underutilized, technique for finding new clients is professional referrals, according to the study, which found that 93% of CPAs surveyed, and 86% of attorneys, make referrals to financial advisors.
These referrals are particularly effective, according to the study, which noted that 73% of clients who receive referrals from their attorneys act on the referrals.
Another source of referrals, from custodians such as Charles Schwab, Fidelity and TD Waterhouse, can be effective, but serve a limited number of advisors and carry substantial fees, the study noted.
Seminars and direct marketing are other potential marketing plan components available to advisors, according to the study. The crucial steps for holding a successful seminar include sending out invitations that "stand out from the crowd," thorough preparation and aggressive follow-ups.
"Advisors who obtain contact information, and even better, qualifications, at the door will have a much easier go of following up with attendees," the study's authors wrote.
    The average advisor seminar results in about 45% of attendees scheduling a follow up meeting, the study notes.
Cold calling, according to the study, has become less effective in recent years, partly because of the national "Do Not Call" list.
Advertising and public relations, the study says, should focus on increasingly visibility, the study says.
"Those campaigns that have focused on the success of individual clients have been shown to be most effective, playing on the hopes and ambitions of viewers," according to the study.

New Pershing Unit To Work With RIAs
Pershing LLC, the nation's largest clearing firm, has formed a new unit that will be focused focusing solely on registered investment advisors.
The Bank of New York subsidiary says its Pershing Advisor Solutions unit will work with broker-dealers and advisors to offer customized services to both independent and dually registered RIAs and large investment managers.
One of the key features of the services will be integration, Pershing says, as it will leverage The Bank of New York's trust and custody services to form an integrated bank and brokerage custody platform.
Reporting, training and marketing support are also available, along with the company's core clearing and execution services, Pershing says.
For broker-dealers, according to Pershing, the unit will offer the ability to consolidate the assets of dually registered RIAs who may be using third-party custodians. The unit also offers services that streamline compliance monitoring of dually registered advisors.
"Pershing Advisor Solutions will provide independent RIAs with a superior alternative to existing platforms for building their businesses," says John Iachello, managing director at Pershing Advisor Solutions.
"Pershing's network [assists] broker-dealers with solutions that enable them to retain dually registered RIAs and capture an increasing share of the growing fee-based market," he adds.
Pershing provides clearing and financial services to more than 1,100 institutional and retail financial organizations and independent advisors who represent a total of about 6 million individual investors.

FPA Members Strongly Favor Social Security Reform
In a rare display of unanimity, members of the Financial Planning Association indicated by an overwhelming margin that Social Security reform is needed now to stave off insolvency in the Federal retirement benefits program.
During a two-week period in May 2,697 individual FPA members, or nearly 10% of total membership, responded to the survey during a two week period in late May. A huge majority of members, 92.6%, agreed that something must be done now to "fix" Social Security to prevent insolvency. Of the 92.6%, 60.7% "strongly agreed" with the statement while 31.9% "agreed." Only 1.9% of members "strongly disagreed."
"Financial planners are on the front lines every day with their clients in attempting to decipher how future Social Security benefits will affect their retirement income," said James A. Barnash, CFP, FPA president. "While the financial planning process involves preparing for unanticipated financial risks, decisive action by Congress this year or next would go a long way in addressing the concerns of anyone planning for the future."
While there was solid agreement among members that Social Security needs fixing, there was less agreement among members about how to fix it. In one question, respondents were asked to "spend" 20 points on various solutions to the problem. The single most popular option, at 21%, or 11,261 of 52,811 points "spent" by respondents, was eliminating the current $90,000 cap on payroll taxes paid into the Social Security trust fund, currently set at $90,000. The second most popular option, at 18% and 9,433 points, was increasing the retirement age two or more years beyond the current age of 67. The third most popular choice, at 5,080 points, or 10%, was the so called Pozen Plan (progressive indexing for payroll taxes and benefits). Of the other options offered, none garnered even a 10% approval rating; the "do nothing "option accounted for 448 points, or less than 1% of the total.
There was no clear consensus with regard to the creation of private investment accounts. In one instance, respondents allocated 15,612 points among their individual "spending" points to various private account options, collectively ranking number one among all options at 29%. When asked separately whether planners believed Social Security should become a defined contribution plan, or along the same lines as private accounts, however, 56.2% said no, with 31.4% favoring them.
Clearly, advisors fret that should private accounts become a reality, the general public is ill prepared to make their own investment decisions. Fully, 48.6% favored directing investments to lifestyle or target accounts, while only 20.7% thought individuals should have full investment discretion. As for account administration, advisors favored a Federal Plan (something similar to the Federal Thrift Savings Plan) over employer/private administration (something similar to qualified plans) by a margin of almost 2 to 1 (39.4% vs. 20.7%).
The survey indicates that the clients or advisors are likely to be less dependent on the Social Security system that the population as a whole. When asked to approximate what portion of their clients' total retirement income Social Security benefits will represent, the results were as follows:
0-25%    53.6%
26-50%  41.7%
51-75%  4.5%
76-100% 0.2%
While Social Security clearly is on the minds of advisors, FPA leadership acknowledges that Medicare, which the survey did not address, will present additional challenges:.
"We need to keep this entire issue in perspective," says Barnash. "The problems with Social Security pale in comparison with the fiscal problems facing Medicare."

Economy Tops Terror As Chief Fear Of Affluent, Survey Says
For the first time since the September 11 terrorist attacks, affluent Americans are more worried about the country's financial future than they are about the terrorism threat, according to a new survey.
The survey by U.S. Trust-its annual Survey of Affluent Americans-found that the top 1% wealthiest Americans cite as their top worry that the next generation may have a tougher time financially.
That worry was cited by more than 80% of those surveyed, up from 75% a year ago.
Concerns about terrorism's impact on the economy and the securities markets-which since 2001 has been cited as their top worry-was ranked second, dropping to 77% from 90% a year ago.
Also for the first time since 2001, affluent Americans expressed decreased optimism in the stock market. The U.S. Trust Affluent Investor Index showed a down tick for the first time in four years, declining to 48 from 66 in 2004, according to the trust company.
While 81% of respondents saw their portfolios increase in value over the past year, 34% feel investing in the stock market is now riskier than it was a year ago, according to the survey.

More Are Millionaires, And More Millionaires Need Advice
The world's population of millionaires grew by 7.3%% in 2004, to a total of 8.3 million people, according to a new report.
The 2005 World Wealth Report, released by Merrill Lynch and the Capgemini Group consulting firm, found that high-net-worth wealth grew by 8.2%, to $30.8 trillion.
In a development that should be of interest to financial advisors, the report also found that high-net-worth individuals with assets between $5 million and $30 million are facing challenges in managing their wealth.
Called "Mid-Tier Millionaires," these individuals, the report's authors write, "respond to the paradox they are facing, added complexity and their desire to have customized solutions, by increasing the number of specialist providers to manage their wealth," says Petrina Dolby, vice president of Capgemini's global wealth management practice. "This, as well as the increase in cost of maintaining their lifestyle overall, places additional pressures on performance expectations, especially in a recovering or stabilizing market such as we have experienced over the past two years."
North America led the world with a 10% rate of growth in millionaires, to a total of 2.7 million, which surpasses the 2.6 million millionaires in Europe. The Asia-Pacific Rim, with 2.3 million millionaires, had a growth rate of 8%, which was double the growth rate in Europe.
On a regional level, Singapore, Hong Kong, Australia and India had the highest rates of millionaire population growth, according to the report.
The report noted that 2004 marked the strongest economic growth worldwide in 20 years and that the rise in the wealth and population of millionaires is expected to slow down in 2005.
Global high-net-worth wealth is projected to grow at a compound annual rate of 6.5% over the next five years over the next five years, according to the report.