A significant obstacle to your success as a wealth manager is connecting with your “ideal clients.” There are many ways to connect with such, and anecdotes show that just about anything can work. Moving beyond the anecdotes, there is solid evidence of what works best.
The top three approaches to business development are presentations at events, client referrals, and referrals from centers of influence (COIs). Again, other approaches, such as social media, produce results but prove to be much less successful. The viability of these different approaches may change as the composition of the wealthy changes. Nonetheless, the three noted approaches are likely your best ways to connect with your ideal clients today.
The dynamics of the three approaches and what is required to make them successful are different. By understanding these differences, you can make smarter decisions on how to spend your time and resources.
COI Referrals
According to Robert Sandrew, chief growth officer at Integrated Partners, a leading national financial advisory firm, “For most financial advisors, the most effective approach to connecting with their ideal clients, especially of those clients are wealthier, are referrals from COIs, especially CPAs. As so many financial advisors have been unable to crack this COI code, they’re probably missing out on the best way to grow their wealth management practices.”
You need to select COIs who are presently working with your ideal clients. They are likely to have many possible referral opportunities for you. Consequently, you can create a steady flow of new ideal clients wanting to work with you.
“It will usually take some time before new COIs will likely make extensive referrals to you,” says Sandrew, “They must get comfortable with you and strongly believe in your integrity and technical competence. However, there are ways to accelerate this process vastly. For example, when learning about the COI’s business model and self-interests, you can engage in funneling, a process where you can identify possible ideal clients for your expertise in the first meeting.”
Most financial advisors, for example, have been unsuccessful in working with COIs. As such, the competition for these referrals is quite limited. It is not that COI relationships cannot deliver tremendous amounts of business; it is that relatively few financial advisors are adept at building meaningful relationships with COIs.
Client Referrals
Most financial advisors connect with new ideal clients through referrals from satisfied clients. Generally, all professionals tend to wait, and a client makes an introduction sooner or later. Commonly, your client is asked by someone for a referral to a financial advisor. They think of you and make the effort to refer you. While there are powerful ways to increase the probability of client referrals, few professionals are taking steps in that direction.
As your client is being reactive to someone asking for direction, there is no screening, and therefore, it is often unlikely that that individual matches your ideal client. At the same time, the potential for new ideal clients is limited, and thus, there is little chance of creating a steady flow of them. Because the approach is client-reactive, you do not know when you will get referrals. They appear when they appear.
As they are your satisfied clients, the competition for their referral is likely limited. However, if your client relies on more than one financial advisor, the referral competition probably increases.
Presenting At Events
Your ability to showcase your expertise in front of high-potential groups is another proven approach to connecting with your ideal clients. Unfortunately, the approach's effectiveness, for the most part, is comparatively low compared to the two other methods.
A significant complication is the quality of the audience. You often do not know who is attending the event, good or bad. At the same time, there is a high probability that your ideal clients are not inclined to participate in most events unless those events are tied to some organization they are members of. Even then, there is a good chance attendance will be limited.
The ability to create a pipeline of new ideal clients is often a function of the number of times you present. You will have to do many presentations to generate a flow of new ideal clients, and as most venues are somewhat restrictive, this is not usually an option. Complicating the ability to present extensively is something that many other financial advisors seek to do. The considerable competition for the best slots diminishes the value of this approach.
If audience members are intrigued by your presentation, new business varies extensively from this point. Sometimes, an individual will want to take action quickly. More often, audience members will want to digest your message and determine if you are the right expert to work with. Commonly, audience members will take your message to their current advisors, who will do everything possible to keep you away from their clients.
To make this approach work, you will need high-quality content and the ability to present reasonably well. The content has to resonate with your audience and be delivered with precision. Financial advisors often deliver dated content, and some are not very good orators. So, even though they are accessing viable venues, their results are not great.
Bottom Line
If you are technically proficient and have a solid business model, you will still need to connect with your ideal clients for a successful wealth management practice. Referrals from COIs are the most robust approach. It requires you to develop a deep understanding of other professionals and an ability to add value to their practices and, sometimes, their personal lives. The processes and systems for creating a pipeline of new ideal clients from COIs are well known. However, effective implementation is where things most often fall apart.
It is usually wise to take steps to help your satisfied clients introduce you to your ideal clients. Waiting for a message from a client about a referral is pervasive but leaves many possibilities on the table. There are easy-to-implement methodologies you can employ to dramatically increase the number of client referrals you receive.
If you are comfortable presenting, doing so at selected events can help deliver new ideal clients to your wealth management practice. Here, the material you discuss must be meaningful to the audience. Doing some homework can seriously increase the odds that your content will generate a positive reaction.
When it comes down to it, you can connect with many new ideal clients if you think strategically and tactically. With the tremendous growth in private wealth, there is no reason you cannot build a substantial wealth management practice.
Jerry D. Prince is the director of Integrated Academy, part of Integrated Partners, a leading financial advisor firm. Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.