A vast majority of advisors want to grow, but many struggle with creating a growth plan. Of 301 registered investment advisors that took part in the TD Ameritrade Institutional RIA sentiment survey, 37 percent did not experience any new client growth in the last six months.
Maybe a part of the issue is that only 50 percent of advisors have a marketing plan in place, according to the 2014 FA Insight Study of Advisory Firms: Growth by Design.
That is one reason why TD Ameritrade focused on breakout growth at their recent National LINC conference. [The new name is an acronym for Learn, Inspire, Network and Collaborate.]
The following are some points shared by experts at the conference:
Focus on a niche and define the ideal client. Attendees were asked to think about their growth strategy and identify groups within their own client base.
If advisors segment their clients base it becomes easier to identify the attributes they share. Then it is easier to build business development and marketing strategies to bring in more clients from each niche.
Vanessa Oligino, senior manager of business performance solutions at TD Ameritrade Institutional, said, “Client segmentation helps you figure out who you have today. You can start to see the patterns. Do research. Who are the people? What are their presences? How do they like to be engaged?”
She gave an example of a firm that wanted to go after women. “The female partner joined female groups in the community. She went after her niche that was older, outdoorsy, philanthropic and single,” she said. Because this advisor knew who her ideal clients were, she was able to become active in that community and now brings in new business all the time.
Brand a unique value proposition to better differentiate your practice. Using a workbook, attendees were asked about their services: Is your value proposition easy to understand? Does it resonate with your target audience? Is your story easy to tell and remember?
“Everyone understands they have to have a value proposition, but they all have the generic ones," Oligino said. "Plus, nobody can do it when put on the spot.” Advisors need to be asking themselves, ‘What do I do well and how do I prove it?’
“If you don’t have a value proposition, things like picking the right colors, fonts and logo aren’t very import,” she added. The trouble is that advisors have to admit they have issues and that brand elements do not match before they can be fixed.
Get more out of client relationships. In the workshop, attendees were asked to answer questions that resulted in a score that gave them their networking style. The four categories were driver, expressive, amiable and analytical. Daniel.Klein, senior consultant on TD Ameritrade Institutional’s business performance solutions team, wanted the attendees to be aware of their style so they can pick the advice that best resonates with clients.
“Nine out of 10 clients are willing to give an introduction," he said."But the number one reason clients don’t provide introductions – advisors don’t ask.”
“The clients don’t know if you want new clients," he added. "They need to be educated. There is lots of opportunity.”
As advisors build out their strategy, they should ask:
• How am I meeting people today? Anything to build on?
• How do I create introduction opportunities?
• What activities help me connect with prospects?
• What do I do to cultivate relationships?
“I am a big believer in leverage," Klein said. "Who can advocate for you?”
Researching prospects in today’s digital world makes business development easier. “Not sure if you know… it is scary how much information you can get on people. What do you want to know about them to get strategic introductions?” asked Klein. “Whenever you meet someone, Google them. You would be amazed at what is out there.”
When it comes to users of LinkedIn, he believes they expect that their profiles are going to be read. If you do this, Klein stated, “You have an exceptionally higher chance to work with them.”
Conduct high impact events. Of TD Ameritrade Institutional’s growth pillars, Oligino said the events pillar is the most popular. That is why they have created event-in-a-box tools.
She said events have taken many forms:
• Wine experience – The team ended an all-day workshop with a wine tasting to give attendees an example of how it can work.
• Shred day – After tax time, bring in all your tax documents. Have a toast to tax season being over.
• Cooking event – Pick a recipe. Make it personal if a client has a dietary need.
• Bowling event – Make the teams with four to six people to a lane. This allows clients to network and build relationships. Have fun with it and run a contest.
• Women’s wellness day – Have a yoga retreat or breast cancer awareness event. Be relevant. Oligino does not advocate a spa day, as it does not add value.
• Culture event – It doesn't have to be held at a museum. Have it at an art gallery where the clients meet the artists.
“Advisors don’t want to be known as sales people," Oligino. "They are more about tapping into the relationship. They can talk with people at an event and establish a relationship." She advised there should be a follow-up plan that might include a gift that says ‘thanks for attending’ while also offering time to talk about finances.
Most advisors believe if they get the appointment, they can close the lead. The event strategy helps get people in the door.
Evaluate current pricing of services. According to the FA Insight Growth by Design Study, only 24 percent of advisory firms review their pricing strategy on an annual basis. The FA study revealed that while asset based fees continue to dominate, 72 percent of firms are delivering services well beyond investment management, with 50 percent of firms delivering nine different services.
Eliza De Pardo, an FA Insight founding partner and director of consulting, said, “For many firms, pure asset-based pricing alone may be inadequate. Limited attention to pricing suggests a great opportunity for advisors to more directly impact their revenue and profitability through proactively managing their pricing.”
Advisors should look at what the market is doing, what their costs are and where they are delivering value. Many advisors have not aligned their service offering with the right pricing model.
Have a plan. Lindsay Troxell, senior practice management consultant at TD Ameritrade Institutional, pointed out that strategic plans are less than ideal. She referenced two relevant statistics:
• 47 percent of advisors say their strategy is not understood by all team members.
• 61 percent of advisors have a strategy that lacks implementation.
Whatever the plan is for growth, it should not be shoved in a drawer. Advisors need to remain focused on growth to achieve the results they want.
“RIA firms that have the ability to scale service and add capacity will be well positioned to take advantage of the growth opportunity in front of them.” said Tom Nally, president, TD Ameritrade Institutional.