Pretend for a minute that a prospect walks into your office. Their entire portfolio consists of one stock. My guess is that you would have all sorts of comments about diversification and the risk in their portfolio. You might even question the prospect’s sanity in putting all “their eggs in one basket” — no advisor I know would be OK with such an approach. Yet when it comes to marketing their business, most advisors are falling into a similar trap by using only one approach to business growth: referrals.
I’ve suggested in the past that advisors who rely on referrals are taking the lazy way out and expecting their clients to grow their firms for them. Lots of research backs me up. In study after study, I see average marketing expenses for advisors at 1% to 2% of gross revenue, so I know these folks are not investing in growth – they’re waiting for the phone to ring.
You don’t miss the water until the well runs dry
I don’t know about you but for the most part, my circle of friends hasn’t changed dramatically over the years. The people that I have deep conversations with is fairly stable. We don’t have many finance-related conversations but I have gladly referred my financial advisor to those close friends; a few have even taken me up on the suggestion. However, my circle is only so big. I have exhausted the contacts that I feel comfortable discussing finances with and that I think would be suitable for my advisor. The referral well has run dry.
My situation is probably similar to most of your clients’. Referrals from the average client after years of working with their advisor dry up. There are only so many times you can ask someone for a referral before it starts to get annoying for both you and your client, so you’re stuck in a vicious circle. You can’t grow your business without referrals and you need referrals to grow your business.
Move beyond referrals
What approach can you use other than referrals? Many practice management types will tell you that client workshops and seminars are the right approach to growing. Some will tell you that COI alliances and B2B networking are best, while others suggest you teach adult learning courses at local junior colleges or public libraries. I speak about content marketing via social media as a scalable way to get your message out.
You have many options, but if you want to make your chosen marketing methods successful, you need to put thought into what might work for you and your business. I’ve always said, you have to do what is comfortable for you. Your approach has to feel authentic. If you are not comfortable with public speaking, then maybe seminars/workshops are not right for you. If you prefer smaller groups, then trade in large client appreciation dinners for smaller, local events. If you’re not a networker, then start a blog, podcast or other social media site to get your message out there.
Target your desired clients
Any or all of these ideas for growing your business can work, but to help grow your firm in the right direction, target your desired clients and make your message clear to them:
- Before you market, know your audience. I heard a great quote once: “If you are marketing to everyone, you are reaching no one.” Your marketing efforts should focus on your ideal or target client. Make sure you can accurately describe whom you work with; create a persona if it helps. Want to do a workshop? Fine. What would your persona want to learn more about? Networking with a COI? Be sure to describe your persona’s issues.
- Define your value proposition. If you can’t explain to a COI or B2B networking group why a client should hire you then why are you wasting their time? They’ve heard all about planning, portfolio management and free consultations but they don’t know about your unique insight and particular set of clients (your niche).
- Customize your user experience. Marketing includes bringing in potential clients as well as letting some prospects self-select away from your business. By showing clients exactly how you work, it allows the interested to stay with you and those who are not a fit to walk away. When you customize your workshops, seminars and other content, you create a better fit for the clients you want to work with and they can find value in what you do.
To grow your business in the right direction, you need to put some thought into your marketing efforts. Start by asking yourself, “What type of clients am I looking for? What value can I bring to them and how do I customize their experience?” Honing in on your desired customers and marketing directly to them should yield better growth results — much better than staring at the phone hoping a referral will call.
Diversification may not protect against market risk. Please check with your Firm’s Home Office before implementing any suggestions.
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