Enchantment is the purest form of sales. Enchantment is all about changing people’s hearts, minds, and actions because you provide them a vision or a way to do things better. The difference between enchantment and simple sales is that with enchantment you have the other person’s best interests at heart, too.
—Guy Kawasaki
There are at least 20 business development approaches that can be used by financial advisors to acquire new clients and their assets. We will mention a number of those approaches but focus on the key approaches that experience and data show need to be part of your client acquisition strategy.
The objective for business development is not growing the number of clients, but growing your number of profitable clients. Chapter 4 discussed the need to balance the cost of the services to be delivered in support of client retention and loyalty with the value of the client to the business. This chapter focuses on how financial advisors can acquire those profitable clients. Many advisors see this as one of their top challenges. As we will repeat, most every advisor has said, “If I can get them into my office, I can close them.” This chapter is about how you can get prospects into your office.
We detailed the client segmentation process and how to effectively and efficiently service your existing clients to increase client retention, loyalty, and advocacy. The challenge of getting more profitable clients in part starts with that segmentation process. Once you have your 80/20 analysis, a key question is, “How do you create another 20?” In our example in Chapter 2, we showed a sample book that actually yielded a 65/20 result—that is, 65 percent of revenues came from 20 percent of our clients. In that example, 34 A-level clients accounted for about 44 percent of revenues and 28 B-level clients accounted for about another 20 percent of revenues. Note that in this example we understand this book consists of too many D clients and that skews the 80/20 data, but that does not change the point we want to make. The top 34 relationships average almost $1 million in investable assets, so this advisor may want to focus on replicating his or her A tier, so would need to add perhaps 34 new $1 million (or greater) relationships over a reasonable period of time (e.g., three years). Each of these 34 clients averages about $7,000 in revenue. Depending on costs (which can be estimated using the methodology proposed in Chapter 4), these 34 clients may be identified as highly profitable. The B clients average about $4,000 in revenue and about $360,000 in investable assets. In the business development processes we will discuss, these will be your targets, with a focus on A-level prospects.
Malcolm Gladwell, an author we like, refers to a “tipping point.” The tipping point feels like a snowball rolling down the hill in order to build positive momentum. As the advisor focuses efforts on working toward acquisition of “top” clients, it will become more effective over time. Eventually growth will hit a critical mass and then start building on itself. A client base and “top client” growth can eventually hit a “tipping point,” so it’s important that the growth momentum has you focus on that top part of your book; those clients are the ones you want to replicate.
As you explored your client segmentation, you also noted some of the characteristics of those top clients such as likability, trust (that they have in you), whether they introduce you to prospects, and their growth potential. Also note their life stages, professions, interests, etc., as we will discuss further with the Client Wisdom approach to introductions. Note your largest retail and institutional relationships as targets. In essence, you are creating your “ideal client” profile. One legendary branch manager was fond of advising advisors that each year they should acquire a new number-one client. We believe this is an exciting goal and suggest that a growing and dynamic book should focus broadly and create not just one new client, but a whole new portion/segment of the book over time.
Once you have identified the types of clients you currently have, you can create a plan for the types of clients on which you want to focus. To succeed, the question to answer is: “What do these top clients want?” Following the process in Chapter 6, Your Client Planning and Review Process, you have discussed your Client Service Model with those clients and determined which of your deliverables are of value to those clients. For every client the answer may be a bit different, but the aggregate of clients’ wants and needs will likely tell us the most important items to highlight in order to earn and maintain their loyalty and advocacy and trust and to know where to focus our business development efforts.
As you do the work entailed in identifying the types of clients you have and want, you are also helping to determine the value of your practice. You understand the cash flow and revenue generated from your client base. You also know the quality of the cash flow, whether fee-based or transactional. You also know the age of clients, how assets are managed, how diverse the client relationships are in products and family generation, how long the client has been with you, the advisor, and so on. You can also consider your depth of services and the quality of those services. In this book, we spend much of the time discussing best practices around efficiency, effectiveness, and quality of services. Figure 9-1 may help an advisory team evaluate how they perform and where to target their resources. As we move into more detailed discussions of business development approaches, use Figure 9-1 to guide your efforts.
For your current top tier clients, retention, loyalty, and advocacy are driven by the quality of services you provide, which are balanced with the revenues you receive for those services. By quality of services we include the depth of the services you provide, such as described by a true set of wealth management deliverables and the customization and personalization you provide for those clients. Your business development efforts focus on those clients who want the model of business you have chosen for your practice. Each client and prospect, whether A or B (Quadrant 1 in Figure 9-1), needs to be evaluated in terms of their wants and needs in context of your business and the likely direction of their potential business over time. Do they want, need, and warrant the level of effort you and your team are investing to fulfill those clients’ wants and needs?
Figure 9-1 | Profitable clients matrix.
The same questions are also true for Quadrant 3 clients. Do they warrant the level of effort you and your team are investing to fulfill their wants and needs? Do any have the potential to become Quadrant 1 clients? If not, options need to be considered in both the cases of current clients and your business development efforts. It would be very rare that you would invest such efforts for Quadrant 3 prospects.
For Quadrant 4 clients and prospects, these are investors whose revenues are relatively low whether because of low investable assets, fee sensitivity, or lack of desire to make you their sole or in some cases primary advisor. Yet you are delivering high-quality services to them, or they will likely demand high-quality services. You are probably working too hard and this almost always entails an ineffective and inefficient use of resources. You cannot afford to continue to maintain these clients and certainly do not want to invest your business development efforts in prospects like these. Your “intake process” is the point in time to ensure that this situation is avoided.
Your Quadrant 2 clients and prospects are investors whose revenues are high or relatively high; however, they may not want the business model you have chosen for your practice. These could be high-risk clients and prospects because you may not have the opportunity to deliver the high-quality services and value you typically deliver to your Quadrant 1 clients. Unless you are willing to set up a lower fee schedule, the wants and needs of these clients and prospects may be better met by other advisors who don’t do what you do. In our view, different fee schedules are a slippery slope and could put you on a path for clients and prospects to choose from a menu of separately priced deliverables. This is not likely a good business model and is difficult to manage. While these investors may be profitable or even highly profitable, they may be shorter-term clients. You will have to decide if you really want to invest your business development efforts in prospects like these. Again, your “intake process” is the point in time to ensure that there is a fit between your business model and the wants and needs of these investors.
Each of the six core client-facing processes that we have discussed is about retention, loyalty, and advocacy, as well as about cost and therefore profitability. Your business development efforts need to be in context of these factors. You must also define your target client in context of the characteristics discussed and your skills, experiences, and passions or aspirations. It is also critical that your team be properly staffed and trained to service well the target clients you aspire to acquire.
Let’s delineate between “introductions” and “referrals.” Up until several years ago the term most people used to acquire prospective clients from active clients was referrals. That is, a client provides names of people to their FA who might be potential new clients. In fact, they could just as well have introduced you to their friends or family members at social events, over a meal, or at a business event. Until a short time ago, referrals didn’t distinguish between providing a name and providing a face-to-face introduction.
The industry now prefers to use the word introductions and differentiates the term from referrals. An article on Wealth Management.com1 states:
Asking to be introduced to someone that’s connected to one of your affluent clients is the polar opposite of asking an affluent client for a referral. Yet because advisors have been taught for so many years to ask for referrals, they tend to think of referrals and introductions as being one-in-the same. They are not!
At least today they are not. Then again, we have seen titles change over time while functions stay the same or close to the same. We change the definition to suit the times, whether it’s investment advisor, investment consultant, financial advisor, and today wealth manager. There are important differences in what we do, but the function and its explanation are more important than the name.
The referenced article goes on to say, “By asking for an introduction, you are helping your client help you by identifying a specific person you’d like to meet.” While this may not always be true, an introduction is a more focused request. It is also attempting to get a face-to-face introduction or meeting, whether over coffee, a meal, or at a social or business function. You may say to your client, “John, you’ve mentioned your parents wanted to discuss their financial situation. I’d love to do that. Why don’t we set up a lunch or dinner meeting so we can talk in an informal setting?” An introduction can also be made by email, but that is not as effective as an in-person introduction.
A referral, on the other hand, is often made in the form of the advisor asking a client for prospective clients, in a nonspecific manner; for example, “John, if you know anyone who could benefit from the kinds of service I provide to you, I would appreciate a referral.” If you ask for a referral in a general way, the client may reply, “Why don’t you call Jim Smith,” but more likely may respond by saying, “I don’t know anyone,” or “Let me think about it.” If clients do give you a name, they may or may not allow you to tell Jim that they told you to call. In either case, referrals done this way are not as effective as introductions and are not recommended.
Despite years and decades of hearing that advisors should ask for introductions (née referrals), they still have difficulty doing it. One article stated that “while 83 percent of consumers are willing to refer a friend after a positive experience, only 29 percent actually take the time to do so. . . .”2 On the other hand, Julie Littlechild reports that “58 percent of clients say they were motivated to refer in order to help a friend while 38 percent said they want to help the advisor build his/her business.”3
From a 2015 Spectrem study:4
When asked to rate their overall level of loyalty, affluent investors rated themselves quite high—at an 83.26 on a 100-point scale. However, when asked how often they refer others to their financial institution, only 9 percent of affluent investors answered “very often.” In fact, 30 percent indicated they never refer others to their financial institution.
Other studies support high percentages of clients saying they would provide introductions to their advisors, if asked, yet the vast majority of those same clients claim they had never been asked. “If statistics are to be believed,” says one, “then 85 percent of advisors do not ask clients for referrals. Only 15 percent of clients voluntarily offer referrals without advisors asking for them.”5
A Google search of “referrals” can yield millions of hits. Even Googling “financial advisors asking for referrals” yields over 75,000 hits. It’s not for lack of information or knowledge that advisors don’t ask for introductions or referrals. Most advisors go about seeking introductions in a very ad hoc fashion. The secret to success with introductions is to move away from an ad hoc introduction/referral process to a structured introduction/referral process. Surprisingly few FAs have an established introduction/referral process or know what drives introductions. A survey on referrals by Janus Labs found:
• Client loyalty plays a major role in getting introductions.
• Almost 70 percent of clients identified as “loyal” may refer within the next year while less than 1 percent of “moderately satisfied” clients are likely to do so.
• Clients identified as “loyal” made 5.6 introductions in the last year while “moderately satisfied” clients made almost no introductions in the last year.
• Less than 11 percent of surveyed advisors on average proactively seek introductions.
Creating and identifying loyal clients is key to a successful introduction process. While most FAs might think that all of their clients are loyal, the Janus Labs survey revealed that only about 12 percent of investors surveyed are truly loyal to their primary FA. We have discussed how to create loyalty in Chapter 3.
This data shows that getting introductions to new prospective clients from current clients certainly has its challenges, though the interest in doing so remains very high. Rather than discussing the data and the issues in securing introductions, this section will discuss how to develop and use a structured process for securing introductions from clients to prospective clients and several methods for doing so.
Getting introductions is a function of you, your client’s satisfaction, and your client’s engagement. Starting off with you, the right mindset can result in more introductions, but it’s more than simply asking a few clients for introductions on a periodic basis. You need an attitude and a way of thinking that needs to be ingrained into the DNA of your entire business. You need to train yourself to see all client relationships and strategic partnerships as opportunities for increased introductions, as well as needing a systematic process for getting clients to introduce you to prospective clients. You need to be referable in terms of the value and services you deliver. Hopefully we have addressed that up to this point.
In “Think Referrals,” the SunAmerica Client Referral Program6 identifies five key components of a referral mindset: being Committed, Focused, Collaborative, Systematic, and Confident.
In context of what we have addressed so far in this book, you need to be committed to implementing the six core client-facing processes, as they will provide an exceptional client offering. Every one of the six processes is focused on building relationships through trust and engagement. The six processes are the framework and intended to be highly collaborative, by taking an ask approach and delivering value. While there may be more of a focus on high-value clients, every client has a Client Service Model or Promise and an intake and Client Planning and Review process.
All six core client-facing processes are structured and systematic. That’s their design level and what processes are. Asking for introductions in an appropriate manner for each individual client is built into the agenda as part of the Client Planning and Review Meeting process. The Client Service process is also aimed at earning introductions. The intent of the six core client-facing processes is to provide organization, structure, and consistency to give advisors the confidence they are doing the right things and in the best interests of their clients. These processes can give advisors the confidence they are delivering outstanding value and that, if well executed, little if anything will fall through the cracks.
If you believe in and deliver the six core client-facing processes we have been discussing, you will have the mindset for success in seeking introductions. Your clients will be well satisfied.
Client engagement is a relatively new term that seems to have gotten traction in the last several years, in part due to Julie Littlechild’s “Anatomy of a Referral: The Economics of Loyalty,” a study done in December 2010. In that study, Littlechild says that “the ‘Engaged client’ [is] one who meets three key criteria—a client who is satisfied, loyal, AND actively providing referrals.” The question becomes what drives “client engagement,” because as a result of engagement clients become more willing to provide introductions. The study points to the answer as:
• Working with the right clients
• Having the right conversations
• Asking the right questions7
Figure 9-2 is a representation, a framework, for the types of clients with whom we might work well, the conversations we might have that move clients toward engagement, and the questions we might ask so that advisors can build practices that engender loyalty and engagement and deliver the elements that result in introductions.
Figure 9-2 | Framework for engaging the right client.
The right clients share your values and have values you share—namely, what do you care about and why? Is it about people, family, community, or is it about money? How do you both feel about resources and frugality? How does honesty and trust fit into their and your values? People have different values, and while we are not suggesting rights and wrongs, we are suggesting your discovery process should determine if your prospect’s set of values fits with your set of values, because that’s part of what leads to engagement. From your intake process to your financial planning and client planning and review meeting processes, you have the opportunity to determine whether you and your prospects and clients share communications styles, personality types, and expectations. We do not expect you to seek clones of yourself but people with whom you can be open and honest in ways that bring mutual trust.
When you share your belief system in conversations, do your prospects and clients want, even more than need, what it is you offer? Do they share your approach to investments? Are they open to your financial planning8 and wealth management approaches, and will they include you as a central player in their financial lives? If you cannot work with your clients in a manner that allows you to do your best job for them, how deep a connection can you really have? Yes, it’s more expensive because these depths take more time for discussions and in the execution of the processes we have discussed. These approaches lead to stronger relationships and a leadership role in the financial lives of your clients, and you know they do because you are asking your clients for feedback and they are providing it. Clients can provide that feedback in a number of ways, but minimally at your annual planning and review they and their feedback are an important part of the direction you set for your practice.
Most advisors want to grow their businesses with higher-value clients and work with fewer of them. What we are talking about is a direction in which the advisor’s practice should travel over time. Of course, these are aspirational goals, but the sooner the better. Having said that, even for advisors who are just starting out or working with “middle-class millionaires” or the “mass affluent” or any other group, this discussion is about deciding how you want to work and who you want to work with. If you want loyal, “engaged clients,” this is an approach that works.
We want to restate that we recognize you may have many clients and limits on your time and affordability. Nevertheless, these things are mandatory only for the clients you want to retain—namely, your A clients at least and many of your B clients.
There are several approaches to acquiring introductions from clients:
• As part of your client face-to-face planning and review meetings
• Utilizing the principle of “aided recall”
• Letting the client know the types of financial issues where you can provide help
• Using the LinkedIn approach
The introduction conversation is best done in person and after getting positive client feedback. Note that the meeting can take place in your office or the client’s environment. Harvey Mackay is quoted as saying, “The most important reading you can do is on the walls of your client’s office or home.”9 For your very best clients, think about client home visits, a convenient way to also include clients’ spouses in your meeting.
Feedback, which is part of your client meeting agenda, needs to precede any discussion of introductions. The agenda includes three of the following six questions to solicit that feedback. Three questions don’t get burdensome, so select the three you believe give you the feedback you need. Choose any of the six questions below that may work better for you:
1. What are we doing that you’d like to see us continue?
2. What aren’t we doing that you’d like to see us do?
3. On a scale of 1 to 10, how would you rate our service to you?
4. What are we doing that isn’t valuable or helpful for you?
5. Do you understand your portfolio and why it’s invested the way it is?
6. Is there anything else you can think of that we can improve on?
If you get feedback that suggests your client is not fully satisfied, a 7 or less on a 10-point scale, the next step is to dig into dissatisfaction and determine if and how you can resolve it. That’s your focus at that point and not securing introductions. You need to get a rating of at least an 8, preferably a 9 or 10, before you go into a discussion about introductions.
Assuming you receive positive feedback you can move into the introduction process using the principle of “aided recall.” Aided recall means prompting respondents (clients) by inducing an association of ideas (or people) to help them recall other individuals who are the same or similar to them. For example, an employee of Exxon (or any firm) should more easily be able to identify others who are also employees of Exxon, especially in her or his own department. Saying, “George, I enjoy working with you. I’m very pleased you’re so satisfied with our services. I wonder if there are any other Exxon Petroleum Engineers like yourself who you might be willing to introduce us to?”
Similarly, gastroenterologists likely know or may be part of a practice with other gastroenterologists, so the same approach using the principle of aided recall applies. “Nancy, I enjoy working with you. I’m very pleased you’re so satisfied with our services. Would you be willing to introduce us to one or two other gastroenterologists in your practice? Perhaps we can meet for dinner one evening?”
American Airlines pilots are likely to know other American Airlines pilots. Note that we did not just say airline pilots or, in the previous example, we did not say doctors. That’s too general. There is a need to be as specific as possible by specialty (e.g., gastroenterologists, urologists, cardiologists, dermatologists, etc.). You get the idea. Of course there are medical practices with multiple disciplines, so in those cases you can use the same approach. For example, “Bill, I enjoy working with you. I’m very pleased you’re so satisfied with our services. Would you be willing to introduce me to one or two other professionals in your practice?”
The aided recall approach improves the probability of acquiring introductions, assuming you have received positive feedback from your client, because it narrows the question so people’s names and faces easily come to mind.
You would use questions as appropriate and specifically defined for each client, but again narrow the request, so the client understands exactly who we would like to be introduced to. Here are a few more examples:
• “You mentioned your parents and siblings. If I can be of service I would appreciate meeting with them. Is that something you would suggest?”
• To an anesthesiologist: “I enjoy working with you and would love the opportunity to be of service to other anesthesiologists like yourself. Would you be willing to introduce me to one or two anesthesiologists you work with (or know)?”
• To a farmer: “I enjoy working with you and would love the opportunity to be of service to other farmers. Would you be willing to introduce me to one or two farmers you work with (or know)?”
• To any client: “You mentioned your friends Mary and Bill. Are they folks we should know? . . . Would you be willing to introduce me to them?”
• To any client: “You mentioned your friend Joe who you went to the ballgame with. Is he someone I should know? . . . Would you be willing to introduce me to him?”
As opposed to aided recall there is “unaided recall.” For example, “Who do you know who might be able to take advantage of the types of services I provide for you?” The question is huge. It is much too broad and too difficult for a client to answer. Even bringing in positive feedback is not helpful. “George, I enjoy working with you. I’m very pleased you’re so satisfied with our services. I wonder if there are any others you know who you might be willing to introduce us to?” This question is difficult because people’s names and faces do not easily come to mind.
You can get a visceral sense of what goes on in your mind when asked such a big question. It is difficult to reply to and is essentially forgotten once the client leaves the meeting. It just doesn’t work. “Unaided recall” is a research method in which a respondent is given no assistance in answering questions regarding a specific topic: “What are names of some banks in your area?” This is as opposed to an “aided recall” question: “Have you ever heard of TD Bank?” The first question, though narrowed to banks, is difficult because you will most likely not recall all the banks in the area. The second question about TD Bank is a simple yes or no.
The aided recall approach is an effective way to seek introductions because clients know their family, they know their friends, and they know people who do what they do, so aiding the client narrows the group of people so that they can easily understand and recall exactly who you are asking about.
To use the aided recall approach effectively, gather information using the Client Wisdom spreadsheet shown in Figure 9-3. The idea is to identify and list clients with their indicative information on the left side of the spreadsheet (top left). This data is already posted on the segmentation spreadsheet (Figure 2-2). Start by listing all A tier clients. The right side of the spreadsheet (top right) is for data to be entered by the advisor from their current client knowledge. This is not intended, at least initially, as a research project. We suggest filling in the data that is known, taking perhaps one minute per client. (For two spouses, use two lines and take two minutes.) Fill out the client’s Occupation and Company. If they are retired, indicate what they did and who they used to work for annotated with an R (e.g., Mechanical Engineer–R, Johnson and Johnson–R). Be specific if you can—don’t record that someone is a Doctor, but an Anesthesiologist; the client isn’t an Engineer but a Mechanical Engineer.
As a side benefit of entering this data you will learn how much you know or don’t know about your best clients. Noting how the client was acquired will also help you relate in conversation, as you can say, “You know we were introduced by the president of your firm, Jack . . . or your neighbor John . . . or your mother, etc. Are there other employees at (name of firm) . . . other neighbors . . . your siblings, etc., who you think I would get along with and might be able to use my help?” Naturally use only one of the “or” options that best fits the situation.
If you know the client’s CPA and/or Trust and Estate attorney note that, too. We will discuss that in the section on Center of Influence (COI) marketing. If you believe the client is “engaged” based on the earlier discussion in this book, note that as well.
Figure 9-3 | Client Wisdom spreadsheet.
Now you have a set of data that can be used for asking questions in order to acquire, or at least seek, introductions using the “aided recall” approach: “I enjoy working with you and would love the opportunity to be of service to other executives at FIRM (or other Mechanical Engineers at FIRM) like yourself. Would you be willing to introduce me to one or two executives (or Mechanical Engineers) you work with?” For “client wisdom” based on travel, organizations or clubs, or hobbies and passions, you will want to dig further and find out more information so you can complete the request. Where do they travel to and with whom? What clubs or organizations do they belong to and how involved are they? What are their hobbies and passions and are they solo or group activities? Separately, it will be of value to know their family members, from parents and grandparents to children to siblings. Some FAs build family trees for and/or with their clients. Some use software for building those family trees. Now you can be prepared to seek introductions using aided recall. The process begins at client intake. You would likely have already built a strong relationship with that client before building that family tree.
Acquiring clients and assets means finding good (nonaggressive) ways of seeking introductions that work for you. The “Anatomy of a Referral” study by Julie Littlechild makes a point of saying, “Despite the fact that 58 percent of engaged clients say they are fundamentally motivated to refer in order to say ‘thank you’ to their advisor, few take action unless there is a clearly stated need on the part of a friend or family member.” This is shown in Figure 9-4.10
Source: Julie Littlechild, “Anatomy of a Referral: The Economics of Loyalty,” December 2010.
The study makes the point of saying that a better approach than asking for an introduction is
to help clients to spot a good referral opportunity so that they recognize the opportunity to share your name . . . the opportunity might involve a client speaking with a friend who has lost a spouse, a colleague who is selling a business, or a family member who is hoping for early retirement. The need triggers the opportunity for a referral; your clients need to recognize that need. . . . If you can help your clients understand the kinds of problems you can solve and provide them with the ‘triggers’ for a referral, then you are the first person they will think of in those situations.
This option is then to speak with clients about the types of clients you best serve so that when that situation arises, they can identify a prospect. Let your clients know on whom you focus, in advance, in a prepared but somewhat casual manner. For example:
By the way, Ed, I’d like you to know my focus in case you run across situations where I can help people you know. Lately I have found a number of situations where there are . . .
Families who want to protect their assets and make sure they are able to retire the way they want. OR . . .
Recent divorces or individuals who have passed away and left behind single heads of household who are concerned about a secure current and future financial situation. OR . . .
Airline pilots who need to put themselves into a position where they can have a secure financial future after they retire. OR . . .
Corporate executives who have complex financial needs because of a number of different sources of wealth.
If you happen to hear about such situations, I am happy to be a resource for them.
Tailor the “who” (families, single heads of household, airline pilots, executives, etc.) and the “what” (ability to retire, secure their situation, etc.) based on the person you are speaking with and your niche, if you have one. It’s best to limit your statement to one or two specialties so that your client can retain what you said and recall it when a friend or family member raises the concern. Don’t try to say you do everything for everybody, otherwise you may wind up doing nothing for nobody.
In these cases you are not directly asking for a referral. You are “planting a seed” so your client knows what you do and whom you do it for. When a client’s friend, neighbor, or colleague mentions a concern, your hope is that your name immediately comes up—your seed has sprouted. You can also see that knowing a lot about your clients and their families can be very important to your introduction efforts. Use the family tree, where appropriate, to understand where family introductions can come from.
What we are looking for in these cases are life changes that may also create “money in motion” opportunities. There are at least four basic money in motion categories:
• Work Life Transitions
• Financial Life Transitions
• Family Life Transitions
• Legacy Life Transitions
There are a number of types of transitions within each area. For example, with work life transitions there can be plans to retire, the sale of a company, a layoff, or a change in jobs. In doing a bit of research, you can identify which situations are most prevalent. For example:
• Every year, almost 4 million people are retiring.11
• As of March 2017 there were 5 million total separations, little changed from July.12
• A typical U.S. worker now lasts 4.2 years on the job.13
• Every month, 2 million Americans quit a job.14
• In 2015, 5.25 million existing homes sold and 510,000 newly constructed homes sold.15
• There are 800,000 new widows/year (13.6 million total in the United States).16
• There are 877,000 divorces and annulments/year.17
As an aside, we do not suggest divorcees as a primary target niche unless you are a Certified Divorce Financial Analyst (CDFA), as there are many unique and complex issues associated with divorce such as the short-term and long-term effects of dividing property, analyzing pensions and retirement plans, and recognizing the tax consequences of different settlement proposals. There are issues beyond those that most FAs deal with on a regular basis. However, once through the divorce, single, mature heads of household can be a good niche market.
Put your request in context of the transition on which you want to focus. For example:
“If any of your colleagues at ABC are contemplating retirement, I’d love to chat with them.”
“If any of your friends have recently left their job, I’d love to chat with them.”
Be prepared in any of these requests to relate a situation where you were able to help another person and how you did that. As an example:
“I recently worked with a client’s uncle who was laid off from his job. The gentleman had some savings but was concerned about his ability to support himself and his family if he didn’t get a job with equivalent income. What we did was a complete financial plan and identified his shortfalls and what he would need in terms of income from another position. In this case the gentleman always wanted to change fields but that would have required taking a lower-paying job in an area he had always wanted to explore. This was his opportunity, so we estimated his income needs, what kinds of position he could afford to take, what had to be done about his budget, options for his older children’s college expenses, as well as looking at his portfolio, and we were able to put together a life plan that would work for him.”
Figure 9-5 is a summary of a number of key life transitions. While you can put your request in writing in a letter to clients, it’s best shared as part of one or more discussions.
To reiterate one last point on this section: We don’t want just names and phone numbers seeking referrals—we want “introductions.” This means, “Would you be willing to introduce me over coffee, lunch, breakfast, or dinner?” If we cannot get an in-person introduction, we can ask the client to introduce us via a personal email, so the prospect is at least expecting a call from us. You would tell the referrer you don’t want to call the person referred “out of the blue” and make them wonder why someone gave out their name. Ask if they would mind sending an email to the person they are referring to you. Here’s a sample you can provide:
The Types of Client I Best Serve
Are you or a family member, relative, friend, neighbor, or business acquaintance going through any of the following life transitions? We can help if you or others are (or expect to be) going through any of the following:
1. Work Life Transitions
a. Is retiring soon?
b. Has started or sold a company recently?
c. Has been laid off from their current employer?
d. Has changed jobs recently?
2. Financial Life Transitions
a. Is purchasing or selling a home?
b. Is struggling with their investments and trying to decide what to do in this current market environment?
c. Needs more income from their investments?
d. Is unhappy with their current financial advisor?
e. Is worried about saving for college for their kids?
f. Is concerned about having enough money for retirement?
g. Has inherited some money recently?
3. Family Life Transitions
a. Has changed their marital status?
b. Had a spouse or significant other pass away recently?
c. Has young children or grandchildren?
d. Is concerned about aging parents?
4. Legacy Life Transitions
a. Has talked about how to leave some inheritance for their children?
b. Is looking for ways to reduce their taxes?
c. Is interested in charitable giving?
d. Is concerned about their estate plan?
e. Owns their own business and wants to establish a savings plan for their employees?
Peter, my financial advisor [insert NAME] is a very valuable resource for me and a member of the local community. He’s a very good person who treats his clients like friends rather than just as a client and offers great personal service and a unique set of deliverables because he is very selective in working with a fixed number of families who are concerned about their financial well-being.
He doesn’t want to call you “out of the blue” and make you wonder why I gave your name out. I thought a quick introduction by email would be OK. He will email you to suggest you set up a quick phone call to explore the possibilities. If you are interested, he’ll follow up with you, and if you are not interested, he’ll back off immediately. I hope you will take his call; he’s a terrific and knowledgeable person with a unique way of approaching financial and investment planning.
Thanks, Bill
If you copy me on the email I will know that it has gone out so I can follow up with an email to them (and I will copy you, so you know I’ve followed up). If they are interested, I’ll carefully pursue their interest. If they are not interested, I’ll back off immediately. I will do nothing to pressure them or in any way make you regret you introduced me to them. How does that sound?18
LinkedIn has been shown to have significant potential for those financial advisors using the platform specifically and social media generally. A 2012 LinkedIn survey (in partnership with FTI Consulting) found that:
• 62 percent of financial advisors actively prospecting on LinkedIn over the past year converted new clients from that process.
• 32 percent of the financial advisors who converted new clients from LinkedIn had $1 million or more in new assets under management from new clients.
• There are 5 million “affluent investors” with $100,000 or more in investable assets, and 73 percent of them use LinkedIn to research investment decisions.
• The “ultra-affluent investors” with $5 million or more in investable assets are 157 percent more likely to trust articles shared on LinkedIn and 37 percent more likely to trust information shared by their LinkedIn network.
• Finally, 52 percent of affluent investors say that they would interact with financial advisors via social media, but only 4 percent currently are being engaged by financial advisors online.20
Recent data states that “during the most recently reported quarter, LinkedIn had 450 million members.”21 This is up about 123 percent from Q4 2012, when there were about 202 million members. (In 2016, Microsoft acquired LinkedIn for about $26 billion.)
The data and recent experience suggest the use of LinkedIn by FAs makes great sense as a prospecting tool. This is an opportunity to know more people, and prospects, that you wouldn’t ordinarily know. The power of LinkedIn for advisors lies in their second-degree connections. The number of first-degree connections you have is not as much a factor as how many second-degree connections you have in your network. However, the more first-degree connections you have, the more seconddegree connections you will likely have in your network.
There are a couple of “principles” to follow to operate successfully in LinkedIn. Disconnect from all financial industry colleagues/competitors and focus on connecting with all your clients, prospects, friends, family members, and appropriate COIs (e.g., CPAs, attorneys, and insurance professionals if they are not competitors). People who are working are more likely to have broader networks than those who are not working. If you can find your health practitioners on LinkedIn, I would certainly connect with them as well as any small-business relationships you have in your potential niche areas. Be cautious with whom you connect and focus on people you really know. For prospecting, there is little value in connecting with strangers. Again, do not connect with other advisors unless they are on your team. We do not want them to have access to your second-degree connections.
Once you have connections, you need to begin reviewing your network. In other words, you are reviewing your connections’ connections. Do not spend endless amounts of time reviewing all of a connection’s 500+ connections. Review their connections until you find a set of names that stick out as potential prospects. (We will get more specific in the process outline that follows.) Prospect names should stick out based on title and location and perhaps their work history and the job they have. We may assume that senior partners, C-Suite executives, doctors, dentists, senior executives, and others have a good income. We don’t know if they are good savers, but we have a rational starting point.
Remember that we only selected a set of names that stuck out. Your connections may have many great connections. You can go back to your connections a small number of times. Our view is that we can go back to your first-degree connections perhaps only two or three times in total.
We want a list of names so that it is probable that your first connection will know a few of them (their first connections) well. There are individuals on LinkedIn who connect with too many people, including many who ask to connect with people they don’t know or do not know particularly well. There is little value to that, but some people like to collect connections. If someone has 300, 400, or 500 or more connections, it is unlikely that person knows all of them well. Remember Dunbar’s number (see Chapter 2).
Here is a process to follow when prospecting:
• Decide with whom you (the financial advisor) are comfortable using this approach.
• FA and client must be connected.
• FA has a good relationship with the client.
• Client probably has a “good number” of connections.
• When you have decided whom you will use this approach with, then decide how many names you will ask the client to review.
• Varies depending on the number of client connections.
• Process users identify a range of connections between 10 and 30 people; 15 is the most common number and is what we suggest in order to identify three or four possible candidates. More than that might be imposing.
• Next, go through the client’s connections (your second-degree connections), if they are visible, to decide which of those connections could be qualified introductions.
• If the client’s connections are not visible, you cannot use this process with this client.
• Identify the 15 or so names that have the characteristics that might make good prospects.
• Advisors should use this approach only two or three times with any client or friend.
• FA can search by title in the client’s connections or company or job type.
• Prepare a first email from you (the advisor) to your client (first-degree connection). A sample email could read something like this:
Brian (Client Name),
I spoke with Robyn (client’s wife) last week. Congratulations on your new house, I’m sure you are very excited. It sounds like the deal of the century. [This opening paragraph is an example of a personal note, a pleasantry.]
Anyway, the reason for this email is that I was on LinkedIn a few days ago and I got caught up reviewing your connections. You actually have several people that stuck out based on . . . (e.g., titles). I wanted to ask you if you would mind if I made a short list of names and send it over to you. I just wanted to see if we could have a quick conversation to see what “intelligence” you have on these individuals . . . if anything?
Thanks,
Rob (Advisor Name)
• Send the email.
• Follow up with a call to the client and get his/her agreement to review the names.
• Thank the client and let him/her know you will put together a note with names and set up a short chat.
• Ask what a good date and time is for a short chat and make an appointment.
• Prepare for a conversation with the client. For example:
• Send a second email to the client 10 minutes before the scheduled call time saying you will call in a few minutes.
• Make the call (a recommended script follows).
• After any small talk and thanking the client for his/her time, review the names.
• Eliminate names the client doesn’t know very well.
• Ask questions about people the client knows, to further cut down on names.
• Discuss intentions to call these people and ask for permission to use the client’s name.
Hi Brian,
I really appreciate you taking a few minutes to go through these names I emailed to you. Do you have the list I sent over?
I know I sent over N names. We are going to make this quick. If you’re like me, you may be connected to people you don’t know very well on LinkedIn. So, the first thing I want to do is eliminate/cross-off anybody that you do not know very well . . . so who should I delete?
Okay, so that leaves us X names. I want to continue to eliminate some more possibly. Obviously you know me and my personality and you know these individuals very well. Out of these remaining connections, is there anyone that you think would be a clash of personalities? [Note: As you go through the names, ask how your client knows them, how long they have known them, whether there is something in particular you should know about them.]
Thanks for taking the time to go through these connections. I really do appreciate it. I just wanted to explain to you my intentions with these individuals. I may send them an email, but I am most definitely going to call them to introduce myself. My goal in the call is to see if they would be open to a 10–15 minute conversation. At the end of the day, either they will be open to it or they will not. If they are open, great . . . either I can add value to what they are doing or I cannot. Since you get along with these individuals, you wouldn’t mind if I mentioned your name either in the email or on the phone, so I can get my foot in the door easier, would you?
Do you happen to have any of their phone numbers handy? [Note: You may prefer to ask your client (Brian, in this case) if he would be willing to send the email introduction, using the sample letter we previously provided.]
To increase the possibility of acquiring introductions using any of these approaches it is of significant value to have an “engaged client.” We have discussed in depth how to create engagement. In summary, the keys to client engagement, satisfaction, and loyalty are in your processes.
Engaged clients receive a more holistic offer and your intention to be their financial quarterback or personal CFO. Is your offer focused on financial planning and true wealth management? Is it more likely to cover your client’s full financial life? Are you delivering the higher level of contact your engaged clients expect, including at least three or more meetings a year? Do you have a strong personal relationship with your clients? Are they actively involved in providing input to you?
Client engagement is a fairly “simple” concept but implementation requires hard work. With perhaps 10.1 million households in the United States with $1 million or more in investable assets22 and perhaps 285,000 competitors,23 well-executed and consistent service can be a differentiator, but the “zone of affection” requires every team member’s efforts.
The number-one driver of trust is “following through on promises . . . . The foundation of trust is built one brick at a time based on the consistent and ongoing evidence that you are trustworthy.”24
In our business, you build this trust when you . . .
• Conduct formal plan and portfolio reviews.
• Reassure your clients through personal, informal communication.
• Offer educational activities, such as workshops.
• Contribute to or follow general articles about the markets or other financial topics.
• Acknowledge that you, as the advisor, value the relationship in ways that don’t directly relate to the business relationship.
• Focus on understanding personal financial goals during review meetings rather than looking only at portfolio returns.
Getting introductions is about four things:
1. Delivering on your promises
2. Believing you deserve introductions for the quality work you do
3. Having a process
4. Executing, executing, executing on a consistent basis
Over the years, Prince & Associates asked hundreds of FAs how they sourced their best clients. In 2000, 25.7 percent got their best clients from other clients, but by 2003 that had dropped to just 14.2 percent. Whereas with professional referrals, 69.7 percent got their best clients in 2000, but it had risen to 81.4 percent by 2003.26
Whether these numbers still reflect the current reality is not critical. It is critical to understand that professional referrals (or introductions) remain an important source of business growth opportunities. Many advisors have been challenged to develop the quality relationships that have resulted from professional alliances and referrals. Prince works primarily with the very high net worth marketplace, which has some differences from the high net worth and mass affluent marketplaces. Nevertheless, the points made and the approaches therein are highly valuable. Pursuing quality professional alliances is a high-value marketing and sales approach. (You can also get a good introduction in The Middle-Class Millionaire.27)
To support the thesis that professional referrals (or introductions) remain a solid source of business growth opportunities, Matt Oechsli of the Oechsli Institute (www.oechsli.com) wrote an article28 that ranks the top 5 “marketing activities used to acquire $1 million+ clients.” In rank order they are:
1. Referral Alliances (e.g., CPAs, attorneys, etc.)
2. Personal Introductions
3. Indirectly Generated Referrals (word-of-mouth)
4. Social Prospecting and Networking
5. Intimate Client Events
The thesis of Rainmaker is that “if you want the wealthy as clients, you must go where the rich go to look for you. 68.9 percent of the affluent find their primary FA through their attorney or accountant. Allow us to put it this way, if almost 70 percent of the wealthy find their primary FA through their attorney or accountant, why would you look anywhere else for them?” 29
The authors go on to say that while many of the “Elite 1200” advisors they collected data from employ a variety of methods to acquire new clients, they have all built strong relationships with other noncompeting professionals who provide them a steady stream of high-quality, prequalified, wealthy referrals. The principle noncompeting professionals they partner with are accountants and attorneys.
What we are talking about is creating a meaningful strategic partnership between the advisor and a carefully chosen select number of professionals, usually attorneys and/or accountants.
A True Partnership means that they are more than just one of a number of FAs being recommended; they are the first and often the only FA to be recommended. This is the essence of a strategic relationship compared to a strategic alliance.
Importantly, they state, “So, in the end, what we find derailing the success of FAs is that they chose not to succeed, by failing to intention success. They’re unwilling to make the effort to ratchet up their practice.”30
Rainmaker’s authors also state:
• For middle-class millionaires, “first in importance are referrals from other professional advisors they employ—accountants and attorneys (54.2 percent). Then comes a referral from another client of the financial advisor (30.1 percent).”
• For women of wealth (743 in the study), they found “advisor referrals were the principal way these affluent clients selected a financial advisor.” Professional referrals are used by almost 70 percent of women of wealth.
• “When professionals make referrals of their affluent clients, there is also a very good chance those referrals will turn into new affluent clients for FAs.”
They further state that while financial incentives are important, the value add you can bring to strategic partners via direct incentives (fee and revenue sharing) is not likely to provide enough or the right kind of incentives to interest a strategic partner. Nevertheless, providing reciprocal referrals will remain very or extremely important even though one-for-one referral scenarios may not happen.
However, indirect financial incentives are not limited, and they are valuable to accountants, attorneys, and other professionals. These indirect financial incentives include:
• Help with practice management
• Insights into alternative compensation structures
• Marketing support and ideas
In a CEG Worldwide study31 of more than 2,000 FAs industrywide, 61 percent reported that such referrals were the source of their best five new clients in the previous year. Coming in a distant second were referrals from existing clients, cited by 23.4 percent of surveyed FAs. CEG Worldwide notes that:
In the study by Russ Alan Prince of more than 1,400 clients with at least $1 million in investable assets, 54.2 percent named referrals from professional advisors such as attorneys and accountants as an important way to find their primary FAs. Trailing behind in importance was referrals from existing clients of the FA cited by 30.1 percent of those surveyed.32
There are many types of professionals who would make excellent strategic partners. Two types stand out with particularly high potential:
• CPAs and accountants who work for individuals and families in the FA’s target market(s). These professionals can make quality alliance partners.
• Attorneys, primarily estate and wealth protection attorneys, who work in the FA’s target market. They can also make valuable strategic partners.
While strategic alliances with CPAs and attorneys can develop into powerful relationships that result in business introductions, you have additional options among other professionals:
• Life insurance specialists working in the high end of the market can have good relationships with individuals in your target market. They may also have relationships with other professionals serving the affluent, like private client attorneys, that can lead to additional opportunities.
• Association executives who lead organizations in your target market may be open to exploring ways to better serve their clients through an alliance.
• Business brokers may be open to an alliance because some of their largest financial transactions can be the sale of the FA’s business. Business brokers know that some transactions may not be completed because the potential seller is not sure what to do with the proceeds. Your financial planning and investment services can be very helpful to the business broker and seller of the practice.
• Some investment bankers who facilitate mergers and acquisitions may welcome an alliance that helps clients invest equity that has been released. Broad-based wealth management services can provide a set of excellent services.
• Consultants who work in your target market may have contacts they can leverage to help you while building their own businesses.
• Property and casualty agents who focus on clients with multimillion-dollar homes, jets, or specialty autos, for example, also may have good affluent client relationships.
The professionals in your target market areas have several things in common:
• They work with affluent clients in the same areas as you.
• They may have built trusted, long-term relationships with their clients.
• They want to grow their businesses.33
Special attention is almost always focused on CPAs and Trust and Estate attorneys. However, you can build alliances with almost any type of professional advisor with these characteristics.
“With so many choices,” the CEG Worldwide study asks, “how do you begin to narrow your options?” As a first step, create a profile of what your ideal strategic partner would look like. Although you may not identify an individual who perfectly matches this profile, it will help keep you on track toward the ideal through your discussions with candidates.
CEG Worldwide’s profile for the ideal CPA firm might look like this:
• Highly respected regional firm.
• Three to 20 CPAs in the firm. (To this CEG recommendation we add that it may be more appropriate to work with smaller firms with, say, one to five CPAs because they may not be as inundated by requests from FAs to form “strategic” professional partnerships.)
• 150–300 clients per CPA.
• Principal specializes in your target niche.
• Principal is marketing oriented and has an entrepreneurial outlook.
• Firm is client-centric, focused on the best interest of its clients.
• Firm sincerely wants to help clients solve their problems and achieve their goals.
• Firm is open to working with other professional advisors.
The profile for the type of attorney you decide to work with might look like this:
• Works extensively with affluent clients.
• Works extensively with other professional advisors to the affluent.
• Specializes in trusts and estates, including wealth protection.
• Has an entrepreneurial outlook and is marketing oriented.
• Is interested in growing the firm’s business in innovative ways.
• Has the best interest of clients in mind.
• Sincerely wants to help clients solve their problems and achieve their goals.
• Shares your commitment to client service, integrity, and professionalism.34
Before searching for CPAs and Trust and Estate attorneys from external sources, start with those professionals who are used by your clients. With your profile of the ideal strategic partner, you can prepare a master list of candidates including your client’s CPAs and Trust and Estate attorneys. For additional candidates, you can turn to various local and national websites and organizations. You can also phone the heads of your local and state CPA societies to ask for assistance in identifying leading firms in your market.
From your master list, identify the top ten possibilities. In the case of CPA firms, CEG recommends, you can assess the whole firm, though your primary contact would hopefully be the managing partner. For attorneys, you can look at the individual attorney, not his or her entire firm. 35
Contact the potential partner directly to discuss joint opportunities for working together and schedule an exploratory meeting. These can be difficult calls for FAs to make but referencing a joint client can smooth the way as would an email to the professional from the client. Professionals need help with business development and also face challenges in growing their businesses. Depending on conditions, some professionals may be preconditioned to work with FAs. Therefore, some will be willing to meet with you.
“Once you have these initial meetings scheduled,” CEG Worldwide notes, “you will be ready to begin the strategic alliance consultative process, which allow you to determine the right strategic partners and to launch your alliances effectively.”36
• “About one-third of surveyed firms use an internal model. That is, they provide . . . financial services and products through one or more employees or partners at the firm. A sizable majority of the firms (65.4 percent) use a collaborative model, whereby they provide financial services and products through employees or partners and through strategic arrangements with financial services providers outside the firm.”
• “The most common type of outside provider used by collaborative firms is the turnkey asset management program (TAMP). More than six in ten of surveyed collaborative firms rely on TAMPs for portfolio management and support. About half of collaborative firms (51.5 percent) provide clients with referrals to select financial services professionals to access financial services and products, while about one-third (31.3 percent) have created formal strategic alliances or joint ventures with one or more financial professionals.”
• The COI relationship “rests on the foundation, which must have four key elements:
• Integrity: Are both partners principled, trustworthy, and reliable? Will you be able to fully trust one another?
• Chemistry: Do you connect with each other on both a professional and personal level? Do you have genuine rapport?
• Empathy: Do you understand one another’s issues and challenges?
• Competence: Do both partners have the professional experience and technical expertise required to capably address their clients’ challenges?”
The objective of this part of the strategy is to get an initial idea of the capabilities and “quality” of the professional. Quality can be a subjective attribute and may be understood differently by different people. The “quality” you will be looking for in this and the other steps of your COI marketing strategy can include: character, excellence, worth, value, skill, and responsiveness. In general, you are seeking a professional who is fit for and well suited to the purpose he or she was hired for, as well as for you and your business.
The COI may or may not be the absolute best in his or her field but needs to be competent to meet your clients’ needs and be relatively cost-effective. Does this professional communicate well and have a good attitude? Is the person enthusiastic about what he or she does? Is the person certainly ethical with high integrity and friendly? Is this someone you like and could work with?
If you are in the early stages of your career and have no or few clients within the primary geographic area in which you work, you will have to “hunt” for professionals with whom to build a relationship. The LinkedIn approach, as previously addressed, may be another source for you. The first set of professionals to vet should be the professionals who work with your top 10 to 20 clients or so, including:
• The CPAs they work with in preparing their tax returns
• The Trust and Estate attorney they work with in preparing their will
• Secondary connections
• The banker or mortgage broker they work with in obtaining a mortgage
• The real estate agent they work with in buying a home
• Other professionals where specific expertise is needed
If you find your client is highly satisfied with the professional you will likely want to interview that professional to establish a relationship and perhaps even choose to work with them yourself. This is someone with whom you should go to the next step.
If your client is not highly satisfied, you can then identify highly satisfactory professionals to that client once you have that group in place.
Over time you may want to know the names and contact information of most, if not all, of your top clients’ other advisors, though you will develop a “strategic relationship” with only one or two professionals in any one discipline. With some minimal effort you can maintain contact with most of them through your automated drip marketing system. An example of an automated drip marketing system is a set of emails to an individual or group of individuals based on specific timelines or user actions. Such an approach can allow you to keep in touch with the individual or group based on specific events. This might include when a client or prospect logs onto your website or requests an article from your site. The emails can be pre-written and may be personalized. An automated drip marketing system can also include sending out compliance-approved newsletters, company-written materials, and special compliance-approved announcements. Depending on your team structure you may have some minimal contact with more than your “strategic” professional relationships.
• We are always getting calls from CPAs and estate attorneys (or other professionals you are vetting). We want to make sure we have the names of your CPA and estate attorney so we can respond to any of their questions with your permission.
• If client does not have a CPA and/or an estate attorney, this may be an opportunity to provide a referral to one. Ask if they would like a recommendation.
• If client has a CPA and/or an estate attorney, record their names on your COI contact list and in your CRM system.
• May I ask you a few questions to get a sense and background of your CPA and/or an estate attorney, from your perspective?
• Assuming yes, ask questions such as:
• What type of business do they have?
• How did you meet this professional?
• How do you feel about the work they’ve done for you?
• What are their costs, and do they seem in line with your other experiences?
• What do you see as unique about that professional that made you pick them?
• In what areas are they particularly strong?
• Do they have any weaknesses?
• Are they responsive?
• Do they have a specific type of client they work with (e.g., individuals, small businesses, and corporations)?
• And, most important: Would you recommend this CPA and/or estate attorney to others in your family and friends? Why?
You should record all COI data in whatever database system and/or CRM system you use. This will also be the base for recording conversations with the COI. Some financial advisors also keep a notebook by COI with a page for each client they have referred to that COI. They also keep a section and page for each client that COI referred. This notebook is then used for follow-on conversations with the COI as appropriate.
At this point you have gotten a positive indication from your client and/or searches that this COI is worth contacting based on information available to date. You are now going to speak to an initially vetted COI.
The objective of this part of the strategy is to introduce yourself and get a very quick sense of the COI through the conversation, but it is primarily designed to get an in-person appointment with the COI. We suggest the COI be geographically proximate to you so that your travel is easier and any clients will likely be close as well.
Make sure you have Googled the COI, reviewed their website if available, and reviewed their LinkedIn page and any other social media data or other information you can find to learn about that person and firm.
The response you will get is most often positive or at least courteous. The COI may well have been contacted by many advisors in the past. The professional may also be associated with one or more other advisors. If this COI is one you would really like to have as a partner, your approach could convince them that you are an advisor they would also like to partner with and that you are serious about establishing “strategic” professional relationships. You can indicate you are talking to several professionals and would like the opportunity to meet, if they are willing and interested.
They most likely know what you want, but they also need introductions. This is why we suggest that in some or many cases it may be more appropriate to work with smaller firms—for example, the firm with one to five CPAs, because they may not be as inundated by requests from FAs to form “strategic” professional partnerships. You may also want to work with less established COIs who are still hungry for business.
If you cannot get an appointment with this COI now, and not likely going forward, determine if this COI will be open to some degree of continuing contact, perhaps a couple of times a year, and if the person is open to being included on your drip list. Cordiality at a minimum is needed and you will of course invite the COI to feel free to contact you if you can be of service. Send him or her an electronic business card (VCF) and follow up with an email thanking them for speaking with you and inviting them to stay in contact. If you can connect on LinkedIn, you may want to do so, assuming they are not a potential competitor.
COI NAME, this is (NAME).
• Our joint client, Mr. and/or Ms. (NAME) thinks very highly of you. We’ve been working together for N years and have a great relationship, so I am particularly pleased that (CLIENT NAME) recommended you.
• Do you have a few minutes to chat?
• Assuming yes, keep going.
• If no, ask when a good time to call back is.
• If you are blown off, you can drop it or ask the client to call so the COI will take your call. However, you may be better off dropping it here if the person is unfriendly.
• Proceed as you would with someone you cannot get an appointment with. As suggested previously, send this person an electronic business card and follow up with an email thanking them for speaking with you and inviting them to stay in contact.
• If you are invited to keep going, briefly build some additional rapport with a conversation. For example:
• How long has (NAME) been your client?
• How long have you been in the business?
• At this point you can ask for an appointment: “COI NAME, I’d like to get together for a brief meeting with you and discuss how you do your business. There are times when I need to refer a client to a CPA/estate attorney and I’d like to find out more about you and your business. Can we meet for breakfast or lunch some time?”
• Assuming a yes, schedule the meeting: “I would like to come by your office if that works for you.” A visit to their office will tell you more about the COI as well. You can get many impressions from the physical facility where the person works and the office staff.
You are meeting with a pre-vetted COI for this call and one with whom you have spoken and have gotten at least a reasonably good sense that you are speaking to a COI of substance based on your research and conversation.
The objectives of this part of the strategy are to:
• Understand the COI’s capabilities and services and evaluate the individual based on some of the previously discussed criteria, your client feedback, and your research.
• Briefly talk about your business from the standpoint of why you are in the business, the types of clients you work with, and the kinds of problems you address and solve. This is where storytelling applies. Keep it short because this call is about the COI.
• Start to build a relationship if there is rapport and a meeting of the minds.
• Begin to enter into the process to establish a joint referral/business relationship if the person is willing/interested.
• Plan the next step, which is to invite the COI to your office where this potential partner can get an understanding of what you do, how you do it, and who you do it for.
As in an initial client or prospect call, let the COI talk 80 percent of the time. The more you let people talk, the more they like you. The more you talk, the less they like you. Let this CPA or attorney sell you on their skills and services. As one blogger writes:38
Cold hard truth: we’re all narcissistic to some degree. Even when we may not feel like we’re the hottest thing since World War III, we do like to believe that our inner lives and thoughts are fascinating. Just take a look at our social networks as we fill our days with Facebook status updates, Instagraming everything, and tweeting about every aspect of our lives. . . .
But believe it or not, there’s a reason for this beyond everyone being profoundly self-involved: as it turns out, talking about ourselves literally makes us feel good. Scientists have found that talking about ourselves activates the same pleasure centers of the brain that are associated with food and money. So in short: we are our favorite subjects because goddamn it feels good to talk about ourselves. And since this fits in with the reward theory of attraction, getting people to talk about themselves is a valuable part of getting people to like you.
. . . You [also] have to be an active listener, taking what they say and bouncing it back by asking the right questions.
Obviously you would have had some opening rapport conversation such as the ever-typical “How are you?” or “Thank you for seeing me today,” or “I am looking forward to learning about you and your business.” But you also need to have an interview plan (see the sidebar for a list of COI interview questions). Work from a written set of questions with writing space to record answers. People you are interviewing don’t mind you using a questionnaire to make sure you cover everything and record their answers.
You won’t be able to ask all of these questions in the time you have. Ask the COI how much time they had allotted to the meeting and stay to that commitment. If you established rapport and you like what you have seen so far, and the COI does as well, you can address more questions as time goes on. This is intended to be a long-term relationship.
Highlight the questions that are most important to this interview. Few interviews go exactly as planned, as one question may open up a topic line you had not planned on. During the interview—and in fact in any subsequent conversations—as you listen to the COI’s answers, think about how you can add value to that person and/or his or her business. This is of course always a good idea when speaking with clients and prospects and when networking.
COI Interview Questions
1. What are your goals for your business?
a. Short term and long term?
b. If we were sitting here 5 years from now, what would you like to have seen happen? (Note: You are looking for their aspirations and desire to grow their business. If they are looking to put it on cruise control, they are not likely the best strategic partner.)
2. Are there any particular problems you have in your profession/running your business?
a. Plans to solve? (Increase income would be an example.)
3. What are your favorite types of cases to work on, and why? (Where does their interest lie?)
4. What types of cases are the most profitable to you? Have you ever quantitatively analyzed them? (Do they know who their best clients are?)
a. What professional types are your dominant client groups? (You are looking for a pattern of opportunity associated with a professional group.)
b. What issues do they voice to you as their major financial concerns? (You are looking to shift into a conversation about specific clients where you can offer solutions to their problems, and even to gain a client introduction.)
c. What issues do you perceive them as having? (With this question you can hunt for wealth management interests.)
d. When you look at your business owners, what level of revenue makes for your best client?
5. How did you initially build your business?
6. Where do your new clients come from?
a. What are the top five sources and why? (Good information to know, but this question is a way to also find out how heavily any other advisors are feeding them clients. There is a possible opportunity to reverse-engineer their COIs, delivering significant value.)
b. Have you worked with financial advisors in the past?
c. What has been your best and worst experience working with a financial advisor?
d. What could we offer that would differentiate us as financial advisors?
e. What makes an ideal client for you—e.g., how would I recognize a great prospect for you?
f. How many new clients do you usually get in a year?
7. What are you doing to get more referrals, and/or what problems are you encountering? (What if anything are they doing systematically to get more clients or more business from existing clients?)
8. Who is your toughest competition and why? (This question is a way to diagnose where they feel their firm could improve by looking at who they envy and why.)
9. What financially related problems are your clients bringing you? (You are looking to identify issues with their clients that you may be able to resolve.)
10. What kinds of marketing do you do? What have you found to be most successful? (Make an inventory of any efforts.)
11. What kinds of networking groups are you involved in? (Inventory active groups to possibly join.)
12. What personal goals do you have? What are you doing about these? (Explore wealth management opportunities with them.)
13. Do any products or services in particular trouble you? (You are looking for product landmines that you want to avoid.)
14. Do you mind if we spend a few minutes discussing how we do our business? (Be prepared to answer questions as appropriate about any of the following.)
a. What’s in your pitch book
b. Your processes and service model
c. Your communications process
d. Your investment philosophy and approach
e. Your differentiation
15. In Conclusion
a. Would you be interested in working together in a way that could mutually benefit us?
b. How do you feel about someone like me working with you?
16. Discuss next steps such as another meeting, a planning session, a test client, or perhaps using the COI as a test client at no cost or any expectation, of course. Consider offering a financial plan for the COI, preferably with real data but even partially real data could be helpful.
You will not likely have time to ask more than a half dozen questions, so plan your time accordingly. You will want to spend a few minutes on point 14 and ask the big questions on point 15.
Source: This is a version of questions from Brett Van Bortel, coauthor (with Russ Allen Prince) of Rainmaker: Strategic Partnering with Attorneys and Accountants to Create a Pipeline of New Affluent Clients (Erlanger, KY: National Underwriter Company, Summit Business Media, 2006). Our additional explanations are in parentheses. There may be other questions you will want to ask as the conversation develops.
http://www.thinkadvisor.com/2006/08/01/building-the-cpa-alliance.
The three stories told here are from Ellen Uzelac, “Building the CPA Alliance,” Research Magazine, August 1, 2006, http://www.thinkadvisor.com/2006/08/01/building-the-cpa-alliance. Reprinted and excerpted with permission from Think Advisor, © 2006 ALM Media Properties, LLC. All rights reserved.
If after your interview there is continuing interest you will move to the next step. If not, you will determine if this COI will be open to some degree of continuing contact, perhaps a couple of times a year, and if the person is open to being included on your drip list. Cordiality at a minimum is needed. Invite the COI to contact you if you can be of service. Send an electronic business card and follow up with an email thanking them for speaking with you and inviting them to stay in contact. If you can connect on LinkedIn, considering potential competition, do so.
Plan the next step, which is to invite the COI to your office, where they can get an understanding of your facilities, your support staff, the tools at your disposal, and your team and management.
At this point you have determined that the COI is not a competitor. You have directly asked that up front if it’s not clear from their website.
If they have a referral relationship with other FAs you have also asked if they are willing to consider you as a second source, if that is acceptable to you. At this point they are probably not yet a “strategic” professional relationship.
You have by now gotten at least a somewhat positive response from a qualified COI with whom you have begun to build a relationship. They have left the door open on the question of whether they are considering entering into a “strategic” professional relationship. (Note: If you have not gotten a positive response from this COI you may want to dig further into why not. If you don’t get a positive response and you can’t find out why, the best you may be able to do is have a cordial, positive, but non-referring relationship.)
If everything has gone well to this point, the objective of this part of the strategy is to continue to build on the relationship by inviting the COI to your office, where they can get an understanding of what you do, how you do it, and who you do it for. It is important that they accept your invitation and commit to a visit.
In essence, this is a sales call at this point. The “sale” is the COI’s agreement to a visit. However, you must be cautious and not be salesy, as this may not go over well. COI relationships must be nurtured. An alliance can take months, even a year or longer to establish. Don’t become impatient or expect quick results.
If the COI does not commit to a visit, you will have to decide whether to continue to pursue a “strategic” professional relationship. You will have to determine how open this COI will be to continuing contact. Does not committing to visiting your office indicate a lack of desire to develop a “strategic” professional relationship? If yes, you may want to drop further attempts to develop that relationship and move on. If maybe, but not now, you may want to maintain contact such as a call two or three times a year and see if they are willing to visit at a future time. Keep dripping if it’s of value and the COI is open to being included. (Note: An email is NOT a substitute for a call.)
As said, cordiality at a minimum is needed and you will invite the COI to feel free to contact you if you can be of service. Send the COI an electronic business card and follow up with an email thanking them. Connect on LinkedIn if appropriate.
The Strategic Value of the COI Visit
As John Bowen of CEG Worldwide notes, “Most advisors have all kinds of challenges forming strategic relationships because they don’t have a clear, compelling value proposition to bring to the CPA [and Trust and Estate attorney]. They may have a good business model but so often what they do is come up to the CPA, as they would a client, and try to impress them with their investment or technical knowledge. Much like clients, CPAs can’t tell the difference between advisors. What they want is an understanding of how the CPA does business and how the advisor can provide them with a coordinated financial offering. They are looking for people who can provide insight, who can be looked at as a business partner. This is more than just a good-old-boy referral network.”
“I’ll bet 80 percent of brokers and advisors would say, ‘CPA alliances are part of my marketing strategy.’ What happens is they end up signing up a lot of CPAs and not doing a lot of business with them,” says Chip Roame of Tiburon Strategic Advisors. Continuing, Roame says, “Why such a high failure rate? It’s simple: the lack of a systematic approach.”
“Everybody wants to meet more clients through referrals; they all know it’s the best way. But most don’t have a systematic approach to it,” according to Bill Cates of Referral Coach International. “There’s a lot of fear and mistaken assumptions that keep them from developing that business. And the solutions are pretty simple, really.”
In Rainmaker,39 the authors state “a strategic partnership is a relationship, and building it right, from the foundation up, requires time and thought. The two basics are personal integrity and technical expertise.”
The COI visit to your office is your opportunity to communicate your views and values. You must communicate your ethical and personal standards. In your visit you will want to:
• Introduce all of your staff.
• Illustrate that you and your team are client-centric by discussing your “Client Service Model” or “Promise.”
• Discuss that you have a fiduciary perspective. If you are a fiduciary certainly discuss that fact. Some firms are technically not fiduciaries, however; a fiduciary is a person or business that holds a legal or ethical relationship of trust with one or more other parties. With a new Department of Labor (DOL) rule you have additional legal fiduciary responsibilities.
• Outline the tools and technologies you have in support of your clients (e.g., your financial planning tools, your CRM, etc.). Show a sample report with the types of recommendations you provide.
• Go through a sample analysis of how you have helped solve a client “problem” using a client example (keeping client specifics confidential).
• Show the COI the processes you use to interact with clients to illustrate your systematic approach. (You can find a description of these processes at www.financialadvisorsuccess.com.)
You can also discuss the types of situations where you have helped clients resolve their wants and/or needs in life transition circumstances as listed in Figure 9-5. In essence, you are sharing your “compelling value proposition,” which includes your people, your skills, your experience and expertise, what you deliver to your clients, and the tools, processes, and approaches you bring to the table. Illustrating your technical expertise should come as an offshoot of everything we have discussed thus far, rather than being a focal point.
At this point you have hopefully impressed the COI. The fact that the COI has visited your office is positive. As with client meetings, as your next steps you will want to:
• Summarize your meeting, reiterating the points you tried to make and your value proposition.
• Seek feedback, asking questions about what they liked, what you might have addressed that you didn’t, and any suggestions they have.
Although the COI is now moving toward a “strategic” professional relationship, the relationship must continue to be nurtured over the coming months and longer. The objective of this part of the strategy is to:
• Continue to build on the relationship.
• Develop how you can jointly work together in a way that could mutually benefit the COI and yourself.
• Plan on a next meeting, perhaps over a meal, to develop next steps.
You will want to offer to become a resource for the COI’s practice, providing an ongoing education on investment-related subjects and keeping them updated on the markets and resources available to your wealth management approach. These next steps can be addressed at the same time as the Step 5 meeting or in another meeting after a week or so.
Script for Working with a COI and Other Ideas
• Are you comfortable enough with who we are to consider some next steps? (Assuming a positive response, continue to explore other topics.)
• At this point, we’ve agreed to continue exploring working together. What are your thoughts on the ideas I have suggested?
• Let’s set up another meeting to:
• Brainstorm plans for working together on a test client.
• Review our “Offerings for Strategic Partners.” (See Appendix 2 for a list of potential offerings you would want to discuss in another meeting.)
• Serve as test clients for one another, at no cost and without any expectation, and consider a financial plan for you and your spouse or partner. You could prepare my tax return with the same agreement.
• Discuss conducting a marketing event together, where we can both invite clients and both speak at the event.
• Explore ways to work together such as through roundtables, teleconferences, newsletters, appreciation events, etc.
• Send clients various materials, such as each other’s newsletters, client magazines, equity and fixed-income information, research, or tax tips. (Perhaps ask a subset of clients what they would like and deliver it.)
• Establish a plan for continuing contact such as a call, lunch, or visit perhaps every 30 to 45 days. (You’ll want to schedule a breakfast or lunch meeting every three or four months with each of your “strategic” COI relationships.)
These final words of advice are excerpted from the Rainmaker Keynote Summary.
• “Many advisors don’t come close to the level of knowledge they have about their potential strategic partners as they do with their investor clients. In other words, advisors know the attorney or accountant is their client, but they don’t engage in the kind of relationship management they would with a top investor client.”
• “Do all the things you do with your BEST investor clients, and move it over to attorneys and accountants—your ‘strategic partners.’”
• “You do not need a lot of partners to significantly increase your income. In fact, the research on this point reveals a striking fact. The average number of partners for the ‘Elite 1200’ is 3.9. Perhaps even more interesting is that it never goes above 5. In fact, when advisors try to work with more than 5, their production began to go down. Why? It appears that they could not feed all of these strategic partnerships adequately and began to backslide into ‘affiliations.’” [It is difficult, in other words, to develop and maintain the type of close “strategic” relationships with COIs that you will need to get them to provide quality introductions.]
• The guidelines for a “strategic” relationship include having a:
• Good personal relationship
• Relationship that adds value to both businesses, including revenue growth
• Solid and continuing joint business arrangement
• If the COI does not meet these criteria, move on.
• “The Elite 1200 . . . turn 180 degrees, from an approach of “Let me tell you about me” to “What can I do for you?”40
Plans are only good intentions unless they immediately degenerate into hard work.
—Peter Drucker
• Track all components of your “strategic” professional relationships.
• Your referrals to your “strategic” professional relationship:
• Who did you refer?
• When did you refer your client?
• What happened (e.g., did the COI get the client’s business)?
• What was the resultant business value?
Ask your client for their perspectives on the professional.
• Referrals from your “strategic” professional relationship:
• Who was referred to you?
• When were you given a referral?
• What happened (e.g., did you get the client’s business)?
• What was the resultant business value?
Provide a nonconfidential overview of the client and thank the professional, whether or not business was achieved.
• Professional Financial Planning
• Portfolio Analysis
• Estate Planning
• Banking and Finance Services
• Fiduciary Responsibilities and Compliance
• Practice Management
(More detail can be found at www.financialadvisorsuccess.com.)
The same conversation you have with your clients about life transitions (see Figure 9-5) you can also have with COIs. It’s another opportunity to bring up stories about any relevant and appropriate situations where you helped solve a client’s financial situation. According to Jonathan Gottschall, author of The Storytelling Animal:
Science backs up the long-held belief that story is the most powerful means of communicating a message. In business, storytelling is all the rage. Without a compelling story, we are told, our product, idea, or personal brand, is dead on arrival. In his book Tell to Win, Peter Guber joins writers like Annette Simmons and Stephen Denning in evangelizing for the power of story in human affairs generally, and business in particular. Guber argues that humans simply aren’t moved to action by “data dumps,” dense PowerPoint slides, or spreadsheets packed with figures. People are moved by emotion. The best way to emotionally connect other people to our agenda begins with “Once upon a time . . .”41
Many advisors, especially when they are new to the business, have put together a list of all the people they know or have known for the purpose of creating a “suspect” list. A suspect is defined as an individual or organization with the potential for needing a particular product or service you provide. They are potential clients who may have been introduced to your product or service (e.g., a known investor) but have not yet rejected your offer. They are not as strong a candidate as a prospect because the advisor may not have met with them as yet (at least with respect to business) but would like to meet them and have a business discussion.
A prospect is defined as a potential client qualified on the basis of buying authority, financial capacity, and willingness to buy. These prospects are also called sales leads. They must have been willing to meet with the advisor or have met with the advisor to be a qualified prospect.
The “Book of Life” spreadsheet (see Figure 9-6) is focused on who the advisor knows or knew, such as friends and family but not limited to those groups. The advisor would list what she or he knows about them. Essentially filling out the list is an exercise in self-brainstorming but can be made easier by thinking in categories.
Advisors may have already explored this area but may have not been formal about it. We recommend not culling the list while putting it together by “assuming” anything about the person’s financial situation or their potential interest. We recommend just posting names and whatever is known about the people at this moment. They may or may not be client-worthy, but they may know people who are client-worthy.
The purpose of this exercise is to record everyone the advisor knows, formally, in writing. Note whether you might or could or do like them as individuals.
The individuals are alive as far as you know, but you do not need to know all the information that is included on the spreadsheet. If you do not know their contact information, age, or their interests or where they work or what they do, that’s fine. Record what you know and leave the rest blank. The missing information can be researched later if necessary. If all you know is the name and how you know them (source of name), that’s fine. Record and move on.
You will likely have many more opportunities to look for your “Book of Life,” including:
1. Family
2. Country club
3. The Rotary or similar organizations and clubs to which you, as an advisor, belong (or will belong)
4. Any “ethnic” based organization to which you many belong, e.g., Italian-American, African-American, etc.
5. Religious affiliations
6. Executives and key persons at previous places you worked and the clients, supporters, and suppliers you may have met affiliated with that firm
7. Small businesses (but find sub-niches in this area where you can focus your skills, such as law firms, auto body shops, auto parts distributors, etc.)
8. Medical/dental practices you know and/or use
9. Employees affected by layoffs
10. School classmates
11. Friends and their families
12. Organizations and charities in which you have a real interest
13. Hobbies and other life interests
14. Racquetball, tennis, polo players or other sports enthusiasts or venues you know where people are likely to have money
15. Golfers
16. Parents of your children’s friends
17. People who might be expected to retire soon
18. People who mentioned that they have just moved their business to another advisor and to check back with them in a year or two
19. People likely to sell their business
20. People who may not make good clients but could be good for getting introductions
21. People who have changed jobs and may have an IRA account that can be rolled over
22. People who may inherit wealth
23. People you have met on various occasions in your role as a financial advisor
24. People associated with specific companies that are creating wealth
25. People who are part of your social network
26. Others
Even though Dunbar’s number suggests that humans can comfortably maintain only 150 stable relationships, theoretically, the average American may know as many as about 600 people.42 In addition, according to Funders and Founders,43 individuals may interact with as many as 80,000 people in a lifetime. Our suggestion is to target 250 people for your “Book of Life” spreadsheet (Figure 9-6), but you do not have to do it all at once.
Figure 9-6 | Book of Life spreadsheet.
Similar to the Book of Life, Matt Oechsli refers to an individual’s “Spheres of Influence” and suggests the client’s Spheres of Influence include family, friends, colleagues, neighbors, and organizations, recreational and professional.
Niche marketing44 is not so much a marketing approach as it is a context for marketing. Niches represent a specific pool of individuals who are targetable prospects. These individuals tend to have similar challenges that could be unique to the group; they represent a business opportunity and should complement your specific strengths and personal interests. Examples of niches with these characteristics are general dentists and general medical practitioners (e.g., GPs or internists). These professions tend to be tied to a chair or examination room and have appointments back to back in many if not most cases. In many cases medical and dental insurance puts stresses on incomes, resulting in high and/or growing patient loads. These niches represent a business opportunity because their income is well above average. It would be helpful for advisors to have the experience of having worked in the field or to have clients already in these fields from whom they can gain knowledge in their issues and concerns.
Niches generally respond predictably to your marketing activities and financial solutions. Advisors have indicated physicians in particular are at times challenging because of their self-confidence. They are also a challenge to get time from, yet they have been sought after by many advisors.
Other important niche characteristics are much more narrowly defined (e.g., not doctors, but anesthesiologists or gastroenterologists or radiologists). Individuals in narrowly defined fields tend to have a common culture and share a natural affinity. They likely read the same professional journals, attend the same meetings or conferences, and have more of a tendency to know others in their sphere. You want niches to be active communicators if possible and be affordably accessible.
Women are not a niche, retirees and pre-retirees are not niches, airline pilots are not a niche. The commonality among women, retirees, and pre-retirees is just not there. There is no single common culture, no common way to access them, and there is no shared affinity as a larger group. If, however, you narrow the focus to women executives in your geography . . . or to IBM employees retiring from New York or Austin, Texas, . . . or, for that matter, to women retiring from IBM in New York City, you have defined niches. There are myriad and diverse niches. For example:
• There is an advisor who loves fishing and his dad was a professional bass fisherman. He made a career working with professional fisherman.
• The first client for an advisor out in California was an executive at Disney. The majority of his client base worked there.
• An advisor in New Jersey was a studio musician before entering the business. His niche became studio musicians.
There is practically no limit to niches. Advisors have successfully focused on niches such as oral surgeons; plastic surgeons; orthodontists; airline pilots from specific airlines; engineers in a specific company; office supply executives; Indian physicians; Pakistani, Greek, or Italian businessmen; Redimix contractors; and the list goes on.
The reason niche marketing is a context rather than a marketing approach is that advisors can seek introductions within the niche from one client to another in that niche. In some cases COIs specialize in the same niches in which you may be interested, so you would use your COI marketing strategy with that group of COIs. You can focus your LinkedIn searches on specific professions or organizations and, if you hold intimate events, you can invite a client to dinner and ask him to bring one of his friends in that same niche. Putting people into groups can create a feeling of proprietorship and relationship with that group. This feeling is an important element to your business development efforts. It can make you feel a level of comfort and confidence as you move forward. You have made a type of investment in the group and the individuals in that group. In essence, you can attain a sense of ownership so you can have more confidence in prospecting in that group either proactively or reactively. Your investment in a niche by preparing yourself to work with that group is an important step. Invest yourself by reading about the group in publications they may be reading, understanding their demographics and psychographics, interviewing group members and COIs who work with them, joining their organizations, and networking with them. In addition, identifying group members who may be prospects and researching them will also prepare you for marketing to the group and individuals within the group.
There is also the belief that niches provide higher assets under management, especially for higher-level producers. The profitability should also be higher because marketing costs are lowered, the prospecting is easier, the pipeline is larger, the closing rate is higher and quicker because of natural trusted relationships, and the referral flow is better because of word-of-mouth.
Commonality within your marketplace makes you the master of the trade and enables you to spend your time better and be more focused. However, for a niche to be productive, it must generally have at least 200 to 300 prospects in your access area who are well-to-do and well positioned from an income perspective. Ideally, the target market should be definable—for instance, it may be a group that meets regularly, reads the same publications, or attends the same meetings, etc. Most important, the advisor should have a level of comfort in working with the selected targets.
As an advisor, you may have more niche opportunities than are practical. Pick three that fit, that you like, and where you have an “entry point” via contacts and/or knowledge to leverage practitioners or employees (e.g., law firms, medical/dental practices, firms you have previously worked for). Your entry point needn’t be limited to practitioners and individuals; if you have a focus on 401(k) plans that can be a product-based entry point.
Putting people into groups can create a feeling of proprietorship and relationship with that group. This feeling is an important element to your business development efforts. It can make you feel a level of comfort and confidence as you move forward. You have made a type of investment in the group and the individuals in that group. In essence you can attain a sense of ownership so you can have more confidence in prospecting in that group either proactively or reactively. Your investment in a niche by preparing yourself to work with that group is an important step. Invest yourself by reading about the group in publications they may be reading, understanding their demographics and psychographics, interviewing group members and COIs who work with them, joining their organizations, and networking with them. In addition, identifying group members who may be prospects will also prepare you for marketing to the group and individuals within the group.
From a marketing perspective, niche marketing allows the advisor to become an expert in how to reach prospects in the niche rather than relying on a more helter-skelter, one-off approach to finding prospective clients. It also allows the advisor to develop a marketing plan tailored to that niche based on in-depth knowledge of the niche’s wants and needs. A custom-designed approach enables advisors to leverage their marketing efforts to reach prospective clients in that niche.
From a planning perspective, niche specialists leverage their time and solutions by offering the specific financial needs of the niche so the advisor becomes an expert in the financial services to meet them. The advisor does not need to know everything about all the solutions the business offers, but needs to know well how to meet the needs of the niche. For example, an advisor who is expert in the 401(k) plans of modest-sized companies in her area may have an excellent niche. In addition, knowing the benefit plans of two or three local companies and having a common solution set simplifies planning and increases expertise.
The advisor can leverage high net worth prospective clients’ need to be introduced by someone they know and trust. Niche marketers have focused and leveraged access because people in the selected niche may know each other and interact. When their talk turns to investing, the financial advisor wants her or his name to come up as the expert who knows many other high net worth people who all basically have similar financial needs. While the advisor won’t know hundreds of different clients very well, she or he can be unique within that niche. The ideal goal is to become the “broker of record” in the selected niche.
Following are a few words about other effective approaches FAs can use to develop and grow their businesses. A solo advisor can undertake only so many efforts. Those efforts should include introductions from clients and professional alliances, LinkedIn, and possibly your “Book of Life.” As a member of a team you may be able to use other approaches by sharing the marketing workload so you can do some strategic networking, undertake more “intimate events,” conduct targeted roundtables, have a drip program, speak at public forums, and/or develop and manage client advisory boards. All these efforts can help in business development.
Additional resources we recommend:
• Millennial marketing. You can find our article “Millennial Marketing: Why It’s Viral and How to Shape It” at www.financialadvisorsuccess.com or at http://horsesmouth.com/millennial-marketing-why-it-s-vital-and-how-to-shape-it. If you are not a member you can join with a free trial.
• Strategic networking. Financial advisors need to get involved in organizations within the community that attract those with high net worth. Networking is the process of developing and maintaining quality relationships that may enrich your life and help you achieve your goals. It is about giving first and realizing that we learn from everyone we meet. An excellent book we recommend is Million Dollar Networking by Andrea Nierenberg (Herndon, VA: Capital Books, 2005).
• Intimate client events. These are small gatherings to which clients are encouraged to bring friends, and where the overt purpose is solely social, not business focused.
• Targeted roundtables. These private events tend to focus on a group of people that one or more of your clients may be part of. Using your Client Wisdom worksheet (see Figure 9-3) you can identify companies your client works for where you can offer a “lunch and learn” event or an after-work event. You can also conduct roundtables if your client is part of a social group.
• Drip programs. Extensively used and worthwhile, drip programs keep your name in front of prospects. It’s rare that advisors will acquire clients from these mailings, so follow-up phone calls are required where you can ask about people’s interest in the material you are sending or if they would prefer different material.
• Speaking at public forums on a range of corporate compliance-approved topics. Speaking engagements are another way of getting recognition of what you do and how you do it. Your internal marketing areas may provide prepared presentations on a host of subjects.
• Client advisory boards. Sitting on the board are top clients and members of your team tasked with giving you feedback on services, marketing, and other aspects of your business and potentially sharing ideas on how you can grow your business. Client advisory boards can be powerful tools for building relationships with top clients, capturing detailed client feedback, and growing business.
There are many business development approaches that can be used by FAs to acquire new clients and their assets. In Figure 9-7, we have listed 18 of them, and throughout this chapter we have detailed five of the most effective approaches for acquiring new clients. LinkedIn is actually another form of getting Introductions from Clients. We know that many FAs find securing Introductions from COIs to be a challenge. We are not suggesting it’s easy, but it can be extremely worthwhile especially if you use the structured approach outlined in this book and limit your strategic relationships to the right four or five professionals.
Figure 9-7 | Business development approaches.
Business Development Approaches |
|
Effective Approaches |
Less Effective Approaches |
Introductions from clients |
“Seminars” |
Introduction from COIs |
Cold walking |
Cold calling |
|
Book of Life |
Telemarketing |
Niche marketing |
Direct mail |
Networking (Pers./Corp.) |
TV/Radio |
Intimate events |
|
Targeted roundtables |
|
Drips |
|
Public forums |
|
Beneficiary campaign |
|
Advisory boards |
|
Your Book of Life is a form of warm calling, which can be effective and a good way at least of getting started and developing your craft. As coaches to financial advisors, we have known clients whose family members tell them they just purchased insurance or had an estate plan put together without discussing their actions with their close relative, the FA, because they didn’t really know what they did/could offer as a financial advisor. Naturally some relatives and friends will say they would rather not have you in their business, but most of us hope our relatives would at least trust and respect us more than a relative stranger.
Niche marketing is or can also be an extension of Introductions from Clients and actually is a very exciting approach. Determination of potential niches starts with your Client Wisdom spreadsheet (see Figure 9-3).
