Prospecting in the wealth management industry, if done properly and with good intentions, simply means finding more people to educate. Period. It shouldn't feel daunting, it shouldn't feel uncomfortable, it shouldn't feel intrusive.
According to recent research reports, there are over 11 million millionaires in the US alone. Furthermore, every day, new millionaires and liquidity events are in the making with the advent of technology, ease of starting a business, more divorce cases, more women breaking the glass ceiling and taking on high-paying roles, and much more.
There are so many ways for wealth managers to get in front of such families and individuals in order to showcase their platform offerings and solutions. With investors more confused than ever about the future of the economy, their income status, risk management, cybersecurity, family dynamics planning and legacy structuring, etc, financial advisors who can find better ways of getting in front of these prospective investors are only helping educate more people in this world.
Yet, most advisors I speak with keep telling me their only approach for growing their practice is through referrals.
As powerful as referrals may be, they are also like hanging on a shoestring. Unpredictable and out of our control. Here's the good news! Referrals will actually significantly increase if advisors diversify their approach and show more proactiveness in prospecting. As you look for alternative ways to grow your practice, not only will you increase your pipeline of prospects, but you will also be rewarded with more referral opportunities. It's just how the universe works! The harder you work, the more your luck will increase. Can anyone disagree with that?
The topics on this video about prospecting and connecting with ultra high net worth prospects will be what I will go much further into in our upcoming Prospecting Workshops, but I wanted to show this to you so you can get some background information.
By Amy Parvaneh
I had the pleasure of being on Michael Kitces' Financial Advisor Success podcast. Podcasts are new to me, but a great avenue for getting my message out to those who don't have the patience to sit down and read a long blog!
Michael speaks at 50 – 70 conferences every year to try to share his knowledge with other advisors, and his Nerd’s Eye View blog reaches more than 200,000 unique visitors every month.
It was an honor to be asked by him to speak about my experience as a financial advisor when I first started out, my success stories, as well as best practices that I see with advisors as a coach to them.
Sometimes, the best marketing collateral you need is yourself. Take some risks by doing something very simple: Being you! This can not only intensify your existing client relationships, but it can help showcase to your potential clients why you are different than their existing advisory relationship.
According to a study by SEI, 47% of your clients will eventually make a referral. Another 47% will not...until you ask. But how can you ask without the question falling flat on its face, and avoiding the typical response of "If I think of someone, I'll let you know"? We answer this important question in this story.
At the end of the day, as financial advisors, we get paid to converse. While questioning and listening skills are typically seen as "softer skill", it is the act of better "story selling" that will allow advisors to learn more about their clients, uncover more opportunities to help them, and more quickly discover who within their circle can benefit from your services as a wealth manager.
Chairman and CEO, Google
The advice that sticks out I got from John Doerr, who in 2001 said, "My advice to you is to have a coach." The coach he said I should have is Bill Campbell. I initially resented the advice, because after all, I was a CEO. I was pretty experienced. Why would I need a coach? Am I doing something wrong? My argument was, How could a coach advise me if I'm the best person in the world at this? But that's not what a coach does. The coach doesn't have to play the sport as well as you do. They have to watch you and get you to be your best. In the business context a coach is not a repetitious coach. A coach is somebody who looks at something with another set of eyes, describes it to you in [his] words, and discusses how to approach the problem.
Once I realized I could trust him and that he could help me with perspective, I decided this was a great idea. When there is [a] business conflict you tend to get rat-holed into it. [Bill's] general advice has been to rise one step higher, above the person on the other side of the table, and to take the long view. He'll say, "You're letting it bother you. Don't."
--Interview by Adam Lashinsky
Many advisors devote significant time, energy and resources to business development, only to find that their rate of growth remains “stuck.”
As marketing and business development consultants, the team at Select Advisors has found that advisors’ frustrations often stem from inaccurate assumptions about where and how to focus their efforts. We believe that identifying and clearing away these unrealistic expectations and misconceptions is necessary to create an effective growth strategy.
The misconceptions are remarkably consistent from firm to firm. Among the most common:
- A single ‘linchpin” referral source exists. Many advisors believe that a custodial firm, a center of influence or perhaps an industry group can be tapped to provide a library of quality leads—that it’s just a matter of finding this motherlode. That may have been true to some extent in years past. But as the RIA field has grown more crowded, any source with valuable referral lists is now using them directly to their own benefit.
- Off-Shedding sales to a junior team member can be effective. Firm leaders often believe that delegating a dedicated individual to drive sales can be effective. The truth is that high-net-worth investors rarely wish to deal with a cold-calling junior team member. Prospects prefer to deal with the firm’s founders, partners, or senior managers, who have the standing to command their respect.
- Existing clients can drive referrals. Many advisors believe that if they do good work, satisfied clients will refer their friends and associates. This is true to some extent, but it’s a passive strategy, and without pre-existing scale, it fails to gain traction: The fewer (and/or older) clients you have, the weaker this machine will be.
- Investment can follow results. Marketing and business development firms don’t operate based on finders’ or performance fees. They require up-front investment of time and energy to help you source leads and grow your practice. One analogy: You expect to get paid as an advisor even if your clients’ portfolios go down. Marketing partners face the same economics.
- A single approach is adequate. The evidence clearly demonstrates single-line business-generation tactics—cold-calling, search engine optimization, PR, client referrals, COI referrals, for instance—are not effective in isolation. Successful strategies combine multiple, complementary tactics.
- Advisors alone can drive sales. RIA firms frequently overlook some of the people who are best positioned to identify and attract assets. With proper coaching, receptionists, traders, support-team members and others can begin to recognize and pursue asset-gathering opportunities.
- COI relationships are built in a brief period. Lunch with an intermediary rarely results in immediate referrals. In fact, it takes on average 18 months from the first meeting before a COI (lawyer/accountant) feels comfortable to send you a referral. Advisors must view a face-to-face meeting as no more than a start. To remain top of mind, successful advisors follow up consistently—sending personal notes, forwarding relevant articles and blogs, extending invitations to events and so on.
- Twitter is an effective prospecting tool. Many advisors enlist social media experts to help launch Twitter and Facebook strategies. The statistical evidence shows that this approach is rarely worth the investment. A high net worth individual is not going to hand-off their lifetime of savings and investments to someone they found on Twitter.
- They have grown without any marketing. Most RIAs come from global platforms where tens of millions of dollars are spent annually on marketing. They fail to recognize that the marketing budget came directly from revenue that they generated. At wirehouses, growth depends largely on marketing. It’s no different for breakaways.
- A brief marketing campaign should bear results. Successful marketing isn’t a one-year commitment. It’s an ongoing process of raising your profile, cultivating relationships and honing your ability to zero in and close new clients over a business cycle. Successful advisors invest in ongoing marketing just as they invest in ongoing office space and utilities. Just like advisors tell an investor that performance should be judged over a 3-5 year cycle, marketing and sales work the same way.
Select Advisors Institute is a consulting firm that works with investment management firms who are looking for our expertise and advice in growing their practice.