By Amy Parvaneh, CEO of Select Advisors Institute.
Warren Buffet once said that it’s only when the tide goes out that you discover who’s been swimming naked.
In other words, any investor can make money in a bull market—it’s the bear market that’s the real test. If you’re an advisor, Buffett’s words contain a great clue about how to position your business for growth.
Over the past six years, advisory clients have seen their account balances rise steadily, and they’ve been pleased with their advisors as a result. But when the market turns, many advisors will struggle, and their clients may look to make a change. This is a great opportunity for you to grow—but the key is to start preparing now.
Our research has shown that the advisors who are the best at capturing growth are always planning ahead. They anticipate those brief moments when money will be in motion, and as a result they can grow by $250 million or more a year. What can these advisors teach us about building a foundation for growth?
First and foremost, get out of your office and make friends. The key to building your business is growing the network of people who like you and enjoy spending time with you, and vice versa. Friends can be centers of influence, college friends, your kids’ friends’ parents. Especially valuable are people you identify as “connectors”—those who like introducing people who can benefit from knowing each other.
Client appreciation events are a great way to grow your circle. Encourage your clients to bring friends; wealthy people know other wealthy people, after all. And rather than investing seminars, consider spiritual retreats, discussions about kids and wealth, or outings to concerts or baseball games. Make sure the activities are ones you’ll authentically enjoy.
The key is to build relationships rather than pitching people: Make your friends trust and like you, and when they need a second opinion about their advisor, they’ll come to you.
This is also a great time to invest in infrastructure. Build a technology, compliance and operational machine that’s on par with the big Wall Street firms’. That’s where you’ll be winning a lot of your clients from, after all, and they’ll expect you to be world-class in these areas.
Finally, successful advisors tell us that they like to survey their clients about the advisor’s strengths and weaknesses. This information helps them correct shortcomings, and also give them ammunition to use in pitching prospects.
Don’t expect prospects to come knocking down your door in a bull market. But remember that all bull markets come to an end—and if you’re prepared, that transition can mark the beginning of serious growth for your practice.
For more information on how Select Advisors can help, reach us at email@example.com