Growing, without the stress

I polled a number of other senior associates at the conference and quite a few told me they had no desire to build their practices beyond their current size. In fact, most of them agreed they had reached the stage in their careers at which they want to simplify their lives – not add new clients.

Coach says: Of course, there are exceptions, but I believe most financial advisors actually do want to grow their businesses. Where they differ is in defining what “growth” means to them. For some advisors, adding just two or three new high net-worth clients per year might be all they need to offset the natural attrition of assets that occurs as clients age. I also know an increasing number of advisors who want to reduce the number of their clients – yet they still want to increase the size of their practices – by increasing average revenue per client. So, the definition of growth (or no growth) is important.

However, I would argue that most advisors absolutely must have a plan to increase the size of their businesses continually. Let’s test that theory by asking some questions about revenue:

– Are more and more of your clients withdrawing assets to fund their retirement income needs?

– Have a growing number of your clients invested all of their assets and are unlikely to invest more?

– If your clients transfer assets to their children, either by choice or as a result of their death, are you at risk of losing those assets because the children need them for their own use? Or do the children live far away or have a relationship with another advisor?

– Is it increasingly difficult to obtain referrals to prospects who fit your preferred client profile?

Now, let’s look at the expense side of the ledger and ask:

– Is managing your practice taking more of your time than it used to?

– Have your operating costs increased?

– Has your dealer payout decreased?

– Are your clients insisting on higher levels of service and technology?

– Are your clients increasingly asking you about fees and commissions?

If you answered “yes” to several of these questions, you are in or on the verge of a “profit squeeze” and your business is at risk.

There are three things you can do to mitigate that risk: increase the fees you charge clients; reduce your expenses; and increase the size of your practice.

Ideally, you would do all three. However, in today’s world, some of those options are less feasible – raising your fees when clients know competing advisors may charge less than you do, for example. Reducing your expenses is a challenge, as costs of staff, technology and compliance all are rising. That pretty much leaves expanding your business as the only alternative. The question then becomes: how to do it?

Essentially, there are two steps to this expansion process: marketing and sales. You need a compelling marketing program to attract the potential clients you want and an effective sales process to convert them into advocates for you and the work you do.

Sadly, many advisors are not very good at marketing themselves. I think it might go back to the time when advisors equated marketing with self-promotion, so activities such as advertising, cold-calling or direct mail dominated their marketing. But consumers are now assaulted by these types of messages and have learned to tune them out.

Research also shows that most consumers cannot differentiate among advisors or the products and services they sell. So, how do you stand out in the crowd?

I believe the answer means moving the focus away from promoting yourself and toward understanding what your target market wants. Your marketing plan, therefore, should answer the following questions:

– What is my preferred client profile? With whom do I want to do business?

– What does my target market want? What do they value – emotionally as well as practically?

– What is my value proposition? How do I deliver what my target market wants?

– What is my brand image? What impression do I want to create with my marketing?

– What promotional activities will I use? How will I deliver my marketing message?

– What resources can I apply? How much money and other resources am I willing to commit to my marketing process?

– What are my expectations? What results do I anticipate and what return do I want?

The second requirement is for a sales plan. Many advisors abhor the very thought that anyone might think of them as “salespeople.” Of course, the truth is that, at some level, we are all selling something. Our children “sell us” on letting them stay up late; our associates “sell us” on working with them on a project; our doctor “sells us” on the prescription he or she is recommending. Everyone is selling.

For some reason, however, many financial advisors don’t want to admit that when they make recommendations to clients, they are, in fact, selling their ideas. Selling is essential to conveying the value of your experience and advice to the right people, in a way that makes them want to act on it.

The notion of selling has changed. Much of what I was taught in sales-training classes many years ago would be considered manipulative and applying high pressure today.

But our sector has moved well away from teaching advisors “17 tricky ways to close a sale” and toward a far more consultative approach in which advisors and clients collaborate to find the best solutions. In fact, I would argue that, in most situations, “selling” is not required at all. Instead, the decision clients make to proceed with your recommendations is just the natural outcome of the work you do together.

So, you need a sales plan – not to help you “close sales” but to ensure you have a well-defined process that you can initiate, over and over again, for identifying what your prospective clients want and then demonstrating how you can address those needs while deepening and strengthening the relationship along the way.

I don’t want to make any of this sound simplistic. Marketing and sales both require careful thought and effective implementation. Furthermore, any plans you make in these areas must be aligned with the overall strategic plan you have for your practice.

But most strategic plans must include some growth. If you are an advisor who is still at the early stage in your career, growth is not an option; you must grow to survive and build your business.

If you have a more mature practice with an older, more established client base, growth continues to be not only desirable; in most cases, it still is necessary.

My best wishes for your continued success!

George Hartman is co-founder and managing partner with Accretive Advisor Inc. and president of Market Logics Inc. His latest book, Blunder, Wonder, Thunder: Powering Your Practice to New Heights (www.marketlogics.ca) was released in 2010. Send questions, comments and opinions on any aspect of practice management to ghartman@accretiveadvisor.com.

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