Business development playbook

Months from now, when the chaos caused by the COVID-19 pandemic has eased, clients will assess how their financial professionals stacked up during these most challenging days. 

Yes, they’ll reflect on how well their portfolios withstood the volatility, but that’s not the factor that’s likely to tip the scales when clients decide whether or not to find a new adviser. It’s the emotional score that financial planners rack up during this coronavirus period that will most likely determine whether clients stick with them over the next year or two.

“It’s easy to look good when everything is on the upswing,” said Mark Tibergien, CEO of Advisor Solutions at BNY Mellon’s Pershing. “Advisers earn their keep during times of down markets.” 

Despite the current challenges, including working apart from business partners and staff, now is the time advisory firms should be laying the groundwork for their next phase of growth. Business development strategies may vary from firm to firm, but every adviser should be thinking about how to hold on to clients after the pandemic and whether an updated marketing approach is in order. 

Studies in the wake of the 2008 recession showed clients decided to switch financial service providers 18 months to 24 months after the crisis, said George Walper, president of the Spectrem Group. Firms need a focused approach on guiding, comforting and reassuring clients through the next 12 months so they don’t lose those assets and referral sources. 

When it comes to marketing, it is those advisers who have invested in creating a strong presence who are benefitting today from a surge in Americans looking for a financial adviser for the first time. Many are people who feel unable to manage their investments and finances during the current market chaos, and some likely have had major life interruptions, such as the loss of a job, business­ or perhaps even a loved one.

Boosting spending on marketing and branding this year to about 5% of revenue — more than double what most advisers spend today —will help position firms to take advantage of that post-coronavirus stream of investors looking for new advisers, Tibergien said.

“Firms with a marketing presence tend to have greater visibility,” he said. “It doesn’t trigger an instant reaction, but it burns in the minds of your target market.” 

Beyond these two approaches, some of the fastest-growing firms are turbocharging their businesses by boosting efficiencies, adapting new service models and connecting with client families. 

For Elizabeth Thorley, CEO and president of Thorley Wealth Management, making her back-office processes and procedures more efficient has been the key to her firm’s 10% annual growth every year for the past 10 years.

In 2011, Thorley went through a process focused on improving the business management side of her firm. She developed reports analyzing the firm’s profits, revenues and, most importantly, how much time employees spent on clients versus paperwork. 

“It was really an eye-opener,” she said. “It changed our focus so the business wasn’t running me, I was running the business.” 

Another key component has been repeatable workflows and processes. Each team member has a defined role, making it easier for the firm to live up to expectations set for clients. The efficiencies also help make it possible for the small firm — just two advisers and two administrative support staffers — to effectively serve an increasing number of clients. 

Role of technology

Technology plays a role. In the past, Thorley had to manually input client data into financial planning software. Now the firm can download the information and update it instantly, freeing employees to spend more time building and analyzing plans. Thorley Wealth clients can check accounts, ask questions and share documents via the firm’s digital client portal and sign forms using an e-signature. Meetings are scheduled digitally and clients can opt for videoconferencing rather than an in-person office visit. 

As a result, Thorley’s team has easily been able to work from home during the COVID-19 pandemic, and Thorley said the repeatable workflows will help the firm thrive after she retires. 

At Single Point Partners, founder Shaun Erickson attributes his firm’s recent growth explosion to $230 million in AUM from $40 million to a new service model and flat-fee structure implemented in 2017. That’s when the firm started going after traditionally do-it-yourself investors who want a partner rather than a manager to whom they delegate tasks. 

Beyond building a portfolio, financial planning and managing cash flow, Single Point emphasizes what Erickson calls a “financial life calendar” — a schedule of events that occur regularly every year, like filing taxes and reviewing employee benefits, along with unique events like buying a home, having a child or getting equity compensation from work. 

Single Point advisers hold clients accountable for getting everything done and help with decisions when necessary, charging a flat fee rather than a percentage of AUM. 

“There are all of these details in our financial life, and they’re very easy for folks to let them slip through the cracks or kick them down the road,” Erickson said. “Our job is to stay on top of them.” 

The approach has increased referrals from other professionals — CPAs, attorneys and other financial advisers recommending investors who are a better fit for Single Point than a traditional wealth management practice. It’s also opened the firm to investors who don’t normally work with an adviser, as well as younger clients. Over the last three years, 60% of the firm’s new clients have been under the age of 60, Erickson said.  

Growth strategy

“These are folks who are pretty smart people … but have never been able to see the value in paying an adviser a percentage of dollars to manage an account for them,” he said. 

The growth strategy at Sweeney & Michel was twofold: Improve client communications and lower costs. 

The latter goal was helped by making the move to an independent RIA, which allowed the firm to start from scratch in selecting technology and investment products. Sweeney & Michel eliminated high-cost funds, stopped charging for college savings accounts and started paying for transactions costs to cap client fees at 0.75%. 

While Renee Michel, one of the founding partners, estimates that 60% of the firm’s growth has come from new clients, she attributed the other 40% to existing clients adding more money because of the lower costs, increased transparency and new services it could offer as an RIA. 

For example, the firm started helping clients put extra cash into money market accounts at local banks to increase their savings rate. Clients were also more comfortable aggregating held-away accounts using eMoney Advisor, the financial planning technology provided by Sweeney & Michel’s custodian, Fidelity Custody & Clearing. 

“When you provide positive value, they refer you to friends,” said Joe Sweeney, another founding partner in the firm. “The little value-adds really added a lot of new business for us.” 

To get the word out, the firm took advantage of digital tools. As a long-time contributor to a local magazine in Chico, Calif., the firm decided to more intentionally repurpose that content for social media, email newsletters and the firm’s blog. It also took advantage of Facebook and LinkedIn’s advertising capabilities to promote the blog inexpensively. Even if it’s just to comment on the daily news, posts generate high engagement, Sweeney said.

“[Clients] feel like they’ve got an adviser who is looking at the same headlines they are and is responding,” he said. 

Not every adviser has to make a major change or enact a specific strategy for growth. 

Family-friendly client events

For Shawn Okumura, principal at Transitions Wealth Advisors, the key is just how the firm conducts business. Okumura’s team takes time to get to know a client’s entire family, but not through official client meetings. For example, the firm invited clients and their families to attend an opening night screening of a new “Star Wars” movie.

“Having them meet us in a nonthreatening, nonbusiness environment, they get a chance to see who we are and see what their comfort level is,” Okumura said.

Events like these have helped Transitions solve the multigenerational puzzle that challenges many advisers. Some clients refer their children to the firm, others refer their senior parents who need help in retirement, and others bring in siblings. 

The result is a wide range in client demographics and needs, which requires Okumura to invest in technology to support them all and deliver a consistent experience across the book of business. But he isn’t turning toward technology for marketing. 

“It’s not about the story we have to tell, it’s not about the investments,” he said. “It’s being in front of the clients, just going the extra mile and doing all the little things.”

Creating a formal plan for growth is an important step for many firms, whether that includes adding a staff member, improving a certain skill, embedding financial planning into the brokerage practice or getting more experience with social media and digital marketing, said Manish Dave, senior vice president of business development at Ameriprise.

Advisers need to prioritize two or three things at a time that will measurably improve growth and then have the tools in place to make those measurements and hold advisers accountable. 

“If you don’t have well-documented goals and a plan, it’s going to be hard to achieve them or make progress towards them,” Dave said.