A few weeks ago, I was talking to a group of advisers about how to grow their practices. One of them said, "Scott, it's different for you because you have such a large staff."
Granted, maybe some business strategies are a little easier for me to execute now given the organization I have behind me. But I certainly didn't start out that way.
Like most advisers, I started from scratch. As we grew, rather than coasting once I had a large client base (and an increasingly full schedule), we made adjustments and prepared for a future that would see us expand from two partners and one staff member to a team of 120 people and close to $4 billion under management today. Things have certainly changed a lot since my partner and I started Hanson McClain some 25 years ago. And, perhaps naturally, some of the strategies we employed then wouldn't work as well now.
But one thing is certain: I know exactly what I would do if I had to move to a new city and start over.
This is the first of a three-part series in which I spell out how I would build a financial advisory firm in today's environment. My hope is that whether you're a seasoned adviser or just starting out, you'll be able to take a few ideas and use them to build your practice.
Adviser marketing from scratch
The most important thing a financial adviser needs is a steady stream of new clients. Although it's the most important task, it's also one of the most difficult, and one few advisers are good at.
We all know the best way to get new clients is through referrals. But when you want to grow faster, rather than just relying upon referrals (which take years), or if you're starting from scratch, one of the best ways to attract new clients is to target a specific employer or work group in your city or town.
Why do I think this is a superior way of capturing clients?
1. Once you learn about the company's retirement and medical benefits for one person, you can leverage that knowledge to help other employees. Most employers have outsourced their HR functions to an 800 number, so it's difficult for employees to get direct answers. They're angry and anxious about this, and you can help. If you become the expert on a company's plans, such as its stock plan and 401(k), you not only set yourself apart from every other adviser, you make yourself a valuable ally.
2. It's much faster, easier and less expensive to market yourself in a small environment than it is to market yourself to the masses.
3. I'd rather be a big fish in a small pond than a minnow in a vast ocean. If you can be a hero to one or two employees within an organization and make a positive impact on their lives, word will spread fast that you are the go-to person when people need financial and retirement advice.
Finding a target company
If I moved to a new city to start fresh and wanted to find a good company to target, here are a few of the criteria I'd use.
First, I'd want to find a company that has an older workforce. This, of course, is not because I want to discriminate against younger workers, but because I know that people are much more receptive to working with an adviser when they are facing the biggest financial challenge of their life — retirement. Not only is this the stage of life where one tends to have the most financial assets, it's often one of the more complex seasons of life.
Second, simple economics: I'd find a company that pays high wages. This is typically the case for companies that employ more professionals than, say, factory workers.
Third, I'd want a company that offers exceptional retirement benefits, either via a legacy pension plan or a great 401(k) match. (A lucrative employee stock plan would be a good target, as well.)
Once I've decided upon one or two employers to target, I would do whatever it took to get to know a handful of people in the company. I'd use LinkedIn, Facebook, friends, anything I could to come up with a short list of employees. I'd then reach out to those people, either through a cold call or an email, and I'd buy them coffee or lunch and tell them my plan. A majority would probably not be of much assistance, but my experience has been that there are always one or two people who are more than happy to help.
Once I found an advocate or two, I'd rely on those employees to provide me with the details of the company's benefits. From there, I'd host "lunch and learns," after-work workshops and other educational events to provide value to the employees and get my name out there.
Of course, this approach takes work. But it costs next to nothing and should yield a ton of clients.
Why am I so confident of this? Because this is exactly how we gathered a large portion of the clients we still serve, and it's an approach we still use.
Next Tuesday: How to structure and use outsourcing in a new advisory practice.