Advisers mostly going down dead end with marketing spend

Advisers mostly going down dead end with marketing spend
If you build it — a website, that is — they may not come; referrals seen as the key
SEP 26, 2012
For advisers, the single-minded pursuit of Baby Boomers heading to retirement may not be the best way to gather assets and boost a firm's growth. Rather, it takes a little bit of marketing genius and balance-sheet savvy to ramp up an advisory practice's value and grow consistently. “People are fairly random about how they approach business development and marketing,” said Mark Tibergien, chief executive of Pershing Advisor Solutions. He participated in a InvestmentNews webcast Sept. 25 entitled “Unlocking Profitability: Key Differentiators of the Most Successful Advisory Firms.” The webcast cited data from the 2012 InvestmentNews/Moss Adams Financial Performance Study of Advisory Firms. The survey, which was based upon responses from 450 advisory firms, revealed that marketing and business development were the top factors advisers would like to change about their businesses. Many seemed to rely mostly on their website and community involvement as a way to get the word out about their practice, however. The survey was sponsored by Pershing Advisor Solutions. Typically, firms are allocating 2% to 3% of their budget toward marketing and business development. But advisers have been putting those resources to use mostly on activities that don't really present opportunities, Mr. Tibergien said. What elite firms are doing is spending time training people to seek business, build relationships and position themselves within the community. Advisers running their practices need to think about how to give others at their firm the confidence to develop a center of influence, perhaps by kicking off events to encourage prospective clients' interest and then following up, Mr. Tibergien said. Advisers also can tie in a reward for the number of clients brought in to the practice, he added. Indeed, referrals from other clients are the biggest driver of new business: 49% of new clients and 48% of new revenue stem from referrals, according to data from InvestmentNews. Being among the top-performing firms pays, too. Last year, these upper-echelon firms raised their client base by a median of 8.8% compared with 2010. By comparison, all other firms increased their client base by 7%. New clients at top-performing firms last year also had a median AUM of $502,857, compared with $431,250 for all other firms. Simply focusing on wealthy retiring boomers isn't necessarily the best way to build assets, either: Those individuals eventually will die and their assets will be distributed. “Any strategy that's based on people with money is a little shallow,” Mr. Tibergien said. Advisers instead ought to think about how those peak earners got there: Are they in the medical profession? Are they affiliated with a church group? Learning those details could help firms position themselves within their marketplace. “If you build on the model a little more by describing your business and who you serve as something that might resonate with me, then I might be more inclined to do business with you,” Mr. Tibergien said.

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