Advisory firms will be focused on building their businesses this year, after spending the last two years just trying to hang on to the clients they have.
Industry experts predict that advisers will bolster referrals and marketing budgets, and increase compensation to top staff members, in an effort to build their practices. Some are considering expanding their staffs, and that includes hiring more advisers.
It's also likely that clients who are unsatisfied with their advisers will take their business elsewhere.
Advisers need to get past the way they serve their clients now, said Gurinder Ahluwalia, president and chief executive of Genworth Financial Wealth Management Inc.
“No longer is the conversation about how they're going to keep and maintain clients,” he said. “They are addressing the business and trying to grow the business and run a more productive practice.”
Advisers who want to attract dissatisfied clients need to have a clear plan for what kind of service they provide and how to market themselves, said Andy Kalbaugh, executive vice president of relationship management for LPL Financial.
“What you have to do with the practice is make sure you're positioned and that you're acquiring the clients you want,” he said. “There's clearly money in motion. I think there's a tremendous opportunity.”
The continuing uncertainty in the economy means that advisers should approach clients differently in terms of asking them about risk.
“It's a targeted effort of the clients they want to serve and serve well,” Mr. Kalbaugh said. “Advisers need to manage the seismic shift in what the consumer relationship is.”
Advisers are focusing more on building their businesses by developing a better sales culture and improving their referral process, said Scott Slater, a managing director of business consulting at The
Charles Schwab Corp.
He always asks advisers why they want to build their practices, because the reasons aren't always the same. The question helps the advisers devise a focused development plan, Mr. Slater said.
“They need to be clear as to why they want to grow the business,” he said. “Some of them have a vision.”
Mr. Slater said advisory firms will try to recruit advisers from wirehouses, but Mindy Diamond, president of Diamond Consultants, a financial services recruiting and consulting firm, doubts that large numbers of brokers will break away.
“I don't think they'll be hiring as many advisers as they say they're going to,” she said. “Independent firms believe there's a great opportunity. But I don't see them actually doing it.”
Wherever the recruits come from, firms are looking to hire. Adam Sherman, chief executive of Firstrust Financial Resources LLC, said he is hoping to fill a number of new positions.
“From my perspective, 2009 was the year of survival in the financial services industry, and I think 2010 will be the year of intelligent growth,” he said. “The firms that can do that will be the ones who succeed going forward.” The registered investment advisory firm manages about $600 million in assets and plans to add four employees to its current staff of 35 this year.
Mr. Sherman wants to increase his firm's life insurance business and is looking at acquisitions.
Firms that have managed to expand their practices during the down market will be ahead of those who are trying to grow now, said Ray Sclafani, president and founder of ClientWise LLC, which coaches advisers.
“These are the ones who are getting tons of new money,” he said.
“The advisers who were on their heels are finding the game of acquisition is on, and many aren't prepared to play.”
E-mail Lisa Shidler at [email protected].
