Can aggressive marketing be the foundation of a financial advisory firm's growth strategy?
David Bach believes it can, and he's marketing his own firm to prove it.
Mr. Bach, co-founder of AE Wealth Management, thinks too many smaller advisory firms are hiding their light under a bushel, and that becoming a "local celebrity" is the surest path to success.
"We think advisers can do with marketing and branding what Starbucks has done with coffee and what McDonald's has done with hamburgers," he said. "Anyone who tells you they are 100% referrals has no marketing machine."
Mr. Bach, a best-selling author, has pushed his own celebrity status in the financial services industry through unabashed marketing efforts. His new turnkey asset management platform also aims to help advisers create television and radio programs, launch client seminars, and even write books.
AE Wealth Management is a subsidiary of Advisors Excel, a Topeka, Kans.-based insurance marketing organization with $5.4 billion in annual sales of mostly annuity products. Advisors Excel, which represents 40 different insurance companies, was started in 2005 and is affiliated with more than 1,000 independent reps.
The AE TAMP, which was launched 18 months ago as an extension of the Advisors Excel model, has already grown to nearly $3 billion, according to Mr. Bach, attracting more than 365 advisers, many of whom came from Advisors Excel.
"We started AE Wealth to better support the investment side, because the majority of our advisers are hybrids who do investment management and sell some type of insurance," said Cody Foster, co-founder of Advisors Excel with David Callahan.
All three men are co-founders of the TAMP.
Mr. Foster said Mr. Bach, who holds the title of director of investor education, will be the "public face" of AE Wealth Management.
Mr. Bach, who cut his teeth in the industry in the early 1990s as a financial adviser at Morgan Stanley, evolved into a marketing guru by writing several books under the banner of his marketing business, FinishRich Media.
He also worked
in 2015 as vice chair at Edelman Financial Services.
By joining the TAMP, advisers maintain their own brand and independence, but pay an asset-based fee of between 45 and 60 basis points for investments on the platform. Mr. Bach said the real benefit is the marketing muscle that is geared specifically toward advisers with between $25 million and $100 million under management.
"The secret to our success is not just us recruiting new advisers, it's that all of our advisers are constantly marketing and growing their business," he said.
According to Mr. Bach, that growth at the adviser level, grounded in aggressive
local marketing efforts, could double AE Wealth Management's assets to around $6 billion a year from now.
The nuts and bolts of the marketing strategy sounds almost formulaic when presented by Mr. Bach.
He highlights marketing, money management and client service, and stresses that marketing is the most important of the three.
That point is in sync with
Fidelity Investments' RIA research, according to David Canter, head of the RIA segment at Fidelity Clearing & Custody Solutions.
"Every year, Fidelity's Benchmarking Study shows that improving marketing and business development is the number one priority among RIAs," Mr. Canter said. "David Bach has a great deal of expertise in this area and helps the advisers who work with AE Wealth Management see the value in marketing and how it can serve as a crucial enabler of growth."
While it would be difficult to deny the power of marketing, some marketing specialists warn against putting too much stock in the celebrity approach to building a business.
"I think there is some utility for a turnkey package that can get advisers exposure in their local market, but there needs to be a well thought-out approach in the way they view marketing, and they have to take a long-term view," said Megan Carpenter, chief executive and co-founder of FiComm Partners.
"It's comparable to the way an adviser talks to clients that want to get rich tomorrow," she said. "There's not a one-size-fits-all marketing approach, and, do you think ultrahigh-net-worth clients want their advisers to be celebrities?"
April Rudin, president and chief executive of The Rudin Group, a financial services marketing firm, is skeptical of a general marketing strategy being applied across multiple unique markets.
"I one-million-percent agree with David Bach that the advisers cannot do it themselves, because when they do the marketing themselves it often looks like they did it themselves," Ms. Rudin said. "But this doesn't seem to be directed toward anything in particular; it seems to be a broad stroke toward a fine touch."
But, regardless of the skeptics, Mr. Bach is committed to the system he has embraced.
"We're all about taking the brand to the next level, because the knowledge it takes to build a billion-dollar RIA is a paint-by-numbers system," he said. "You don't need to be a national celebrity, but it's easier to raise money when you're a celebrity in your local market."
Tom Mosley, chief executive of Ease Into Retirement, was among the first advisers to join AE Wealth Management in April 2016, when he had just $5 million under management.
"The marketing is one thing, but the building out of a business operation is what they've really helped me with," said Mr. Mosley, who now manages $33 million.
April Roberts, chief executive of Roberts Wealth Management, joined the TAMP in April of this year and has seen her assets grow to $39.4 million from $26 million.
"The technology, process and client education has really streamlined everything," said Ms. Roberts, who hopes to reach $100 million in assets by the end of next year.
In addition to buying airtime for Saturday and Sunday morning television programs in the Houston area where she lives, Ms. Roberts also has tapped AE Wealth Management's expertise to help write her first book, which will be coming out early next year. She also is doing seminars to attract new clients.
"It helps separate you from all the noise out there," she said.
