Summer is usually a time when advisers kick back and relax. But with revenue down across the industry, this summer may be quite different. Indeed, many advisers are suddenly looking for ways to fill the revenue void left by the market's downturn.
For nearly a year, we have heard about all the clients who will be looking for new advisers in the aftermath of the demise of Wall Street brokerage firms, a figure that could reach as high as 75%, according to some estimates.
Here's a look at some ways to boost revenue.
The fastest, most economical and most effective way to gain clients is through referrals. Experts who specialize in referral methods stress the following:
• Define whom you want as clients.
• Identify clients who are likely to give you a referral.
• Develop your own way to ask for referrals. One question you might consider using, in light of recent events, is: “Do you know anyone who has been burned by Wall Street?”
• Follow up on referrals.
• Thank people who refer clients to you.
Advisers who are good at this approach seem to be able to ask for referrals so artfully that most clients don't even realize they've provided them with one. Of course, the process should not be oversimplified. If it were as easy as it sounds, more people would do it.
GET BUSIER
Another approach to generating referrals is to increase your activity level.
The more networking meetings you attend, charitable organizations you participate in, events you host and prospects you follow up on, the more prospects you will attract.
Better yet, try to focus your efforts on interacting with the ideal clients you want to attract. In the end, doing something is better than doing nothing. Even direct mail, which generates a 2% to 3% return at best, is a viable method to generate business activity.
Another way to generate more revenue is to develop expertise in a distinct niche.
The key here is to make sure that your niche is in fact distinct.
Many advisers talk about having a niche, but few actually do. For example, some advisers perceive retirees as a distinct niche, and they bill themselves as advisers who really care about their clients.
The problem is that all advisers say they care about their clients. So being a retirement specialist who cares about clients is not particularly distinct.
A genuine niche can often be found around career changers: the airline-pilot-turned-financial-planner who knows the intricacies of pension plans and downsizing packages from the airline for which he or she used to work or the denominational minister/financial adviser who knows the challenges and opportunities available to his or her unique group to save for retirement.
If you are developing a niche from scratch, be prepared for it to take time. Your ability to present yourself as a genuine niche expert will be reinforced as you add clients.
Currently in vogue is the notion of forming strategic alliances.
Most advisers rank referrals from clients as superior to referrals from strategic alliances in terms of quantity. In fact, it appears that no one has cracked the code for getting certified public accountants to refer clients — even if the CPA works down the hall in the same firm.
FORMING ALLIANCES
Strategic alliances, however, may have an edge when it comes to the quality of referrals.
Some advisers are also looking to buy existing practices as a means of expanding their business. But given that the leading edge of baby boomers are a relatively young 63, the tide between sellers and buyers isn't likely to shift for another five or 10 years.
A lucky few may acquire practices now, but the odds are not favorable.
Many mid-career advisers have gotten used to easily attracting clients. But the current economy has given them a jolt. The remaining weeks of summer are a time to ramp up activity. And for those who do, taking a diversified mix of approaches is a wise course of action.
Joni Youngwirth is the managing principal of practice management at Commonwealth Financial -Network in Waltham, Mass. She can be reached at [email protected].
