Most advisory firms will strive to be more successful, whether it is this year or by the year 2030. To do this, most will have to significantly grow the number of total assets managed. For others the total number of clients will need to increase, which is especially true for the minority of financial planners that only charge a financial planning fee.
The SEI and FPA research titled, “Advisory Firms in 2030: The Innovation Imperative,” showed that 77 percent of those surveyed believe client referrals are the most important growth driver. Yet, when we first start consulting our clients, few of them already have a well-thought-out plan to gain more client referrals year after year.
To help, here are three strategic actions each financial planner should do this year. These best practices can have a compounding benefit of increased number of clients and assets under management.
1.) Know Your Clients
At first each firm should have identified target markets that it wants to focus on for future growth. Hopefully the current client base is in line with the ideal client profile, as it is easier to replicate existing clients than to start from scratch.
By knowing the clients better than anyone, customized services can be offered, unique marketing messages can be created and targeted prospecting can take place.
How should planners get to know their clients? Of course, some of that work starts in one-on-one meetings. However, advanced client research requires an independent third-party facilitator to get deep into the clients’ feedback and opinions.
Every planner should use an independent third-party facilitator to conduct an annual survey that can be as short as 10 questions. More advanced research can take place in the form of focus groups and advisory boards to get to know the client base even better. Interestingly enough, when focus groups are conducted, clients involved typically give more referrals after the research than they did before. By asking them to share their thoughts and advice, they start to have an even greater vested interest in the success of the advisory practice.
2.) Have Conversations About Referrals
All the high-pressure tactics of asking for referrals have damaged the financial services industry in many ways. The effects are that often planners do not feel comfortable asking and—not by coincidence—clients do not want to be asked either.
Traditional approaches put the need on the client to help the planner. However, this is not the right approach. Instead the conversations should be around the planner wanting to help their client by helping their family member, friend, colleague, etc.
If the planner can, offer help, instead of asking for it. That approach will lead to many introductions. First of all, the planner will be comfortable having the conversations. Plus, the clients will feel like the planner is doing them a value-added service my helping others they know. This simple change can make a huge difference. Byrnes Consulting has seen that the more “helpful” conversations that occur, the more likely referrals will start coming from the existing client base.
3.) Facilitate Real Introductions
In every survey Byrnes Consulting conducted for our clients that included referrals as part of the learning agenda, we found that clients said they gave significantly more referrals than planners were actually seeing. We find that often planners only have 5 to 20 percent of their clients give referrals. However, approximately three out of four clients say they give referrals.
That is a big difference with huge potential. There might be many reasons the referrals are not reaching out, ranging from them experiencing terrible online first impressions to them just not being ready to take the first step all on their own.
Planners really have to step up their digital presence. Referrals will be the main way planners continue to grow, but any more websites and social networks now get an assist on making the referral a real lead. Today, the majority of prospects will have done some online research before taking the first step to call, email or visit a planner. Expect this preliminary step to be close to 100 percent in the coming years.
For those prospects not quite ready to take the first step on their own, planners need to create opportunities for them to get introduced. Ideally the existing client can bring them to an event or something more intimate. Every year, each firm should have a very diverse event strategy to get most of the client base to participate in at least one activity.
The financial planners that want to grow at a faster pace over the next decade need to continue to have a well-thought-out plan. Hopefully these strategic actions can help them take the initial steps needed to bring in more clients in the coming years.
Mike Byrnes is a national speaker and owner of Byrnes Consulting, LLC. His firm provides consulting services to help advisers become even more successful. He helps financial professionals with business planning, marketing strategy, business development, client service and management effectiveness. He is a coach in the FPA Coaches Corner.
Editor’s note: This piece originally appeared in the FPA Coaches Corner whitepaper, “Action 2020: Create Business Success for Today and Tomorrow.” Download your copy of the whitepaper here.