The COVID-19 pandemic has brought major changes to how advisors are working with clients, especially based on the comments we received during our recent webinar, “How the Pandemic Has Changed Advisory Practices.”
In particular, many advisors who attended the webinar were very concerned about how to establish new client relationships during a time when it’s far more difficult to meet in person. Since that topic was of such high interest, I asked an additional three related questions of our panelists, Beverly Flaxington, The Human Behavior Coach® and founder of The Collaborative, a sales, marketing and teambuilding consultancy; Sara Grillo, CFA, a marketing consultant for investment managers and financial advisors; and Dan Solin, founder and president of Solin Strategic and Evidence Based Advisor Marketing.
Aren't client referrals still a great source of new business? In your opinion, why or why not?
Bev: We see this as one of the best sources for clients. We are continually uncovering opportunities that advisors have missed. In many cases, clients can be COIs. As an example, clients run their own businesses (we had an advisor parlay a funeral-home owner into a great referral source), and they are working with people who advisors might like to have for clients. It isn’t just, “introduce me to your friends and family.”
At a basic level, most advisors have no idea how to set up for referrals and there are often dozens lurking in their client base. It is a great place to start!
Dan: Yes, referrals are low-hanging fruit in the quest for new business. According to the World Wealth Report prepared by Capgemini in 2018, 44.4% of high-net-worth clients said they found their wealth manager through a referral from a friend or business contact.
It’s noteworthy that 33% used “active approaches based on personal research and making direct contact with preferred wealth managers.” The trend toward non-referral sources of new business has been accelerating for a while. According to Michael Kitces, based on the Investment News 2016 benchmarking study, referrals were no longer the primary source of AUM growth. It’s now “all about external business development and marketing strategies.”
In this article about the importance of digital marketing for financial advisors, Chris Brox wrote that this means “an amazing website,” an active social media presence, e-mail marketing, and pay-for-click and lead-generation strategies. For those who want to get started with digital marketing by taking basic steps you can do on your own, you can download this free brochure here.
Sara: It is time to deepen relationships with clients. There is a specific strategy that you can use to increase the chance of your clients sending a referral your way. It is called the, “crisis marketing strategy” and I have explained it in this blog/podcast here.
Here are a few of my favorite tactics:
- Weekly webinar series (see Crisis Marketing Strategy).
- SEO optimized YouTube videos with highly searched keywords in the title and summary description.
- Consistent, thoughtful messages sent through LinkedIn or Facebook messenger. Your goal should be to understand deeply the individuals you are trying to communicate with. Avoid spamming them or sending the typical financial advisor LinkedIn message that goes something like, “I’m a financial advisor with 20 years of experience. I put my clients’ best interests first. Can we meet for coffee?”
What are your top ideas for financial advisors to acquire new clients and retain them?
Dan: There’s no quick fix for acquiring new clients. Many of the traditional strategies (events, teaching at educational institutions) are foreclosed by the pandemic, and likely to be unavailable for some time.
While the pandemic presents challenges, I see opportunities. If you haven’t considered focusing on a niche market, now might be a good time to consider doing so. This article discusses the benefits of target markets. Take a fresh look at your fee structure, which is probably an AUM-based fee. Consider a flat or hourly fee, or a hybrid that gives your clients options. It’s an easy way to differentiate yourself.
Once you have a target market in mind, communicating with them is not difficult. The internet is a great leveler. Start by creating original content that’s valuable to your demographic. Post it on your website. Repost it on social media.
When you create content, do so in your voice. Make it personal. Start a newsletter. You’ll be surprised at how easy it is to get subscribers. I started a newsletter for advisors several years ago. It now has almost 2,000 subscribers.
Finally, craft a digital-marketing strategy that should include a schedule for writing content, a review of your website, regular postings on social media and goals (like being higher in organic rankings on Google).
If prospects don’t know you, they won’t hire you.
Bev: Two main ideas – leverage your existing clients in new ways. Be strategic in the way you approach them; engage them in your efforts. One of our advisors set up a client advisory board for the sole purpose of having clients provide ideas and insights to help the advisor grow.
Second, pick a niche and own your niche. Focus on a well-defined segment and become the “go-to” for that segment. Advisors don’t want to miss opportunity so will often not agree to niche marketing but it is extremely effective for growth.
Not being able to meet in person seems like it would make it a lot harder to acquire new clients, don’t you think? How can advisors make the relationship sticky if they haven’t ever met new clients in person?
Sara: Although during a market crisis it is easier to get people to express an interest in the work that a financial advisor does, it is harder to close the business. This is due to the emotional turmoil that uncertainty brings.
You have to appear over and over again to them electronically, because trust is the key to overcoming their fear of uncertainty. Your online brand is the driving force behind this strategy, just like Terry Francona was the driving force behind the 2004 Boston Red Sox team that defeated their rival, the New York Yankees, and then went on to win the World Series.
Appear frequently in front of these prospects using the following online tools:
Other creative prospecting techniques include:
- Dropping off a gift at their house.
- Sending a singing telegram.
- Customizing a face mask and sending it to them.
- Mailing thank you cards or other personalized letters.
- Personalizing follow-up videos created for one specific individual.
Whichever one you pick, put your personality into it and be authentic! There’s no right or wrong way to do this. Define it on your terms and have it be an expression of yourself. (Follow my podcast here and please send me an email if you have any topics you’d like me to cover, or if you would just like to say hello.)
Bev: We run a firm that does more than 50% of its client work online – with many of our longstanding, most successful engagements, we have never met the client. Virtually, you have a greater opportunity to listen, listen and listen some more. What are they saying they care about? What values do they express? What words do they use? Record and remember these and then follow up with interesting info they might care about, such as articles or blogs or contacts. Set a “what’s next” every time you speak: Always have something you want to discuss, but don’t have all of the information on hand so you have to follow up.
Dan: The pandemic has made Zoom a household name. The resistance to videoconferencing has evaporated. Meeting someone virtually can be almost as effective as meeting them in person – and far more productive. In fact, there’s compelling evidence videoconferencing improves communication and helps build relationships, in addition to other benefits.
Your focus shouldn’t be solely on acquiring new clients. The pandemic gives you opportunities to reduce expenses and increase profits without adding AUM. Is it possible for you and/or your team members to work from home? Can you reduce (or eliminate) the space you rent? Can you save on travel and entertainment by meeting clients virtually?
There’s precedent for “sticky” relationships in the absence of personal contact. Look at robo advisors, and the big fund families. They’ve generated billions of AUM based on a virtual business model.
You can too.
Dorothy Hinchcliff is the editor of Advisor Perspectives.
Read more articles by Dorothy Hinchcliff
The COVID-19 pandemic has brought major changes to how advisors are working with clients, especially based on the comments we received during our recent webinar, “How the Pandemic Has Changed Advisory Practices.”
