"Many advisors are obsessed with selling performance. But most wealthy investors today are concerned with the preservation of capital and peace of mind."

It’s Personal

By John Bowen

To attract wealthy clients to your asset management business, build relationships and offer peace of mind.

Almost very financial advisor I've talked with wants to build a successful asset-management business. Goals are set and "how-to" seminars are attended, but soon the excitement dissipates with the reality of the day's crises.

The answer isn't getting luckier; it's getting smarter. Most financial advisors still use direct marketing techniques to locate wealthy investors and sell them on an asset management program. But the industry has changed; marketing strategies that build successful financial planning practices in the past don't work today. If you continue to do what you've done before, you will not achieve the success you want.

Selling Peace of Mind

Many advisors are obsessed with selling performance. But most wealthy investors today are concerned with the preservation of capital and peace of mind. New research shows that today's wealthy individuals are much less sensitive than institutional or small retail investors to investment performance—so if you are selling performance, you are out of alignment with their thinking.

Advisors who use direct marketing techniques for locating clients spend countless hours and hundreds of thousands of dollars attempting to contact new prospects through mass mailings, seminars, radio, television, even cold calling. Like weight-loss programs, these techniques never seem to produce the results they promise. Why?

According to a study by Institutional Investor Inc., most wealthy clients (those with more than $1 million in assets) prefer to meet financial advisors through a friend or acquaintance who has had positive experience, through centers of influence well known to them and organizations they mutually belong to, or through credible third-party sources such as magazines or books. The common theme is established relationships.

Today, any intelligent investor who is going to entrust you with his or her life savings will want to check you out. They want to know if you are competent, trustworthy and have done a good job for their associates. This is the same way they find a reliable doctor or dentist.

Four steps to wealthy prospects

The key to building a million-dollar based asset management business is building relationships. We suggest using a four-step relationship marketing process aligned with the way wealthy prospects want to find you.

Step One:The first thing is to convert existing clients to active marketers. Every prospect wants to meet satisfied clients, but you have to satisfy your clients first. For every client that your asset management service adds value for, you should prepare an updated investment policy statement.

Step Two:Clone your existing clients. According to the study mentioned earlier, 60.5 percent of wealthy investors feel they are influential in referring advisors to others. For the largest single group in the survey, "family stewards," or individuals who see themselves as family providers, the figure is 75.3 percent.

You simply need to be honest and tell clients to spend your time in one of two ways: marketing for new clients or solving their financial problems. With their referral you can free up additional time to stay focused on solving their financial needs.

The best time to ask for a referral is after you build trust. You need to build trust during the first interview. As soon as prospects become clients, they are more than willing to give you referrals because they will know that whomever they refer will have the same positive experience. Provide your clients with a short profile of your target clients. Rest assured that you would have an endless steam of qualified and endorsed prospects if you follow these steps.

Deliver a consistent process. Wealthy clients want to know that everyone goes through the exact same steps. The last thing they want to do is to subject their friends to an uncomfortable experience. Everything you do should be consistent, from conducting a fact-finding interview or writing an Investment Policy Statement to setting up quarterly meetings.

Step Three: Develop niche marketing. Align yourself with organizations that represent the type of client you want. We spent a lot of time working on committees and doing seminars for financial organizations that aligned with our target markets.

Step Four: Create strategic alliances with centers of influence, accounting firms and credible publications. As in a good marriage, you have to work hard at developing and sustaining these relationships.

Adopt these steps as a part of your business and you will build an enormously successful asset management business. Own these steps and make them yours.

Reprinted from: FINANCIAL PLANNING