Creating a Strategic Marketing Machine

By John Bowen

All of us recognize the need to expand a business in order to reach the next level of success. Most financial planners also understand the importance of marketing in achieving that next level but never quite get around to starting a solid marketing program. They are so busy doing the day-to-day work of a business that they never get around to building a marketing machine that will provide a stream of qualified prospects.

Marketing means creating an environment conducive to sales. Its goal should be to develop�systematically and purposefully�a steady stream of new pre-qualified, pre-endorsed prospects who seek out and work with the financial planner. Marketing is the way to reach that goal instead of merely hoping it happens. Further, an ongoing strategic marketing process creates equity value in any financial planning practice.

Create a Compelling Vision of Success

The financial planner must first have a vision of what success means. By knowing what the goals are, the advisor able to reach them. One begins with the end result of how business will be. This is done by visualizing the achievement of goals. Painting a picture in the mind of what a business will look like five years from now is a useful exercise because the mind is the most powerful tool for developing a clear goal to follow.

The financial planner should form a mental picture of what the situation will be five years from today and walking through every part of that day in the future. He or she should begin with waking up in the morning and then driving to the office to meet a client. The planner should visualize all the details of the office and the office and the client. He or she should continue on through every step of the day. Surprisingly, the mind is capable of accurately painting a picture of what the future may bring.

This process can be used to develop a competing vision of success. The planner will become aware of his or her own personal vision of success. It is critical to be excited by such a vision. An emotional commitment to it will be the force that makes it a reality after it has been a dream.

Writing down the main points of a vision of success is the beginning of forming a business plan. This vision of success will become the motivating force behind the overall business plan, the inspiration for other team players to participate in the business, and the crux of the financial model of the business. Emotional commitment is the engine that moves the business forward, even in the face of difficult challenges. By means of a mental picture and passion, a strategic marketing machine is now within reach.

Develop a Target Market

One of the main challenges in developing a marketing plan is that there are too many opportunities to choose from. An important skill is the ability to say "no" unless an opportunity is consistent with the marketing machine. Most financial advisors jump from opportunity to opportunity and never establish a long-term business strategy. Therefore they do not get the most reward out of their efforts. It is, for example, more effective to work on establishing one marketing sphere and becoming known to a single community of prospects.

The marketing challenge today is to create a tight focus by specializing in a narrowly defined target market. The benefits of targeting are several. It allows the advisor to focus resources on only high-payoff activities. Once a market with potential has been identified, the advisor can effectively leverage time. Identifying a market also allows the advisor to become proficient in a target group's particular financial challenges. Receiving referrals will then be easier because the planner understands the deep and narrow issues that affect the target group. This leads to the reputation in the community as "the expert" who really understands clients' particular issues.

To become a well-known planner in a metropolitan area can require years of time, money, and effort. To become the number one planner in a niche market, however, requires less effort and happens over a much shorter period. With very little effort, the advisor can learn a group's unique needs and than help them meet those needs. Such an advisor is positioned as an expert in client's minds.

In Tom Stanley's Marketing to the Affluent,he tells readers to find money that is in motion and to pool capital from small, targeted groups. Many successful advisors focus on money in motion from the rollover market, divorces, inheritances, settlements or saleable assets. They also focus on pools of capital in retirement funds, qualified plans, endowments or foundations. Most advisors, however, do not have any overall plan or grasp of the "big picture." They worry that if they turn away business from a market that they are not currently working with, it will be a missed opportunity. They do not realize that the penalty of working with everyone is not only a dysfunctional marketing plan, but also the undermining of all of their business. They thus miss out on the advantages of accumulated knowledge and expertise, and of an established system—a marketing machine.

The goal is to penetrate a single niche market accurately and quickly. It is necessary to be positioned in that niche market when major life events happen to the people inhabiting that niche such as, the selling of a business. Then the planner can identify important events unique to the market and take advantage of them. Of course, while people in the target group possess similar needs, there will always be slight variations between what specific clients need. The advisor must be able to handle the details of each case in expert fashion. In this way, the planner is in the right place at the right time.

The focus today, however, should be on wealthy investors with large pools of capital. Typically, these are business owners and retirees. Business owners should be contacted before they sell their businesses and as close to the impending sales as possible. Likewise, the advisor should contact those about to retire close to their retirements. In most cases, the advisor's minimum account with such clients should be $100,000.

Another huge market consists of individuals going through a divorce. Unfortunately, most people in these circumstances, whether male or female, experience serious erosion of capital and retain only one-third of their net worth. It is still now money in motion, however. In most divorces, there is little capital to invest unless there has been a successful family business. In a divorce involving a business, the husband typically keeps the business. The wife gets everything else and she usually does not have a financial advisor. Therefore, divorced women are an excellent target market. Many divorcees attend support groups or otherwise network, so delighted clients will have many opportunities to refer other affluent divorcees to the same financial planner.

Another potential market includes wealthy widows and widowers. Through the death of a loved one, significant assets are freed up. Other professional advisors, such as attorneys, CPAs and life insurance agents who serve this market provide inroads to it. Therefore it is an excellent strategy to cultivate strategic alliances with such respected professionals in related fields.

Demographics

There is a lot of discussion now about the $10 trillion that will soon be moving from one generation to the next. In reality, though, the wealthy are just giving it to their already wealthy children. Wealth is extremely concentrated and most people with large amounts of money, over $5 million to invest, are already working with advisors, so it is unlikely that this money transfer will open up a huge new target market.

Some advisors want to work in the institutional market. Although this market represents over $5 trillion, it is so competitive and there are such huge opportunities elsewhere that it makes sense to avoid the institutional market unless strong relationships with it already exist. While a financial planner may pick up an institutional amount on occasion, it is best not to be fooled into focusing on that market unless the planner has a long-term plan and a real competitive advantage.

Discovering Niche Opportunities

A niche opportunity is uncovered by finding a market that is particularly suited to the advisor's own talents, skills, and interests. Each planner has unique talents. Each has comparative advantages, skills, and interests in different areas. A high quality of life comes from working with a group of people with whom one has an affinity. The choice of a target market could therefore hinge on an interest as specific as sailing. Whatever it is, look at the market under consideration. Make sure that this market has a high concentration of qualified prospects with money in motion or with available, pooled capital. In identifying a niche, make sure prospects possess a shared perception and have similar problems, values, and desires.

There are two types of research to find niche opportunities. The first is to query the existing client base and the second is to go outside the existing client base to gather information. It is extremely affective to interview key clients, centers of influence, local experts, and industry leaders to identify new niches. In the interview process, the planner discovers many new and exciting opportunities. By doing research and asking key people, the search becomes focused and targeted.

It is all right to investigate several niches initially, but it is best to focus on no more than three niches at a time. The most successful niche of these three will probably become the advisor's long-term market focus.

After identifying market niches, the planner can begin to accumulate specialized knowledge to work effectively in those areas. He or she should find out what the inhabitants of a targeted niche are looking for. By interviewing people who are not existing clients and finding out what they seek in a financial advisor, the planner will see people open up because they will not feel the need to protect themselves from a hidden sales agenda. More often than not, the planner will end up with a client or at least a referral by means of this non-threatening conversation.

To begin interviews, the planner should first identify any favorite clients and develop a set of questions that will both reveal opportunities and lead to referrals. The focus should be on necessary information, such as clients' motives and unsolved problems.

Other people to interview are centers of influence in the market niche, such CPAs, attorneys and other professionals that work within that target market. This can be arranged through a telephone call. The planner can first request an introduction from someone mutually known and then call the person directly. Such calls require communicating to the other person that what is sought is a win-win relationship that will mutually benefit those involved. Then the other person will be interested in what the advisor has to say.

Niche opportunities cannot be identified without doing research. In doing research, the planner will identify people who need financial advice. He or she will uncover values, problems, challenges, and opportunities, and identify individual prospects and centers of influence. This will set the stage for building strategic alliances. These steps should be incorporated into the writing of a marketing plan to create a marketing machine.

Positioning us an Expert to Attract Qualified Prospects

The key to communicating with clients is to properly position oneself first. Positioning is the art of cling clients' and prospects' perceptions of who the advisor is. A financial advisor should stand out in the crowd of financial market competitor. He or she should design a position that guarantees primacy in the minds of clients. The goal is to be perceived as different and better than the competition. The advisor's main competition is the brokerage industry. Yet 53 percent of affluent investors do not trust brokers, so developing a process through marketing and sales that immediately differentiates the advisor from the brokerage industry is possible.

If the planner is perceived as a specialist to a particular niche industry, it is a huge advantage. For example, a divorcee going through perhaps the most traumatic experience of her life has major financial decisions to make. She can work with a general practitioner or she can work with a known specialist in the community working with divorcees. Here the advisor with a reputation as an expert operates at a distinct advantage.

Many affluent people view financial specialists as product pushers. The advisor, in contrast, wants to be perceived as having no bias in terms of products. The advisor also wants to be seen as a person of expertise who enjoys meeting real-world financial challenges. That is the ideal position to be in, it is a powerful one in the minds of clients.

In Cultivating the Affluent II by Russ Prince and Karen Maru File (Institutional Investors, Inc.) affluent investors were surveyed to find what they considered to be the most important services provided by a discretionary money manager. Number one by far, at 56.7 percent, was asset allocation. The affluent, thus, expect good investment advice. Second was financial and estate planning; third was tax planning. The advisor must offer services that the affluent consider important and then add the competitive advantage of understanding the targeted market's specific needs. The advisor is then able to do more for the client than the competition can. This positions the advisor as uniquely qualified to assist the affluent.

Affluent investors obviously want trustworthy advisors. The planner must earn their trust every step of the way and be impressive in doing so. He or she must empathize with their problems, understand their values and goals, and help them get what they want. The planner must capitalize on trends. The asset management business is itself a trend that is growing dramatically.

The financial planner should develop a "unique selling proposition" that attracts qualified prospects, but turns off people who do not qualify. This is done by a strong promise of benefit. A good verbal benefit statement can become the subtitle of a business. For example, for a practice focusing on executives, the statement might be, "I help executives make work optional."

The advisor's collateral material must be consistent with the overall positioning. Mass marketing is therefore not an option. It generally turns off prospects. The first thing most financial advisors want to do is print up a glossy corporate brochure with matching "everything." It is better to customize everything to the client. The affluent want that, so the planner should give it to them.

Communicate Benefits Cost-Effectively

It is important to deliver the right message to the right prospect at the right time. The right message should touch on the prospect's emotional as well as financial needs. There are three main channels for communicating with prospects: the relationship channel, the credibility channel and the direct channel. Relationship marketing is one-on-one, usually through referral or a strategic alliance. Credibility marketing is establishing prospect's concept of the advisor through public relations. Direct marketing is achieved through direct response.

Most financial advisors realize that if they could be in contact with qualified prospects constantly, they would be successful, so they try to do this through mass marketing techniques. Mass marketing techniques are not effective.

In a survey of independent RIAs completed by Prince & Associates, financial advisors recognized the need for marketing support in their communications efforts. Well over half of those surveyed wanted help in direct mail and advertising. However, multimillion-dollar prospects do not choose their advisors through direct mail marketing. They go to a trusted friend or business associate to ask for a recommendation. Only if that friend or business associate truly trusts and is impressed by the financial advisor would a referral be forthcoming. Using direct marketing is a waste of time when it comes to the affluent.

Relationship marketing, on the other hand, builds solid relationships systematically. It is the only method that makes sense. Everyone wants to do direct marketing because it seems so effortless compared to face-to-face contact. Our firm, in its early stages, did a tremendous amount of direct response, advertising, mailings, etc. Today, we do no advertising. If a firm has an established name and is already a major player, direct mail and advertising can be effective, but it is not a good avenue for most individual financial advisors. Instead, they should concentrate on doing a good job at relationship-based marketing by cultivating personal referrals through client recommendations.

Credibility-based marketing also works. It complements relationship-based marketing because being published provides instant credibility with prospects. Media interviews, public speaking, and publishing a newsletter can be quite valuable when coupled with networking.

Conclusion

By following these five steps, the advisor's marketing efforts will create tremendous success:

1. Envision a successful financial advisory practice five years from today.
2. Find out who the profitable prospects are and target them.
3. Identify no more than three niche opportunities, and then work down to one to focus on.
4. Stake out a position to attract qualified prospects by differentiating oneself from competitors as an expert in a field.
5. Communicate cost effectively on a relationship basis and establish a high degree of credibility.

If advisors follow these steps, they will create their own strategic marketing machines. Getting started is the key. Then they will realize their visions of success by helping others achieve their dreams. That is what is so great about this industry.

Reprinted from: FINANCIAL PLANNING