
Over 90 advisors responded to a survey I conducted earlier this year with Advisor Perspectives. Here are the important insights into which activities help find new business for RIAs and IBDs.
While overall assets were up across advisory firms, thanks to a positive market, the hunt for new assets coming from new clients continues to be a struggle for many. Here’s what’s working and what’s not based on the survey results.
Ranking on a scale of 1 to 10, with 1 meaning “worst,” I aggregated results by the bottom and top third self-rankings (1-3 and 8-10, respectively). When asked about overall new sales effectiveness for the firm, both RIAs and IBDs gave themselves the highest ratings in the “middle” (4 – 7). IBDs rated themselves in the worst categories by a factor of 3 to 1 versus the RIAs and neither category gave themselves a “10” rating overall. Below I have broken down the efforts into individual sources of new revenue.
A whopping 32% of IBDs said their client referrals were in the lowest categories possible while only 13% of RIAs answered similarly. But both advisor-types showed very low numbers on the high end of the scale. Obtaining referrals from COIs (centers of influence) fared even worse with both sets giving this category overall low ratings – close to 37% for IBDs and close to 42% for RIAs. The last category of prospecting, obtaining new clients in general was also weak with 32% of IBDs giving this the lowest ratings and 26% of RIAs. It’s important to note that in no case did either IBDs or RIAs give strong ratings in any aspect of new business growth.
One surprising differentiator was in the area of formal sales training. IBDs overwhelming rated formal sales training they have received in the higher categories, with over 90% rating it between 5-9 on the 10-best scale. By contrast, only about 14% of RIAs rated the results from formal sales training in the top third.
When asked to explain obstacles to growth the most common themes were lack of time and lack of focus. Other responses included:
- Poor sales skills of team members;
- Insufficient money devoted to selling; and
- No formal written sales plan.
A few respondents said they had “no need” for new sales, and no obstacles to growth whatsoever. These firms appear to be in the minority.
If your firm could use a recharge on growth and wants to capitalize on the opportunity left open by those struggling in this area, consider these four steps:
- Focus on the three areas of organic growth – client referrals, referrals from centers-of-influence (COIs) and direct networking or marketing. As a firm, examine where you are now with each of these, and where you would like to be. Understand your baseline and then set a goal for what you want to achieve in each of these areas. Then take a look at each channel, what obstacles are in the way of reaching your levels of success? Why the gap? If you can identify the obstacles, you can understand what’s within your control and influence and develop a plan to fix them.
- Teach your advisors how to “sell” but without being salesy. This means asking each person to create a Business Building Plan to highlight where they will focus their attention to find new assets. Have them identify the opportunities within their current client base, as well as potential COIs or clients as COI they can work with. Put deadlines and expectations so that advisors know this is a serious focus for your firm.
- Create a sales culture to prevent ‘sales” from being a dirty word. No firm grows without some sort of effort on business building. Advisors are in a unique position because their firm can “grow” because the market helps out and increases assets. The market is not a sure thing, however, and learning how to find new opportunities when the market taketh what it giveth is critically important. Having an environment where you talk about selling, work together on selling, and embrace selling will help everyone to become more comfortable with the concept.
- Measure your progress. It’s not about beating anyone up if things aren’t going well, but just like you would have done initially to recognize your obstacles to success, you must track and measure what’s working and what’s not. Make mid-course corrections, discard ideas that are not yielding results. Just as you would not leave an under-performing investment sitting in a portfolio unendingly, so you should move off a sales initiative that doesn’t yield anything.
Advisors have an excellent opportunity to define themselves in the market, let people know what they do well and why, and to leverage existing relationships for new introductions. It takes focus, and commitment however to do so. Choose something your firm can do – today – and implement it for increased organic growth.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. In 2008, she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
Read more articles by Beverly Flaxington