In the early days of the financial planningandindependentadvisory industry — some 20 to 30 years
ago — the industry was largely what
we call “transactional.” That is, the vast
majority of most firms’ revenues were
generated by selling financial plans and
the investment “products” that went
into them: typically tax shelters, limited partnerships, annuities, life insurance, and mutual funds. And while most
independent firms were too small to do
much marketing, when they did, it was
to explain how they were fiduciaries,
which made them better than big brokerage firms that sold products.
The independent advisory industry
has come a long way since then. Today
most independent firms are service
businesses, providing financial advice
and investment management for an
annual recurring management fee. And,
yes, I’m aware this isn’t news.
What you probably don’t realize is
many of the businesses supporting independent advisory firms haven’t kept
pace. They still offer business advice
to advisory firm owners as if it’s still a
transactional business. One of the most
glaring examples of this is found in marketing advice.
Granted, even the largest independent firms can’t afford FleishmanHillard
or another large marketing agency.
And sadly, if you Google “marketing
for recurring revenue streams,” you
won’t get much useful information. This
means that advisory owners who want
to grow their businesses are going to
have be proactive in finding savvy outside partners to help with their marketing efforts.
But here’s how to break down the reali-ties of this situation: product sales businesses vs. recurring revenue stream
businesses. Back in the old days of
“advisory product sales,” sound business
management dictated that if the number
of leads contacting your firm is falling,
you need to do more marketing.
However, when the number of leads
is falling in a business where the primary revenue stream is ongoing and recurring, it’s not a marketing problem, it’s a
client service problem. Why? Because in
most independent advisory businesses,
the vast majority of new clients come
from referrals by existing clients who
are engaged and are having a great experience within your firm.
Therefore, if your lead ratio is
falling, you know the problem. As
falling referrals have the most impact
on your growth, focusing your
attention on marketing will only make
the problem worse.
Simply put, you are not connecting
with your clients as well as possible.
That’s not to say that you’ve never connected with your clients, chances are
you are not focusing on them as much as
you once did or could, likely because you
are focused on marketing.
Most clients are with you for the
long term and many client cycle times
are indefinite. Consequently, a focus
away from client service and onto
marketing is not going to solve an
In a recurring revenue business, when
your lead rate is falling, your close rate
most likely also is falling and this is a service problem. What do you do about it?
Marketing Myths and Facts
Here’s what’s really behind the business expansion of today’s fastest-
growing advisory firms.
When the number of
THE FAST TRACK
leads is falling in a
business where the
stream is ongoing
and recurring, it’s
not a marketing
problem, it’s a client
By Angie Herbers