38 INVESTMENT ADVISOR NOVEMBER 2019 | ThinkAdvisor.com
BE A COMMUNICATOR
A good place to start is communication,
although not quite as fun as the creative
process of marketing. Review your client service processes and delivery. Has
it changed recently? Is it being done by
all your people consistently? If not, what
are you going to do about it? And, what
training can you put into place to ensure
it is? Do the advisors need more training?
This is an area where leaders must set
their attachment to marketing aside and
take a hard look at the people they are
developing. We all want to be offering
the best service and training, but, a key
to running a successful business is the
ability to honestly access the results of
other people’s work — and then use it to
make changes in the business to make
your employees better.
Also, look at your own motivation as a
leader. Did you get so focused on growth
that you neglected employee development? Are your advisors and/or staff
overloaded? As your business grows, so
does the workload of you and your team.
To maintain a high level of client service
in a recurring revenue stream, there’s a
limit to the workloads that you and your
people can handle effectively. This is
an area where owners often fail to see
things the way they really are.
Often this blindness results from the
desire to keep revenue high, expenses
low and profits higher. You have to ask
whether it’s really prudent to save a few
(or a lot of ) dollars, but lose the power of
your primary lead source, which is referral rates, for future growth.
Owners tend to have a blind spot
when assessing whether their staff is
overworked. They may ask the question but often don’t want to know the
real answer or take responsibility for it.
Employees tend to want to please the
boss. And, the good employees tend to
Great business owners and leaders
keep a keen eye on their people first and
do what they really need to do to keep
their employees balanced, energized
and happy. As a result, they are serving
the people, not their growth goals alone.
And they do this because falling client
service is never a position you want to
be in as a business.
INSIDE THE NUMBERS
Let’s say you have the people part figured
out and client service is great, but you
want to increase revenue at a faster rate.
The answer is to look inside the numbers.
The fastest-growing firms in the RIA
space are the ones that have the highest referral rates. Unfortunately, we
don’t hear much about those firms in
the media. While the trade media today
likes to talk about issues such as M&As,
marketing and advertising, a story about
referral rates is less appealing.
But here’s what we know from the
data we’ve collected: Over the course
of the past 20 years we have analyzed
thousands of firm P&Ls, and there is a
key expense line item that stands out in
the best, fastest growing firms. That line
item is “marketing expense,” but can be
deceiving if you don’t dig deeper into
what it really includes as typically it acts
as a catch-all area.
In reviewing what the outperform-
ers spent their marketing dollars on,
What do these numbers really tell you?
The way to grow an advisory firm is not
a true marketing expense. Categorize it
on the P&L however you want to. But,
the bottom line is that client apprecia-
tion makes growth happen. To keep it
happening, you must back up that cli-
ent appreciation with good people who
deliver great advice. If you cannot do
that, no amount of true marketing invest-
ment is going to make a difference.
Angie Herbers is chief executive at Herbers
& Company, an independent growth consul-tancy for financial advisory firms. She can be
reached at www.HerbersCo.com.
We found outperformers spent roughly 3% of
their revenues on client appreciation, which
they categorized as marketing. Only about 1%
of total revenues was spent on true outbound