Should You Prospect in a Down Market?

Some of it will come from new clients and some of it will come from existing clients.

So, let's assume on average you have been bringing in $1 million a month from existing clients. We will assume that continues. Over the next three years, that could bring in $36 million from existing clients.

So you need $44 million from prospects.

First, take a look at how much you are bringing in from referrals. Let's say you are opening one nice referral account a month that's bringing in $500,000, so you're getting $6 million in new assets a year from referrals. So, over a three-year period that could give you $18 million. That forecasts $54 million from your current pace of business. To hit your double, you need another $44 million.

That's what you raise over the next three years from some source of prospecting other than referrals.

Defensive StrategyLet's take a defensive look at that same book of business. You've got $100 million. You think the market could go down 20 percent in the next year. You're getting $12 million in new assets from clients. You believe that will continue, but we're not going to count on the $6 million from referrals. That might or might not continue. So, you need $8 million from some source other than your clients and referrals in order to maintain your current income.

Other ChannelsNetworking. Without a doubt, the most popular "alternate channel" is "networking." You can break down networking into two sub-classes: networking with business associates and with social acquaintances.

Each has its own challenges that must be overcome.

Your business contacts may not know you well enough as a financial advisor to feel comfortable if you solicit their business.

Let's take an example.

For 10 years, you have been friendly with the owner of the dry cleaning store where you have your business attire cleaned. This business owner mostly knows you as the guy or gal with the expensive suits. That identity does not give you entr?e to ask, "By the way, Jack, who are you using as a financial advisor?"

Take another example.

You know the MD that you normally sit next to in Rotary also owns 17 Taco Bell franchises. You would love the business. But you cannot solicit that business at all. It breaks the social rules. She has to come to you.

So how do you convert network contacts into business prospects?

Over a period of months or years, you drip on them and never ask for anything. I call this a "No Key" campaign. "Low Key" is low pressure, right? Well "No Key" is no pressure.

The original version of this, which I cooked up back in the '80s, instructed people to write hand-written notes along the line, "Here's some info I thought you could use." If you are in Rotary, send stuff on what you know people will be interested in. But only rarely send anything business-related. Rotary is after stamping out polio. So be on the look-out for that. Just make sure you send it on your firm letterhead. Sooner or later, your contact will ask, "Tell me again what you do."

Fair game.

Seminars. I hear more teeth grinding on the subject of seminars than almost any other marketing program. "Our area is 'seminared' out" is the mantra.

The reality is: Seminars are harder today to make profitable than ever before.

The good news is: If you do everything right, they can be very profitable. You can in fact build your business up to a new level using seminars.

I have compiled some past Research articles on seminar marketing into a White Paper, "The Seminar Success Zone." If you would like a copy, go to www.billgood.com/successzone.

Cold Calling. Suppose I tell you that cold calling is so hard today, hardly anyone does it. Would you consider it? Suppose I further tell you that the few who do often succeed wildly.

I know one senior FA who hired a tough-as-nails caller and sicced him on a very wealthy area of town. Believe it or not, there are still some people who had not signed up for the "Do Not Call" list. His instructions were, "Get me one seminar a month with six wealthy families."

It took a month of calling to get those six families. At best, the people in this area are resistant to solicitors of any kind. This caller could go days without anyone accepting the invitation. It was awful. And in about three years this FA added $1 million a year to his assets under management.

Best Time to ProspectSo, if I ask: "In addition to referrals, how are you developing new business?" Remember: The correct answer is, "In addition to referrals, we …."

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Bill Good is chairman of Bill Good Marketing Systems in Draper, Utah; see www.billgood.com.