In my survey, "Best Practices 2011," 67% of advisors with more than $100 million in AUM have a written business plan. Interestingly, 65% of advisors with less than $50 million also have a written business plan. So we all agree: Having a written business plan is a best practice.
So where do you start?
I recommend any marketing plan—even a prospecting plan—should always start with a client marketing component. I have posted a couple of Financial Advisor Client Marketing Resources on my website.
Here's the problem you face in starting with prospecting.
If you have been spending several hours a day with clients and then re-allocate some of that time to a new prospecting campaign, you have unknowingly signed up for a guaranteed income reduction plan.
Here's how it works.
Prospecting has a longer pipeline than client marketing, doesn't it? While prospecting is certainly essential to building your future, if you don't deal with that unpleasant sidebar to your plan, your income will drop as surely as the night follows the day.
The strategy I've recommended for a long time is that you need to view a major prospecting campaign the same way you would if you were building a new business. To do that, you need time and money.
Where does it come from?
It comes from your existing business, i.e., your clients.
You start with client marketing. You will want to download my Client Retention Formula. You take at least some of the increased revenue to buy some time by hiring additional staff or outsourcing something you've been doing.
By freeing up time you were spending elsewhere (most likely in service), you have the time to create your new business. You don't reduce the time you were spending with clients. That's where the income reduction comes from.
If you fail to follow some approximation of this scenario, you will have the following conversation.
Your spouse looks at the first check after you launch your prospecting campaign.
Spouse: Pardon me? What are you doing?
FA: Honey, I'm prospecting. Remember, we talked about building up to the next level.
Spouse: This is ridiculous. You have to knock that off. We can't live on this.
Where to Start
Like planning a trip, you need a destination. But you also need a starting point.
I would start with an assessment, and before that, I would start with a definition. Clients are people with whom you have a business relationship. As regular readers of this feature know, I'm a believer that the proper definition is: A client is "someone who has bought something from you."
When I ask someone "How many households do you manage?" I frequently hear, "Well I have 122 real clients and 394 customers."
Not in my book. You have 122 A clients and 394 B, C and D. Many members of this latter group are A clients for someone else. Treat your Bs, Cs and Ds like As and many will become As. So a primary objective for your client marketing plan is: Upgrade your B, C and D clients to As.
Another way to put that is: Become sole provider for those clients who follow advice. When you have become sole provider, you have at that moment, an A-client. To help you with this, I've written some questions. They are interspersed in the explanations that follow. For each question, assign yourself a score from 1–5. A "5" answer is, "Yes, I do this all, or most of the time."
Scope of the Marketing Plan
Client Marketing covers three areas:
1. Retention
2. Business Now
3. Business in the Future
Let's take these one at a time.
Retention
Actions taken to retain client relationships are by far the most important marketing you will undertake. In countless iterations, you've heard it said, "It costs five times as much to get a new client as it does to keep an old one." So how do we approach client relationship retention? To answer my own question, you do it by handling the three reasons advisors lose clients. You lose them by giving:
1. Bad investment advice;
2. Poor, or no service;
3. Not enough communication.
So an important element in your plan is: Assess your investment performance. If it compares unfavorably with the major indices, you need to overhaul your investment strategies, your funds, your managers, etc.
To deal with the service issue, measure it against these standards:
