A few weeks ago, I saw a great video blog by Paul Kingsman called Q1 Is Done – Where Are You? I loved Paul’s idea of creating your own quarterly review on yourself (and your business). And I would guess that some of you aren’t where you want to be after the first 3 months of the year. Sure, we could blame it on the political uncertainty of a new administration, fear and reality of raising interest rates, or clients who are increasingly concerned about world markets and the economy – but maybe we should look internally. What grade would you give your own efforts? How focused were you in marketing in the first quarter and how effective were those efforts?
Too often, I meet with advisors who think of marketing as an afterthought or a “nice to have,” instead of a “have to have.” Marketing is seen as an expense, rather than an investment. Even worse, marketing is something that starts and stops for these advisors, sometimes on a whim or after a client loss. Mostly, I see marketing that has an inconsistent message or misses the target audience (if there is one).
Am I talking about you? Maybe, if you are a firm that:
- Tries to brand itself around comprehensive planning, yet all your communications are purely market and investment focused?
- Hasn’t done a client event in years, but is disappointed when you don’t get a great turnout at your “bring a guest” referral client appreciation dinner?
- Wants to grow new assets, but has a marketing “expense” of less than 2% of net revenue?
- Does not do marketing, but has an average client age of 64 and will start to feel the impact of retirement income drawdown on your book
- Sends out so much generic information and messaging that nothing resonates?
All of these examples show firms that don’t pay enough attention to marketing their businesses. They lack the “marketing mindset” that each advisory firm must have to grow – and I would bet their own first quarter review shows little to no progress in their growth plan.What is your marketing mindset? Click To Tweet
By the numbers
Most of us say we want to grow, so we usually pick a random number out of the air as our target. Have you ever really given thought to what that number means in prospects? Have you ever considered how the market and drawdowns can affect that goal?
Let’s walk through a little exercise:
- Assume we have $100MM in AUM at the beginning of the year and our growth goal is $10MM. What we are really saying is (at 100 bps) we want to increase our revenue an additional $100,000.
- We know there are going to be some distributions and RMDs, so to make it easy, let’s say we have a 10% distribution rate. At the end of the year, we would have about $90MM in AUM.
- The market gives and the market takes. Let’s say we have a decent year and balanced 60/40 portfolio (like most of your clients) goes up 5%, including dividends, so your AUM is now roughly $95MM. That means your additional revenue goal of $100K really needs to be $150K or $15MM in AUM to make up for the outflows.
If your average account size is $500K, that means 30 new clients (probably 50 prospects!). No wonder that quarterly review with yourself didn’t go so well.
Planning, not just tactics
In my experience, advisors faced with this situation typically start looking to find out what events or ideas that others have used to grow in their businesses. They call wholesalers, who are happy to suggest some sort of product event or economic presentation. But the questions should start with “Who are my clients and what would they want?” It starts with a plan and a mindset. One event is not going to get you back on pace.
Here’s how to change your mindset and start your plan:
- Build your client persona
- Increase your budget
- Understand your value proposition
- Systemize the messaging
- Build your tactics (like events)
- Have a biweekly marketing meeting with your staff to check up on progress
Your growth goals – and frankly, the future of your business – depend on your mindset. It better be focused on growth and growing.