The
.-ar
Plan You'll Nee
To grow in this new, more treacherous business environment, every planner needs
a plan. By Stephanie Bogan and Natalie Doss
The seruggle many advisors face is ehae afeer
nearly a decade of markeeing ehae meane lieele more
ehan servicing clienes and waieing for ehe phone eo
ring, aceive markeeing can seem as dauneing and com-
plex as a piano concereo by Johann Sebaseian Bach.
Much like ehe difference beeween a seudene who
aspires eo become a greae pianise and a maesero who
headlines conceres around ehe world, the difference
beeween 'waneing' and 'knowing how' eo grow are
very differene ehings.
Johann Sebaseian Bach may have been a musical
genieis, bue his secree was simple, powerful and some-
ehing advisors can use eo creaee eheir own maseerpiece:
"There is noehing remarkable aboue ie," he wroee. "Ail
one has eo do is hie ehe righe keys ae ehe righe eime and
ehe inserumene plays ieself."
A BROADER VIEW
Wieh all ehis in mind, ehe goal of our Best Practices:
Business Development Study, ehe ehird in our Bese Prac-
tices Seudy Series for Financial Planning, was eo share
wieh advisors ehe fundameneal faceors ehae promoee
successful business developmene. In doing, we hope eo
promoee business praceices ehae drive groweh across ehe
advisor communiey.
As wieh our inieial studies in the series, our focus
looks eo eop-quareile advisory firms, based on eoeal
owner income (all owner conipen.saeion plus owner-
ship reeurns). Whae becomes apparene is ehae geeeing
to the eop is less aboue individual business develop-
mene eaceics and more aboue having ehe righe seraeegy,
laying a serong foundaeion and maineaining a syseem-
atic execueion.
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BUSINESS DEVELOPMENT LANDSCAPE
Alehough financial advisors repore ehae groweh eieher
stopped or declined in 2009, ehey expece noe only eo
recover, hue also eo grow significanely over ehe nexe
ehree years. Seill, ie is a eime for realism.
Advisors dearly recognize ehae groweh in ehe fueure
will require more effore ehan ie did in the pase, and ehis
seares with investing more time in markeeing and devel-
oping a clear plan for groweh. Overall, ehe posieive oue-
look is good news. There are, however, some gaps ehae
demand our ateeneion:
• Failing to plan. Less ehan one-ehird of advisors
indicare ehey have a wrieeen markeeing plan in place,
and fewer seill have fully implemeneed ehae plan.
• Lack of focus. While a majoriey of financial advi-
sors say ehey have some way eo ideneify eheir eargee
clienes (eypically assees), firms ehae do noe make ehe
firse quareile indicaee ehae only half of eheir clienes fie
ehe bill. Top-quareile advisor firms are significanely
more focused, wieh 6 8 % of clienes in eheir eargee cli-
ene caeegory. To a lesser exeene, firms are beginning eo
broaden eheir eargee cliene definieion eo include cliene
needs and/or affiliations.
• An ad-hoc approach. Many advisors take an ad-
hoc approach eo markeeing and communicaeions; only
a few indicaee ehae ehey have syseemaeized eheir busi-
ness developmene process.
• Inadequate measurement. While ehe abiliey eo
measure results is critical to success, a small minoriey of
advisors have a process in place eo assess ehe success of
eheir markeeing inieiaeives.
Advisors are keenly aware of ehese challenges and
understand that eheir abiliey eo capiealize on currene
FINANCIAL PLANNING October 2010 105
opportunities is largely an issue of planning and commit- have mostly or fully implemented it. Even among the most
ment. This tmderstanding is shown in strategies that advi- successful firms, only 11% have a fully implemented plan.
sors identify as having the greatest potential for driving Failure to market effectively is more about how advisors
future growth: implement a marketing strategy and less about the tactics
1. Have a plan and invest the time and money to execute chosen. Through our work with advisors, we have identified
that plan. three basic scenarios for marketing implementation: event-
2. Buy growth by acquiring another practice or hiring driven, cycle-driven and process-driven.
another advisor. Event-driven. For the event-driven advisor, a single
3. Leverage existing resources by hiring additional busi- event happens and the advisor responds. For example, a
ness development staff. referral calls, or the advisor is asked to speak at an event.
Regardless of the activity, the opportunity arose in isola-
IT STARTS WITH A PLAN tion, driven by an outside source, without any relation to a
Marketing is much more than an activity or event; it is broader strategy or effort. For these advisors, marketing is
an organized business system that consistently creates driven largely by intuition instead of intention.
and drives growth. An effective marketing plan is the link Cycle-driven. The cycle-driven advisor seems to represent
a good number of today's practicing advisors. These advisors
Percentage of participants that do or do not have a marketing pian
are focused on business development, albeit sporadically. The
result is that the advisor engages in series of silo-style events,
70%
which are not connected by a cohesive strategy. For example,
60%
an advisor decides to host an event or have lunch with centers
50%
of infiuence. This is generally done for intense, but relatively
40%
^ ^ ^ ^ 28% brief periods, and then repeated as needed. Then, one of two
3O'K> 1
things happens: A burst of activity generates new business,
20% 1
occupying the advisor's time, preventing him or her from
10% 1 continuing marketing, or the results are not immediate and
0% ' I^I^^H^^IHIil^H the advisor stops engaging in marketing.
Have a marketing plan Do not have a marketing plan
Both of the above models fall prey to a yo-yo effect—the
Source: QuatítUYisK. mm . • Other Advisors
ups and downs in new business activity that are derived
between your growth goals for the future and your daily "to from the sporadic attention paid to it.
do" list. And while a vast majority of advisors accept that Process-driven. By contract the process-driven advisor
this is true and believe that creating a plan will drive growth, develops and consistently implements a marketing plan—
only 32% of the best firms have created such a plan. the true definition of marketing. In particular, a good mar-
Composing a plan can, and should, result in changes to keting plan is predictable and built on a series of simple,
consistently implemented activities. It elevates your posi-
Marketing pian impiementation ievels
tion, enhances your reputation and expands your client base
801.
over time.
70%
Some of the most established advisors lack a systematic
60%
marketing plan. One reason is many are pâturai rainmakers
50%
and therefore, until recently, they simply did not deem it
40%
necessary to develop one. This attitude creates an inherent
30%
risk. Simply put, when it comes to business development,
20%
it is clear that most businesses strongly rely on the firm's
10%
principals to act as rainmakers, with more than half of firms
0%
Marketing plan Marketing plan Marketing plan Marketing plan entirely dependent on the principal to attract new business.
is fully is mostly is partially is not This founder dependency ultimately hinders growth and
implemented implemented implemented implemented at all
creates succession risk.
the way you run your business, which requires commitment As the current advisor population ages and we look to
on a level that is still a resistance point for advisors. Of the younger advisors to take the reins, we may find that a mote
32% of advisors with a clear plan, only about half say they structured approach to growth is required. Further, the abil-

106 October 2010 FINANCIAL PLANNING


IN PRACTICE—BUILDING A SIMPLE,
SMART MARKETING PLAN
The most common misconception about marketing
is that it is a thing—an event, a catchy jingle, a flashy
website. While these are all marketing activities, they
are not marketing at its core—a systematic business
process for cultivating new business.
What's the key to a good marketing plan? It should
be simple, systematic and sustainable. In fact, a good
plan is not sexy and does not sizzle. The more boring
reality is that marketing is a carefully crafted exercise
consisting of three basic elements:
1. Simple. Effective marketing does not have to be
complicated or flashy. If you're focusing on profes-
sional referrals, a simple plan might be to develop
monthly value-added communications and weekly
lunch meetings with your referral sources or pro-
spective referral sources.
2. Systematic. Many advisors fall victim to yo-yo
marketing, but this approach does not sustain consis-
tent and long-term growth. Developing a simple and
systematic plan is a key driver for building sustainable
and scalable growth.
3. Sustainable. This feeds from both the simple and
the systematic. Often flashy and complicated market-
ing ideas are not sustainable in the long-term. There
simply aren't enough hours in a day to complete
87 marketing activities, run a business and manage
clients. Creating a simple plan that you can implement
with reasonable frequency (and time commitment) is
much more sustainable.
In short, effective marketing is focused on maximizing
your marketing reach and resources. No catchy jingles
required.—S.B.
ity to demonstrate a clear and consistent marketing process,
which is not linked to the individual skills of any one per-
son, will have a positive impact on both the growth and
long-term value of the firm.
FINDING YOUR AUDIENCE
Even with every note in place, a masterpiece is nothing
without the right audience. Just as different styles of music
are appropriate for difference audiences, the development
of a marketing plan and its activities can and should differ
from firm to firm, based on the target audience or target
client profile.
In our research, we sought to understand if and how
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advisors have defined their target client and the extent to
which they use that definition as part of their marketing and
client acceptance process. More specifically, a target client
profile defines the characteristics of the clients with whom
you work—or the deal-breakers in your decision to work
with clients, which often include:
• Client size (e.g., net worth or Investable assets)
• Client needs (e.g., age or specialized needs)
• Client affiliations (e.g., lifestyle or profession)
Based on the data and our consulting experience, there
does not seem to be any one "best" way to target clients.
Review of the data suggests that a range of approaches work.
The primary factors used in targeting and selecting new
clients included net worth, investable assets, profession,
age group, lifestyle, interests/hobbies, specialized needs and
otherS. Client size dominated, with about three quarters
Factors used in defining a target ciient profile
100%
60%
40%
20%
of advisors using investable assets as the primary means
by which they defined a target client. About half used net
worth and just less than half used age (which would drive
client needs). There are wide ranges of factors utilized to
a greater or lesser degree. As a rule, client size dominates
because clients who fall below a certain threshold become
unprofitable; this is often a deal-breaker. However, client
needs and affiliations
Percentage of active cilents who can be critical driv-
meet the target ciient portfoiio
ers of efficiency—and
growth—in a business,
68%
allowing an advisor to
focus his or her efforts
and build a business
arotind the needs of a
clearly defined group
of clients.
I argeting a specific
niche or using a spe-
FINANCIAL PLANNING October 2010 107
108 October 2010 FINANCIAL PLANNING
 cific factor may not drive firms into the top-quartile advisor
category, but data suggests it is a contributing factor, with IN PRACTICE-
68% of top-quartile advisors having a defined client profile REINFORCING REFERRALS
compared with only half for the remainder of the advisor The key to driving increased referral activity is to un-
population. We do believe—and the data suggests—that derstand the behavior you are promoting and reward
what you choose is less important than if you choose to it. If you want a referral source to continue to refer
target your clients. Simply put, those firms with a higher clients, and the right ones, sending a thank-you card
percentage of clients in their target group tend to be consid- or gift only for referrals who become clients may not
erably more profitable. provide enough incentive. Instead, our experience tells
us that a simple process that recognizes and rewards
Even with target clients and niche marketing becoming
the referral behavior—and not the outcome—is more
industry buzzwords, many advisors actively accept clients
effective at increasing not only the quantity, but also
who do not meet their client profile. While there are many
the quality of referrals, and provides you with the op-
valid reasons to accept clients who do not meet the target
portunity to teach referral sources what clients you do
client profile, our experience has been that advisors often
your best work with.
rely too much on the exception. The net result is a client
Our broader process, including a process tailored
base built on the exception and not the rule, leading to a
specifically to centers of influence and in-depth train-
drain on profitability and scalable growth.
ing around why and how to make these systems work,
is being developed into an online tool that will be
Factors used In defining a target ciient profiie launched later this year. In the interim, here's a simple
three-step process you can use with clients:
1. When a referral is received, immediately call, send a
note and/or gift to say that you were touched by their
confidence (a thank you),
2. As the prospect goes through your prospecting
process, update your referral source at least once to
let him or her know how it's going
3. Once the prospect has made a decision, regardless
Client referrals Professional referrals of the outcome, call your referral source again to say
• ;,.' • Other Advisors thank you for the referral.
By creating a multistep process that spans the referral
THE CONDUCTOR OF GROWTH lifetime, you are involving and thus investing the refer-
Developing a plan and focusing on an audience are key ral source in the referral, making him or her feel more
components of sustainable marketing, but what are the valued and important.
components and activities that drive growth? While no one
tactic is a universal silver bullet, referrals do come close. ness came from client referrals and although that number
Top-quartile advisors indicated that 60% of new busi- dropped to 50% for other advisors, it is still the source
Most ot Some of of the majority of new business. Although not as great a
Reierral Follow Up Quartile Always the time the time Rarely Never contributor to new business, professional referrals represent
Place a thank you IQA 475% 15,3% 15,3% 16,9% 5,1% 20% and 10% of new business for top-quartile advisors and
phone call <1QA 42,0% 20,7% 21,8% 9,8% 5,7%
other advisors, respectively.
Send a thank-you 1ÛA 54.2% 15,3% 20,3% 6,8% 3,4%
note or letter <10A 40.8% 26,4% 18,4% 9,2% 5,2% With few advisors implementing a systematic marketing
Send a thank- 10A 10,2% 5,1% 28,8% 28,8% 27,1% plan and an industry that has historically focused on word
you gift <10A 10,3% 12,6% 23,0% 27,6% 26,4% of mouth, it is not surprising to see referrals comprising the
Involve referral source 10A 13,6% 28,8% 32,2% 13,6% 11.9% majority of growth for advisors. Surprisingly, even as the
on ongoing basis <1QA 9,8% 23.0% 33,3% 22,4% 11.5%
single biggest driver of new business, the process by which
Notify referral source lOA 35,6% 27,1% 20,3% 10.2% 6,8%
of result of referral <10A 36,8% 31,6% 17,2% 8,6% 5,7% they are generated is not highly systematized for many advi-
Follow formalized 10A 13,6% 20.3% 13.6% 23.7% 28.8%
sors—only about 20% of advisors ask for referrals routinely.
referral process <1QA 9.8% 16.7% 23.0% 21.3% 29.3% The apparent discomfort of asking for referrals is so dra-

www.Financial-Planning.com FINANCIAL PLANNING October 2010 109

 Effectiveness of Extremely Highly Mildly Not Does MORE THAN ONE NOTE
MarketH» Activities Ouartlle effective effective effective effective effective not apply Cliene referrals are ehe clear driver of
Passive referrals lOA 11.9% 11.9% 25.4% 42.4% 3.4% 5.1% groweh. However, we should noe forgée
from existing clients <10A 2.3% 9.8% 22.4% 45.4% 16.7% 3.4%
exeernal drivers, specifically prospece-
Actively market to clients lOA 5.1% 11.9% 18.6% 11.9% 11.9% 40.7%
to generate referrals <10A 2.3% 4.6% t6.7% 24.7% 12.1% 39.7% ing—working wieh ceneers of infiuence
CPA and attorney 10A 5.1% 10.2% 18.6% 28.8% 18.6% 18.6% eo generare professional referrals and
relationships <10A 3.4% 9.2% 16.1% 35.1% 20.7% 15.5% acquisition. Beyond referrals from clienes,
Financial advisor/ 10A 0.0% 0.0% 6.8% 8.5% 10.2% 74.6% referrals from professionals rank as ehe
broker relationships <10A 2.3% 1.1% 6.9% 8.0% 21.3% 60.3%
nexe mose effeceive groweh seraeegy. No
Direct marketing 10A 0.0% 1.7% 3.4% 13.7% 20.6% 60.5%
(mail, fax, email, Internet) <10A 0.0% 1.1% 4.0% 13.2% 24.1% 57.5% oeher seraeegies are raeed as pareicularly
PR/media coverage - 10A 0.0% 0.4% 3.0% 6.9% 6.0% 83.7% effeceive, alehough communiey involve-
retain firm <10A 0.0% 0.0% 1.1% 6.9% 5.2% 86.8% mene, charieable involvemene and niche
PR/media coverage - 10A 0.4% 1.7% 3.0% 7.3% 7.3% 80.3% markeeing do garner some suppore.
internal <10A 0.0% 0.6% 2.3% 5.7% 5.7% 85.6%
Taking a closer look at media, adver-
Radio/ 10A 0.0% 6.8% 1.7% 6.8% 8.5% 76.3%
TV shows <10A 0.6% 0.6% 1.7% 2.9% 6.3% 87.9% tising and PR aceivieies specifically, we
Seminar 10A 0.0% 5.1% 20.3% 3.4% 64.4% see ehae more recognieion-orieneed aceiv-
marketing <10A 1.1% 5.2% 9.8% 17.2% 5.7% 60.9% ieies ofeen employed by eradieional busi-
Professional/ lOA 0.0% 0.0% 3.4% 13.6% 10.2% 72.9% nesses have yee eo gain eraceion or prove
trade groups <10A 0.6% 1.1% 5.2% 17.2% 8.6% 67.2%
highly effeceive for financial advisors.
Referral/ 10A 3.4% 0.0% 0.0% 13.6% 16.9% 66.1%
networking groups <10A 1.1% 1.1% 6.9% 17.2% 13.2% 60.3% We do noe eake ehis eo mean ehae ehese
Cold calls/ 10A 0.0% 0.0% 3.4% 5.1% 3.4% 88.1% seraeegies cannoe be effeceive. Quiee ehe
solicitation <10A 0.0% 0.0% 4.0% 12.1% 10.3% 73.6% conerary: Effeceiveness is more depen-
10A 0.0% 0.0% 1.7% 10.2% 15.3% 72.9% dene on firm goals and circumseances.
Advertising <10A 0.0% 0.6% 1.7% 13.2% 20.1% 64.4%
For example, larger advisory firms eend
Internet 10A 0.0% 0.0% 3.1% 6.3% 43.8% 46.9%
presence <10A 0.0% 1.1% 3.2% 8.4% 40.0% 47.4% eo benefie more from ehese markeeing ave-
Community 10A 0.0% 6.8% 13.6% 32.2% 5.1% 42.4% luies as ehey suppore ehe goals of creaeing
involvement <10A 1.7% 4.6% 16.7% 26.4% 10.9% 39.7% name recognieion, brand awareness and
Charitable tOA 0.0% 8.5% 8.5% 30.5% 5.1% 47.5% dominane posieioning. In addieion, ehese
involvement <10A 1.7% 5.2% 10.3% 14.4% 12.6% 55.7%
inieiaeives eend eo be mose effeceive when
Niche 10A 3.4% 11.9% 3.4% 15.3% 3.4% 62.7%
marketing <10A 5.7% 5.7% 10.9% 8.6% 7.5% 61.5% engaged in consiseendy over an exeended
10A 18.2% 0.0% 9.1% 9.1% 0.0% 63.6% period of eime, and smaller firms may lack
Other <10A 8.3% 4.2% 8.3% 12.5% 4.2% 62.5% ehe financial resources eo be persiseene
enough eo realize ehe payoff. Engaging
maeic ehae advisors, knowing full well whae works, neverehe- in any of ehese aceivieies sporadically has, in our experience,
less do noe eap ineo ehe power of ehis opportuniey. proven highly ineffective and a wasee of eime.
While advisors do noe necessarily eake a syseemaeic
approach eo referrals, a majoriey do have a process in place Marketing expenses
eo ehank clienes for referrals. The data shows thae nearly SiO.OOO
half of advisors always place a call or send a ehank-you noee.
$15.000
However, only aboue 14% of firms, even ehose ae ehe eop, $15,000
indicaee ehae ehey follow a formalized referral process.
The mosr imporeane conclusion we draw from ehese $9,000
sioooo
findings isn'e whae we found, bue raeher whae we did noe.
These findings suggest ehae 50% of advisors do nothing in 55.000
response eo a referral. Beyond basic business eeiqueeee, we
cannoe logically explain why half of ehe advisor popeila-
eion would noe have a response eo ehe evene ehae drives ehe Client referrals Professional referrals
majoriey of eheir groweh. Our advice eo advisors is eo focus • lOA • other Advisors
fl.' Qtjantuvis r
on reinforcing referral behavior wiehin eheir cliene base.

110 October 2010 FINANCIAL PLANNING

 THE END RESULT
Have yotir efforts resulted in a masterpiece, a one-hit won-
der or nothing at all? For advisors, an effective measure-
ment system must look at both the revenue generated from
new business activities and how much is invested to gen-
erate that revenue. How much you spend often depends
on how you would categorize your firm and the types of
clients you serve.
Honing in on the comparison between top-performing
firms and their peers, it should be no surpri.se that top-
quartile advisors spend more on business development
than other advisors; as the old saying goes, it takes money
Retum on marketing
S2.00
SI.50
$1.00
SI 00
S050
SOOO
to make money. The median dollars top-quartile advisors
spend are rtmning at three times what other advisors typi-
cally spend. Even during the market downturn, top-quartile
advisors spent considerably more, in absolute terms, than
their counterparts in the remaining quartiles. On avetage,
firms indicated that they invested a median of 2% of rev-
enue in marketing activities with budgets ranging from less
than f % to about 4% of revenue.
Looking beyond the cost of marketing, one should ask
as a whole how much is marketing worth—or what is the
return on marketing (ROM)? As with all investments, you
should demand a clear return.
A simple way to measure your ROM is to compare new
revenue generated to the amount you spend on marketing
each year. ROM is a tangible performance measurement
that will help you evaluate your marketing performance.
Looking at 2008, ROM for top-quartile advisors was
$1.63. That is, for every dollar spent in marketing, $1.63
was generated in new revenue. For the others, ROM is one
to one; for every dollar spent in marketing, $ 1 in new rev-
enue was generated.
The result of spending more on marketing not only
affects ROM, but also affects high-level performance mea-
surements. At the end of the second quarter of 2009, the
median new revenue generated by top-quartile advisory
www. Financial-Plannlng.com
firms was $20,000, twice that of other advisors. At the
same time, they generated a median of four new clients
compared with five for the rest.
In part, this may be attributed to their greater focus on
target clients and a slight preference for systematic mar-
keting. But we must also consider their focus on a wealth
management offering and higher-net-worth clients, as we
learned in out 2009 Business Performance Study.
Keep in mind, we aren't implying that if you throw
money at marketing it will translate into new revenue.
Marketing is less about what advisors do and more about
how they do it.
A WORD OF ADVICE
We have learned that while financial advisors have yet to
focus on systematic marketing, they see it as a key compo-
nent of future growth. The most difficult step is looking
inward and taking the information learned about what
improvements can be made, such as developing a market-
ing plan, and then implementing the changes needed to
drive growth.
This does not have to be a daunting task. We don't
believe, and experience has shown us, that the unduly com-
plex 25-page plan that maps out a mountain of activities
in infinite detail is necessary. Even the simplest marketing
plan or referral program can do wonders for a firm as long
as the plan is consistently executed and accountability is
part of the process.
People often overcomplicate things when it isn't neces-
sary. For instance, my three-year-old son Parker was "inde-
pendently" zipping his hoodie the other day when he cried
out in frustration, "Mommy, it won't work." I kneeled
down and said, "Sweetie, the secret is you have to line this
part of the zipper with this part and pull" and with the wis-
dom of a child he asked, "Why is it a secret?"
It seems that whether from the mouth of babes or the
genius of great composers, the secret behind many things
in life is they can be simple when we focus. To build your
own marketing masterpiece you need the discipline to dis-
till things into a simple plan and, as Bach suggests, hit the
right keys at the right time. S3
Stephanie Bogan is the GEO ofQuantuvis Gonsulting (Steph-
anie@quantuvis.com). Natalie Doss is the firm's research
manager (natalie@quantuvis.com). To learn more about par-
ticipating in the Best Practices Study Series, or to receive a dis-
counted copy ofstudyfindingsand your complimentary online
Marketing Dashboard with customizable benchmark compar-
isons, go to www.quantuvis.com. Use promo code EPOGTIO.
FINANCIAL PLANNING October 2010 111
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