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The.-arPlan You'll N e eTo grow in this new, more treacherous business environment, every planner needsa plan. By Stephanie Bogan and Natalie DossThe seruggle many advisors face is ehae afeernearly a decade of markeeing ehae meane lieele moreehan servicing clienes and waieing for ehe phone eoring, aceive markeeing can seem as dauneing and com -plex as a piano concereo by Johann Sebaseian Bach.M uch l ike ehe difference beeween a seudene whoaspires eo become a greae pianise and a maesero whoheadl ines conceres arou nd ehe world, the differencebeeween 'waneing ' and 'kno wi ng ho w' eo grow arevery differene ehings.

Johann Sebaseian Bach may have been a musicalgenieis, 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. "Ailone has eo do is hie ehe righe keys ae ehe righe eime andehe inserumene plays ieself."A BROADER VIEWWieh 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 sharewieh advisors ehe fundameneal faceors ehae promoeesuccessful business developmene. In doing, we hope eopromoee business praceices ehae drive groweh across eheadvisor communiey.

As wieh our inieial studies in the series, our focuslooks eo eop-quareile advisory firms, based on eoealowner income (al l owner conipen.saeion plus owner-ship reeurns). Whae becomes apparene is ehae geeeingto the eop is less aboue individual business develop-mene eaceics and more aboue having ehe righe seraeegy,laying a serong foundaeion and maine aining a syseem-atic execueion.

BUSINESS DEVELOPMENT LANDSCAPEAleh ough financial advisors repore ehae groweh eieherstopped or declined in 2009, ehey expece noe only eorecover, hue also eo grow significanely over ehe nexeehree years. Seill, ie is a eime for realism .

Advisors dearly recognize ehae groweh in ehe fueurewill require m ore effore ehan ie did in the pase, and ehisseares 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 ehaedemand our ateeneion:

Fail ing to plan. Less ehan one-ehird of advisorsindicare 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 eargeeclienes (eypically assees), firms ehae do noe make ehefirse quareile indicaee ehae only half of eheir clienes fieehe bill . Top-quareile advisor firms are significanelymo re focu sed, wieh 6 8 % of clienes in eheir eargee cli-ene caeegory. T o a lesser exeene, firms are be gin nin g eobroaden eheir eargee cliene definieion eo include clieneneeds an d/ or a ffiliations.

An ad-hoc approach. Many advisors take an ad-hoc approach eo markeeing and communicaeions; onlya few indicaee ehae ehey have syseemaeized eheir busi-ness developmene process.

Inadequate measurement . While ehe abiliey eome asure results is critical to success, a small minoriey ofadvisors have a process in place eo assess ehe success ofeheir markeeing inieiaeives.

Advisors are keenly aware of ehese challenges andunderstand that eheir abiliey eo capiealize on currene

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opportunities is largely an issue of planning and commit-ment. This tmderstanding is shown in strategies that advi-sors identify as having the greatest potential for drivingfuture growth:

1. Have a plan and invest the time and money to executethat plan.2 . Buy growth by acquiring another practice or hiringanother advisor.3 . Leverage existing resources by hiring additional busi-ness developm ent staff.

IT STARTS WITH A PLANMarketing is much more than an activity or event; it isan organized business system that consistently createsand drives growth. An effective marketing plan is the link

Percentage of participants that do or do not have a marketing pian

70%60%50%40 %3 O ' K > 120% 11 0 % 10% '

Source:QuattUYisK.

^ ^ ^ ^ 2 8%

Have a marketing plan I^I^^H^^IHIil^HDo not have a marketing planmm . Other Advisors

between your growth goals for the future and your daily "todo" list. And while a vast majority of advisors accept thatthis is true and believe that creating a plan will drive growth,only 32 % of the best firms have created such a plan.

Composing a plan can, and should, result in changes toMarketin g pian impiementation ievels801.70%60 %50 %40 %30%20 %10%0% M a r k e t i n g p l a nis f u l l yi m p l e m e n t e d

M a r k e t i n g p l a nis m o s t l yi m p l e m e n t e dM a r k e t i n g p l a nis p a r t i a l l yi m p l e m e n t e d

M a r k e t i n g p l a nis n o ti m p l e m e n t e d a t al l

the way you run your business, which requires com mitm enton a level that is still a resistance point for advisors. Of the32 % of advisors with a clear plan, only about half say they

have mostly or fully implemented it. Even among the mostsuccessful firms, only 1 1 % have a fully im plemen ted plan.Failure to market effectively is more about how advisorsimplement a marketing strategy and less about the tacticschosen. Throu gh our work with advisors, we have identifiedthree basic scenarios for marketing implementation: event-driven, cycle-driven and process-driven.Event-driven. For the event-driven advisor, a singleevent happens and the advisor responds. For example, areferral calls, or the advisor is asked to speak at an event.Regardless of the activity, the opportunity arose in isola-tion, driven by an outside source, without any relation to abroader strategy or effort. For these advisors, marketing is

driven largely by intuition instead of intentio n.Cycle-driven. The cycle-driven advisor seems to representa good number of today's practicing advisors. These advisorsare focused on business development, albeit sporadically. Theresult is that the advisor engages in series of silo-style events,which are not connected by a cohesive strategy. For example,an advisor decides to host an event or have lunch with centersof infiuence. Th is is generally done for intense, but relativelybrief periods, and then repeated as needed. Th en, on e of twothings happens: A burst of activity generates new business,occupying the advisor's time, preventing him or her fromcontinuing marketing, or the results are not immediate andthe advisor stops engaging in marketing.

Both of the above models fall prey to a yo-yo effecttheups and downs in new business activity that are derivedfrom the sporadic attention paid to it.Process-driven. By contract the process-driven advisordevelops and consistently implements a marketing plan

the true definition of marketing. In particular, a good mar-keting plan is predictable and built on a series of simple,consistently implemented activities. It elevates your posi-tion, enhances your repu tation and expands your client baseover time.Some of the most established advisors lack a systematicmarketing plan. One reason is many are pturai rainmakersand therefore, until recently, they simply did not deem itnecessary to develop one. This attitude creates an inherentrisk. Simply put, when it comes to business development,it is clear that most businesses strongly rely on the firm'sprincipals to act as rainmakers, with more than half of firmsentirely dependent on the principal to attract new business.This founder dependency ultimately hinders growth andcreates succession risk.As the current advisor population ages and we look to

younger advisors to take the reins, we may find that a motestructured approach to growth is required. Further, the abil-

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IN PRACTICEBUILDING A SIMPLE,SMART MARKETING PLANThe most comm on m isconception about m arketingis that it is a thingan event, a catchy jingle, a flashywebsite. While these are all marke ting activities, theyare not m arketing at its corea systematic businessprocess for cultivating new business.What's the key to a good marketing plan? It shouldbe simple, systematic and sustainable. In fact, a goodplan is not sexy and does not sizzle. The more boringreality is that m arketing is a carefully crafted exerciseconsisting of three basic elements:1 . Simple. Effective marketing does not have to becomplicated or flashy. If you're focusing on profes-sional referrals, a simple plan might be to developmonthly value-added com munications and weeklylunch meetings with your referral sources or pro-spective referral sources.2. Systematic. Many advisors fall victim to yo-yomarketing, but this approach does not sustain consis-tent and long-term g row th. Developing a simple andsystematic plan is a key driver for building sustainableand scalable growth.3. Sustainable. This feeds from both the simple andthe systematic. Often flashy and complicated market-ing ideas are not sustainable in the long-term. Theresimply aren't enough hours in a day to complete87 marke ting activities, run a business and manageclients. Creating a simple plan that you can implementwith reasonable frequency (and time commitment) ismuch more sustainable.In short, effective marketing is focused on maximizingyour marketing reach and resources. No catchy jinglesrequired.S.B.

ity to d emo nstrate a clear and consistent m arketing process,which is not linked to the individual skills of any one per-son, will have a positive impact on both the growth andlong-term value of the firm.FINDING YOUR AUDIENCEEven with every note in place, a masterpiece is nothingwith out the right audience. Just as different styles of musicare appropriate for difference audiences, the developmentof a marketing plan and its activities can and should differfrom firm to firm, based on the target audience or targetclient profile.In our research, we sought to understand if and how

advisors have defined their target client and the extent towhich they use that definition as part of their marketing andclient acceptance process. More specifically, a target clientprofile defines the characteristics of the clients with whomyou workor the deal-breakers in your decision to workwith 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, theredoes 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 andotherS. Client size dominated, with about three quartersFactors used in defining a targe t ciient p rofile

100%

60%

40%

20%

of advisors using investable assets as the primary meansby which they defined a target client. About half used networth and just less than half used age (which would driveclient needs). There are wide ranges of factors utilized toa greater or lesser degree. As a rule, client size dominatesbecause clients who fall below a certain threshold becomeunprofitable; this is often a deal-breaker. However, clientneeds and affiliationscan be critical driv-ers of efficiencyandgrowthin a business,allowing an advisor tofocus his or her effortsand build a businessarotind the needs of aclearly defined groupof clients.

I argeting a specificniche or using a spe-

Percentage of active cilents whomeet th e target ciient portfoiio

68%

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cific factor may not drive firms into the top-qu artile advisorcategory, but data suggests it is a contributing factor, with6 8 % of top-qu artile advisors having a defined client profilecompared with only half for the remainder of the advisorpopulation. We do believeand the data suggeststhatwhat you choose is less important than if you choose totarget your clients. Simply put, those firms with a higherpercentage of clients in their target group tend to be consid-erably more profitable.

Even with target clients and niche marketing becomingindustry buzzwords, many advisors actively accept clientswho do not meet their client profile. While there are manyvalid reasons to accept clients who do not meet the targetclient profile, our experience has been that advisors oftenrely too much on the exception. The net result is a clientbase built on the exception and not the rule, leading to adrain on profitability and scalable growth.

Factors used In defining a target ciient profiie

Client re fe rra ls P rofessional re ferra ls ;,.' Other Adv isors

THE CONDUCTOR OF GROWTHDeveloping a plan and focusing on an audience are keycomponents of sustainable marketing, but what are thecomp onents and activities that drive growth? While no on etactic is a universal silver bullet, referrals do come close.Top -qua rtile advisors indicated that 6 0% of new busi-

Most o t Some o fReierral Follow Up Quar t i l e A lways th e t i m e th e t ime Rarely N everPlace a t hank y ouphone cal lSend a t hank-younote or le t terSend a thank-you g i f tInvolve referral sourceon ongoing basisNot i fy referral sourceof result of referralFol low formal izedreferral process

IQ A< 1Q A1 A

< 1 0 A1 0 A

< 1 0 A1 0 A< 1 Q AlO A< 1 0 A1 0 A< 1 QA

4 7 5 %4 2 , 0 %5 4 . 2 %4 0 . 8 %10,2%10,3%13,6%9,8%

35,6%36, 8%13,6%9.8%

15,3%20,7%15,3%26, 4%5 , 1 %

12,6%28, 8%23. 0%2 7 , 1 %3 1 , 6 %20. 3%16.7%

15,3%21,8%

20, 3%18,4%28, 8%23, 0%32,2%33,3%20, 3%17,2%13.6%23. 0%

16,9%9,8%6,8%9,2%

28, 8%27,6%13,6%22,4%10.2%8,6%

2 3 . 7 %2 1 . 3 %

5 , 1 %5 , 7 %3 , 4 %5,2%

2 7 , 1 %26, 4%11.9%11.5%6,8%5,7%

28. 8%29. 3%

I N P R A C T I C E -REINFORCING REFERRALSThe key to d r i v ing inc reased re fe rra l ac t i v i t y i s t o un -d e r s tand t h e b eh av io r y ou a r e p r om o t ing and r ew a r dit. If you w ant a re fe r ra l source to c on t inue to re fe rc l ien ts , and t he r igh t ones, send ing a t hank -y ou cardor g i ft on ly fo r re fe rra ls w ho becom e c l ien ts may no tp rov ide en ough incen t i ve . Ins tead, ou r exper ience te l lsus tha t a s imp le p rocess tha t recogn izes and rew ardst h e r e f e rr a l b eh av io r and no t t h e ou t c om e is m o r eef fec t ive a t inc reas ing no t on ly t he quant i ty , bu t a lsothe qua l i ty o f re fe r ra ls , and p rov ides y ou w i t h t he op -por t un i t y t o t each re fe r ra l sources what c l ien ts you doy ou r b es t w o r k w i t h .Our b roader p rocess , inc lud ing a p rocess ta i lo redspec i fi ca ll y t o c en ters o f in fluence and in -de p th t ra in -in g a ro u n d w h y a n d h o w t o m a k e th e s e s y s te m s w o r k ,is be ing deve loped in to an on l ine too l tha t w i l l belaunched la te r t h is year . In t he in te r im , here 's a s imp let h r ee -s tep p r oc ess y ou c an u s e w i t h c l i en ts :1. When a re fe r ra l i s rece ived , imm ed ia te ly cal l , s end ano t e and /o r g i f t to s ay th a t y ou w e r e t ou c h e d b y t h e i rcon f idence (a thank you) ,2 . A s th e p r os p ec t g oes th r ou g h y ou r p r os p ec t ingprocess , up da te you r re fe r ra l sou rce a t leas t once tol e t h im o r h e r k now h ow i t's g o ing3 . Once t he p rosp ec t has m ade a dec is ion, regard lesso f t he o u t com e, ca ll you r re fe r ra l source aga in to saythank y ou fo r t he re fe r ra l.By c rea t ing a m u l t i s tep p rocess t ha t spans t he re fe rra ll if e t im e, you a re invo lv ing and t hus inves t ing t he re fe r -ra l source in t he re fe r ra l , m ak ing h im or her f ee l m orev a l u ed and im p o r tan t .

ness came from client referrals and although that numberdrop ped to 50% for other advisors, it is still the sourceof the majority of new business. Although not as great acontributor to new business, professional referrals represent20% and 10% of new business for top-quartile advisors andother advisors, respectively.

With few advisors implementing a systematic marketingplan and an industry that has historically focused on wordof mouth, it is not surprising to see referrals comprising themajority of growth for advisors. Surprisingly, even as thesingle biggest driver of new business, the process by whichthey are generated is not highly systematized for m any advi-sorsonly about 2 0% of advisors ask for referrals routinely.The apparent discomfort of asking for referrals is so dra-

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E f f e c t i v e n e s s of E x t r e m e l y H i g h l y M i ld l y Not D o e sM a r k e t H A c t i v i t ie s O u a r t l le e f f e c t i v e e f f e c t i v e e f f e c t i v e e f f e c t i v e e f f e c t i v e n o t a p p l yP a s s i v e r e f e r r a l s lOAf r o m e x i s t in g c l ie n t s

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THE END RESULTHave 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 fromnew business activities and how much is invested to gen-erate that revenue. How much you spend often dependson how you would categorize your firm and the types ofclients you serve.

Honing in on the comparison between top-performingfirms and their peers, it should be no surpri.se that top-quartile advisors spend more on business developmentthan other advisors; as the old saying goes, it takes moneyRetum on marketingS 2 . 0 0

S I . 5 0

S I 0 0

S 0 5 0

S O O O

$ 1 . 0 0

to make money. The median dollars top-quartile advisorsspend are rtmning at three times what other advisors typi-cally spend. Even during the m arket down turn, top-quartileadvisors spent considerably more, in absolute terms, thantheir 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 lessthan f % to about 4 % of revenue.

Looking beyond the cost of marketing, one should askas a whole how much is marketing worthor what is thereturn on marketing (ROM)? As with all investments, youshould demand a clear return.A simple way to measure your R OM is to compare newrevenue generated to the amount you spend on marketingeach year. ROM is a tangible performance measurementthat will help you evaluate your marketing performance.Looking at 200 8, ROM for top-quartile advisors was$1.63. That is, for every dollar spent in marketing, $1.63was generated in new revenue. For the others, RO M is oneto one; for every dollar spent in marketing, $ 1 in new rev-enue was generated.The result of spending more on marketing not onlyaffects ROM, but also affects high-level performance mea-surements. At the end of the second quarter of 2009, themedian new revenue generated by top-quartile advisory

firms was $20,000, twice that of other advisors. At thesame time, they generated a median of four new clientscompared with five for the rest.In part, this may be attributed to their greater focus ontarget clients and a slight preference for systematic mar-keting. But we must also consider their focus on a wealthmanagement offering and higher-net-worth clients, as welearned in out 2009 Business Performance Study.Keep in mind, we aren't implying that if you throwmoney at marketing it will translate into new revenue.Marketing is less about what advisors do and more abouthow they do it.

A WORD OF ADVICEWe have learned that while financial advisors have yet tofocus on systematic mark eting, they see it as a key com po-nent of future growth. The most difficult step is lookinginward and taking the information learned about whatimprovements can be made, such as developing a market-ing plan, and then implementing the changes needed todrive growth.This does not have to be a daunting task. We don'tbelieve, and experience has shown us, that the unduly com-plex 25-page plan that maps out a mountain of activitiesin infinite detail is necessary. Even the simplest marketing

plan or referral program can do wonders for a firm as longas the plan is consistently executed and accountability ispart 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 criedout in frustration, "Mommy, it won't work." I kneeleddown and said, "Sweetie, the secret is you have to line thispart of th e zipper with this part and p ull" 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 thingsin life is they can be simple when we focus. To build yourown marketing masterpiece you need the discipline to dis-till things into a simple plan and, as Bach suggests, hit theright keys at the right time. S3Stephanie Bogan i s the G E O ofQuantuvis Gonsulting (Stepanie@ quan tuvis.com). Natalie Doss is the firm's researchmanager (natalie@quantuvis.com). T o learn more aboutticipating in t h e Best Practices Study Series, o r t o receive a counted copy of study indingsand your complimentary onlinMarketing Dashboard with customizable benchmark compisons, g o to www .quantuvis.com. Use promo code EPOGTI

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