1. business and industrial
2. advertising and marketing
3. marketing

practice management
Brick by Brick
How to implement an active
marketing program that works
By Rudy Adolf and Rajini Kodialam
M
ost registered investment
advisors find new clients the old-fashioned
way: referrals from satisfied customers. Word-of-mouth referrals have always
worked well in this business, since would-be
clients commonly ask friends, family, or colleagues for advice,
and will likely act on a glowing recommendation. It’s a tried-andtrue approach and yes, still effective. However, from a marketing
perspective, it’s a passive way to develop your business.
In recent years, industry leaders have begun implementing active marketing strategies to complement the traditional
word-of-mouth model. The active model is becoming vital, and
RIA firms that can develop targeted and efficient marketing
programs will enjoy an enormous competitive advantage in the
years to come.
Consider the big picture: U.S. investable household assets
have tripled in the last 25 years to $23 trillion, and the retirement needs of baby boomers will drive the continued growth of
professionally managed assets. The lion’s share of those assets
are going to RIAs, who have historically outpaced all other
channels in asset growth. As an industry, we’ve enjoyed a 24%
compound annual growth rate (CAGR) in assets under management, with a 20% CAGR projected over the next five years,
according to the 2007 Moss Adams Fast Forward: The Advisor
of the Future report conducted for Pershing Advisor Solutions.
With that kind of growth, you might be thinking, “Why go to
all the trouble of developing a complicated marketing plan?
Why not just sit back and wait for the referrals to roll in?”
Part one of a three part series using best practices of successful firms
to inform the ways that firms can grow in the future. This month, we
explain how to develop an effective marketing plan; next month, we
explore how to deliver exceptional service; in November, we will describe
how to keep growing through all the stages in an RIA firm’s lifecycle.
The answer is that we all need to develop new strategies to
stay competitive. While the entire industry has enjoyed healthy
growth, the top 10% of RIA firms—the growth leaders—
regularly surpass the industry average, and they do it in part
through active marketing, the same Moss Adams report found.
These are firms that acquire clients through the strategic and
tactical use of marketing: identifying their strengths, knowing
their target audience, creating a message that speaks to that
audience, and devising a multi-channel approach for delivering
their message. Among these firms are many that have joined the
Focus Financial Network; we will base many of our suggestions
below on the real-world experiences of these firms.
Don’t Get Left Behind
The competition in the wealth management industry is
increasing as RIAs, most of them independent, have grown more
than 47% in the last two years, according to a 2007 Cerulli report
on RIAs, Evaluating Opportunities in a Maturing Marketplace.
The firms that rely on the old passive word-of-mouth model
of business development risk getting left behind. The winners
of this competition will be advisory firms that find new and
creative ways to identify, attract and serve profitable clients. To be an industry leader—or to simply remain competitive
in an increasingly crowded marketplace—now is the time to
develop a marketing plan. Marketing plans don’t have to be
elaborate, time-consuming, or expensive. It’s not rocket science either. It’s simply effective and sustainable techniques
that have been time tested in other industries with similar
client segments and can be balanced with the many demands
of running your firm. Besides, investing in a down market
means you’ll be positioned to reap the benefits of an upswing.
Know Your Strengths
The first step is to assess your strengths and your failings: What do you do well? What are your weaknesses? The
foundation for growth rests on excellent client service, high
customer satisfaction, and strong client retention. Knowing
the strengths and addressing the weaknesses of your company
solidifies a foundation for a successful active marketing plan. The best way to measure your performance is to conduct a
client satisfaction survey which can be outsourced to a professional firm at a fairly low cost. You just need to make sure you
have an updated client e-mail list so the survey can be conducted electronically. Encourage clients to complete the survey
over a two-to-four-week period. The survey would include
questions such as:
• Why did you join the firm?
• How satisfied are you with the firm?
• Are you more likely to maintain, increase, or decrease the assets you have with the firm over the next 12 months?
96 ­| Investment Advisor september 2008 | www.investmentadvisor.com
• How satisfied are you with the level of service provided by
your advisor?
• How satisfied are you with the performance of your financial
plan? Do you believe that plan will allow you to meet your longterm goals?
• Would you recommend our company to a friend or colleague?
These questions will help to measure your core strengths and
overall effectiveness. Ask clients to provide names at the end of
the survey so you can follow up with them if they are dissatisfied
in any way and to ask them for referrals. Make it optional so they
remain comfortable with providing honest feedback. The survey
information provides you with a real-world-based “unique value
proposition,” i.e., the reason prospective clients should choose
you over another financial advisor.
Perhaps the most important question for you right now is
the final one in the list above: “How likely is it that you would
recommend our company to a friend or colleague?” This is the
question that will help identify a prioritized list of clients (“net
promoters”) most likely to refer someone in the near term.
These are the people who will be of greatest value to you as
you move through the steps of developing a new active marketing plan.
Set Specific Goals
Now ask yourself what you’re trying to achieve. Your answers
should go beyond generalities and include specific growth objectives tailored to your strategic and financial business goals.
The advisory firm of HoyleCohen in San Diego set a goal of
becoming the city’s premier wealth management firm with $1 billion in assets under management within five years. If you’re a firm
that targets high-net-worth clients and your advisors typically
bring in two or three new clients each year, set a target for your
advisors to bring in four or five new clients, then stick to a minimum asset threshold to ensure they’re the kind of clients you want.
Goals can inspire tremendous excitement and motivation
within an organization. Dream big, but be realistic about
your targets. A goal of $1 billion in AUM is a great motivator, but it must also be attainable. It’s important to involve
the entire organization in determining your goals, and to
regularly remind staffers of the goal while rewarding them
for incremental progress toward achieving those targets.
Know Your Audience
Your goals will help determine who you want to attract. A profitability analysis of your current client base will help identify the most
profitable target segment for your practice. Your ideal clients aren’t
necessarily the ones with the most assets (though assets never hurt).
Rather, your best clients are those who can benefit most from your
special skills or approach; these clients are also usually the most
profitable. Your active marketing plan will help those prospective
clients understand what your business can do for them.
Define your target segment using demographic and psychographic descriptions: keep it simple because you have to be able
to explain this segment to your clients so they can, in turn, think
of ideal referrals.
The Common Characteristics
of a Niche
Targeting a specific niche is a tried-and-true approach
to getting good clients. But what exactly is a niche, and how
do you serve it well? A niche is a subset of your ideal customer model that has distinct needs and characteristics, but is
sizeable enough to be attractive on its own. You may need to
fine-tune your customer experience, product set, or collateral
to speak more directly to these people, but if they’re a good
fit with your strengths and expertise they can turbo-charge
your active-marketing efforts. For instance, the California
wealth management firm HoyleCohen, because of its experience and insights into the needs and challenges of health
professionals, chose to target San Diego healthcare professionals as a client niche because of the local concentration of
physicians and Scripps Institute employees.
Determine the areas where your core skill set is differentiated from the competition and where there are suitable market
opportunities to grow. If you’re missing key products or need to
reconfigure your service experience, tackle these areas first. You
may also have existing clients who don’t fit your new target audience, such as lower-profit clients who take up a disproportionate amount of your time (see following article). You may need to
deploy new models of servicing those clients. One way to handle
this is to adopt a team approach to handling clients with the goal
of creating capacity within your firm to best attract and service
your “ideal” customers. If you’ve pinned your growth on the
top-tier clients, you need to deliver on your promises to them.
Bob Kresek, a former Hewlett-Packard executive, began
Founders Financial Network in Cupertino, California, after
having difficulty locating good wealth management advice for
himself. He and his advisors have a very clear “ideal” client—
Silicon Valley entrepreneurs who have recently had a significant
increase in personal wealth, primarily from company stock
or options. (Kresek’s experience is also a reminder that investors disillusioned with the financial guidance they’ve received
from advisors at major financial institutions represent a growth
opportunity.)
You can also target a particular market niche to help you
develop those top-tier customers. Once again, make your niche
strategy goal-oriented. Set specific goals for number of new
clients obtained and amount of their assets under management.
Remember to track cost per million in acquired assets and profitability per client to help you track the growth of this particular
subset of valued customers. Assign a team leader to oversee the
development of this market, ideally one who has served and
already understands this niche. There are at least two other
steps you should take to focus your marketing efforts:
Sharpen Your Message. A lot of firms in this industry look
and sound alike—think about all the brochures you’ve seen that
highlight a firm’s expertise in working with affluent clients so
they can enjoy a secure and fulfilling retirement. You need to
98 ­| Investment Advisor september 2008 | www.investmentadvisor.com
set yourself apart with a message that’s crystal clear and aimed
directly at your target audience. Your firm’s marketing message
should say, unequivocally, “Here’s what we do. Here’s what makes
us different. Here’s why we’re the absolute best choice for you.”
Founders has a crisp, clear introductory message: “Founders
Financial Network is a financial planning and wealth management firm dedicated to growing assets and achieving lasting
value for Silicon Valley executives and entrepreneurs who have
experienced a significant increase in personal wealth.”
Be Consistent. Update your collateral so that every channel
reflects your market positioning—brochures, Web sites, newsletters, statements, video, and media sound bites.
An Active Referral Plan
You know your strengths, you know your audience,
and you have a message ready to go. What’s next?
This is an ideal moment to revisit that trusty business development
tool, the customer referral—except you aren’t just waiting for referrals
to come to you. There’s a lot you can do to transform the referral
process from passive to active and provide a solid foundation for your
new marketing plan. Following are some strategies that work.
Just ask: According to Cerulli Associates, nearly 50% of new
clients come from referrals. By effectively facilitating your referrals,
you can expect to grow your practice by an incremental 7%-8%
annually. Yet a recent survey for Janus Labs, conducted by Prince
& Associates, found that only about one in ten advisors actually ask
for referrals. Sure, it can be awkward to ask clients for referrals, but
the results are well worth the effort. Ask as part of your regular or
annual meetings with clients. You should especially target your “net
promoters”; set up meetings with them early in the process, and
cultivate them as your front-line resource for referrals.
Educate your clients: Share with clients your growth strategy, aspirations, and ideal-client model. Ask them for names of
friends, family, and business associates who fit your target audience. Some clients might be reluctant to provide such names at
that moment; so don’t push them. Instead, give them opportunities to mention you to their friends themselves.
Keep clients in the loop: Share what you learned in your
client satisfaction survey in a note to clients highlighting
your strengths, as well as noting areas where you are making improvements. Mention that you are particularly proud
that they are willing to refer you. Keep clients updated on
your progress, and thank them with a call, a letter, or a small
gift. Use every “thank you” from a satisfied customer as an
opportunity to share your firm’s aspirations. “Don’t send me
a basket of fruit,” you can tell them, “send me a referral.” Just
be sure to work closely with your legal and compliance people
to make sure you fully understand all relevant privacy and
fiduciary standards when communicating with clients. Benefit
Funding Services Group, a retirement plan consulting firm
in Irvine, California, trained all of its consultants to conduct
a follow-up conversation with every client after the survey to
discuss opportunities in greater detail—and the strong survey
results helped develop consultants’ confidence when seeking
referrals.
Business Development Ex Referrals
In addition to turbo-charging referrals by actively soliciting
them, there are a number of other tactics you can strategically
deploy to attract more prospects to your firm.
Hold events: Set up a series of events—of a financial
education nature or just social—and invite clients to bring a
guest. StrategicPoint Investment Advisors in Providence, Rhode
Island, has hosted events featuring a consultant who talks about
strategies to help clients’ children get into top universities.
That’s a topic of great interest to many current and prospective
clients, and one that resulted in new business for the firm. If
your clients sit on philanthropic or corporate boards, arrange
to make a presentation to the board. GW & Wade of Wellesley,
Massachussetts, generated many new clients by presenting to
their clients’ fellow board members.
Create a client advisory board: Ask a group of clients to talk
to you a couple of times a year about what you can do better.
Clients willing to spend time on your board, and who see you are
committed to listening to their suggestions, will be your strongest
advocates.
Do some PR: Work with a public relations firm, or reach out
to local media yourself to make sure they’re aware of your firm and
your position in the market, and that you’re available as an expert
source in stories about money and investing. Be sure to communicate milestones such as new hires or assets under management.
Push the newsletter: Encourage clients to forward your
newsletter to friends, and offer to add non-clients to your mail
and e-mail lists. It’s the best way to help prospective clients
“try before they buy” your services. Dion Money Management
in Williamstown, Massachusetts, has a strong newsletter subscriber base and it scored by producing a series of informative
investing Webcasts aimed at tech-savvy clients and prospects.
Recipients forwarded the Webcast links to friends and associates, resulting in a surge of new clients for the firm.
Keep track of client networks: Above all, set up a system
to track your client-prospect networks, and be religious about
keeping that information up-to-date. Set realistic but ambitious
goals for increasing monthly, quarterly, and annual referrals.
Follow through on each and every interaction. When you get a
referral, act on it. And don’t forget to thank your clients appropriately for each and every referral.
The old model of dispensing wisdom and waiting for the referrals to appear isn’t enough in today’s market. There is still plenty
of low-hanging fruit well within your reach, but these days there
are many more hands waiting to harvest it. You may want to
consult a marketing expert to help you define a strategy that suits
your firm’s resources, goals, experience, and expertise. Regardless
of whether you go it alone or hire outside help, a well-conceived
marketing plan will help you get your share—and then some—of
IA
the enormous opportunities that exist in our industry.
Ruediger (Rudy) Adolf is founder and CEO of Focus Financial Partners, a leading
international partnership of independent, fiduciary wealth management firms. He
can be reached at [email protected]. Rajini Kodialam is a co-founder and senior
VP of practice management at Focus. She can be reached at [email protected].
100 ­| Investment Advisor september 2008 | www.investmentadvisor.com
This is part two of a three-part
series using actual best practices of successful firms to suggest
the best ways for firms to grow
in the future. This month, we
provide practical ways to provide
excellent client service. Part
one explored how to develop
an effective marketing plan;
part three will describe how to
maintain growth through all the
stages in an RIA firm’s lifecycle.
Gold
Medal
How to deliver exceptional service throughout the client lifecycle
A
Illustration: Michael Morgenstern
By Rajini Kodialam and Rudy Adolf
s a registered investment
advisor (RIA), you are in the business of
serving your clients’ financial needs—and
it’s no exaggeration to say that the quality
of the service you provide will go a long
way toward determining your firm’s
success. Clients expect the basics
to be executed flawlessly: every
telephone call and e-mail returned
promptly, high-quality advice and expertise provided regularly, ongoing meticulous record-keeping and organization, frank admission of
rare mistakes, as well as being treated with courtesy and respect.
These fundamentals are essential but insufficient; exemplary
advisors go well beyond the basics to deliver a level of service
that consistently surprises and delights. In today’s competitive
market, it’s worth asking yourself whether you are doing everything you can to exceed your clients’ expectations.
Industry research regularly finds that RIAs in general do a better job of satisfying client needs than wirehouses, banks, or
other financial institutions. The McKinsey report, Winning the
Retirement Race: Consumer Retirement Survey 2007, found that
consumers are most satisfied with independent advisors, and that
independent advisors more successfully engage, serve, and retain
clients because they give consumers what they want—an advisor
96 ­| Investment Advisor xxx 2008 | InvestmentAdvisor.com
who is responsive and timely, who provides comprehensive services with objectivity and simplicity, while transparently disclosing the fees for those services.
This should not give independent advisors license to pat themselves on the back and call it a day. The competition for investor
assets is real, and there are RIAs with service efforts that are especially
effective and personal. These advisors enjoy superlative client retention rates and a strong pipeline of new assets and clients, regardless of
market conditions. What makes these advisors exceptional?
In April 2008, Focus Financial Partners tried to find out. Our
internal investor satisfaction survey across our partner firms
revealed that more than 90% of clients rate their advisors overall
as “very satisfactory.” To find out what differentiates the standouts, we conducted in-depth interviews with several elite advisors and their clients about their client service methods. These
conversations revealed that an institutionalized commitment to
personal and high-touch service practices is what enables these
advisors and their firms to delight their clients at every turn.
Different phases in the client relationship call for different
approaches to service: a new client requires services and attention
that are distinct from one who has been with you for decades; clients
going through major life changes have very specific needs related to
that change. The advisors with whom we spoke elaborated on the
ways they address the needs of their clients at each stage.
october 2008 Investment Advisor ­| 96
Stage 1: Early Engagement
Another Benefit
Clients chose a new advisor usually because they are not satisfied with the service they have received elsewhere, or because
they feel they can no longer do this themselves and it is time
for their assets to be managed by a professional. Getting the
relationship off to the right start with truly exceptional customer
service tactics from the outset will set you apart from your peers.
Consider the following to “wow” new clients:
Get on the same page. It sounds obvious, but make sure you
and your clients are compatible. After all, exceptional service
won’t mean much to a client who fundamentally disagrees with
your philosophy on investing. Bert Schweizer of Buckingham
Asset Management in St. Louis says his firm spells out the
Buckingham philosophy and approach plainly at the first client
meeting, “We’re believers in market efficiency and use passively
managed mutual funds,” he says. “If someone wants an advisor
who’ll trade stocks, we’re not for them.”
Ron Lara of Lara, Shull & May, in Falls Church, Virginia, and
Frisco, Colorado, works with new clients to craft an explicit vision
statement. “A client might say, ‘I want to purchase a second home,
have $15,000 a month in spending money in retirement, and set up
a foundation for my children to manage,’” he says. Recording client
goals at the outset helps to define appropriate financial strategies,
and provides a benchmark for gauging future progress.
Founders Financial Network in Cupertino, California, works
with several Silicon Valley executives who have come into wealth as
the result of a company sale or IPO. Advisor Bob Kresek starts by
helping them determine how much wealth they will have to invest,
and helping them define their needs today as well as in the future.
Make a quick and easy transfer. Clients may come to you
after realizing that they don’t have the time, expertise, or inclination to manage their money effectively. Perhaps they have
just terminated a relationship with a broker who recommended
Getting a number of members of your team to be
engaged with clients in the early phase of their relationship with
your firm helps the new clients to appreciate the resources your
firm can apply to their issues, and gets clients used to the notion
that you’re not the only person who can help them with their
advice needs. There’s another benefit, however, that may not
be so obvious but is just as important: It is also the best way to
develop the next generation of talent.
The senior principals at the firm of GW & Wade in Wellesley,
Massachusetts and Silicon Valley, California, take this very seriously—junior advisors at the firm shadow senior advisors for one
year to learn how to respond to a full range of client interactions
and situations. At Buckingham Asset Management, based in St.
Louis, associates lead a portion of the client meeting, and receive
feedback from their supervisors afterward.
Know Your Client
When it comes to providing world-class customer service,
longevity can help you understand what individual clients need.
For instance, as client relationships develop, you will understand
how much financial discipline, structure, and prompting particular clients might need from you. “My advisor keeps after me to
get things done,” says a client of Founders Financial Network
in Cupertino, California. “I like knowing that he will provide the
discipline I need to accomplish my financial goals.”
trades or investments that were not in the client’s interests.
They might have come into newfound wealth. Whatever brings
them to you, new clients are likely to have messy finances.
It’s important to get their financial house in order quickly
while beginning to establish trust and rapport. The new advisor
should transfer as much of the client’s assets as possible to their
management as soon as possible so that they can get a snapshot
of the client’s financial picture, which is essential to coming up
with a plan that suits that client’s needs. As many advisors know,
however, this is often easier said than done.
The asset transfer is often a paperwork-intensive and tedious process that can present a challenge to a new client relationship. Advisors
with whom we spoke stressed the importance of making this transition as easy and painless as possible. Tim Pinch at GW & Wade in
Wellesley, Massachusetts, and Silicon Valley, California, sends his
associates to new clients’ houses to assist in finding the appropriate
documents, if needed. His team organizes paperwork carefully to
minimize the time and attention clients must devote to it.
Put out fires. With the transfer complete, look to identify
and address immediate concerns. Such problem areas frequently
involve inappropriate or outdated estate or tax planning. Common
discoveries—such as finding ex-spouses still listed as the primary
beneficiary on IRAs, or uncovering an opportunity to file an 83(b)
election to save on future taxes—can be resolved quickly and have
multiple benefits, not least of which is establishing trust in your
expertise and your focus on the client’s needs.
Get familiar with each other. Successful advisors meet
frequently with new clients. Regular meetings early in the relationship allow the advisor to reshape the client’s finances, while
familiarizing the client with the advisor’s methods, reports and
other elements of their practice. Tim Pinch schedules the first
few meetings with new clients at short intervals—four to six
meetings in two to three week intervals—and supplements those
face-to-face meetings with regular phone calls. The frequency
of face-to-face interaction and ongoing telephone dialogue
provides the opportunity to align every aspect of the client’s
financial picture and to build relationships with each member of
the GW & Wade team that will support the client.
Involving the various members of your team during this process
can help familiarize clients with your staff and external partners,
and will help them begin to appreciate the resources you bring to
bear on their behalf. It also allows you the flexibility of not being
“the person” on call for every client question or need.
Make it clear to your clients that your team is there for them
at all times, and explain who will work with them on which
issues. Lara, Shull & May provides new clients with welcome
98 ­| Investment Advisor october 2008 | InvestmentAdvisor.com
packages that include contact information for all team members,
and explanations of each team member’s areas of responsibility.
The process of aligning your philosophy with clients, transferring assets, and addressing immediate concerns through multiple
touch points in the early stages of engagement ultimately results
in a strong foundation for your relationship with the client.
Stage 2: Long-Tenured Clients
The relationship is established, the plan is in place, and everything is running like clockwork. Now is the time to downshift into
a service level that’s defined by quarterly statements and an annual
client meeting, right? After all, by this point, clients surely know
enough to call if they have questions or issues, correct? Wrong!
While contact need not be as frequent with long-term clients as it is
with new arrivals to your practice, established relationships should
not be neglected. Make sure you take these steps:
Meet on their terms. The frequency with which you contact
these clients, and the manner in which you contact them, should
vary based on each client. Advisors with whom we spoke stressed
the need for at least one annual face-to-face meeting at a minimum to review financial plans, changes in the client’s situation,
and progress toward their goals.
Some clients simply will be too busy or may live too far away to
come to your office. In such cases, you can demonstrate your commitment by traveling to them. Although he’s based near Boston, Tim
Pinch travels to San Francisco once a quarter to meet with a client of
17 years. “Tim has come out just to meet with me on occasion, when
there has been a specific need,” says the client. “It means a lot to me
that he is willing to make that effort.”
Most RIAs provide quarterly newsletters to supplement statements. Providing exceptional service requires taking these standard
steps to another level. Your understanding of your clients should tell
you which of them need or want contact from you more regularly.
Pinch appends personalized notes to the newsletter for some clients
to explain how the big picture in the financial markets affects them.
He also calls some clients the day after he sends out their quarterly
statements to offer reassurance or to answer any questions.
Meet their needs—not someone else’s. Each client is different, so each client’s plan should reflect his or her unique situation. This attention to the individual is a hallmark of optimal
service. “My advisor didn’t push a one-size-fits-all plan on me,”
says one client. “He tailored it to me, and he gives me additional
services whenever I need them. He makes strong recommendations—but I always make the final decisions. Working hard at
my job made me rich, but my advisor helps keep me rich.”
Incorporate the family. Ron Lara offers to hold family meetings for his clients. “Family meetings are fantastic for helping the
whole family stay informed about important issues, and they give
children the peace of mind that their parents’ financial affairs are in
order,” he says. Lara notes that the vast majority of clients’ children
remain with his practice after the parents pass on.
Show your appreciation. Tokens of appreciation go a long way
in solidifying any relationship. When clients provide multiple referrals, GW & Wade sends them to dinner at a favorite restaurant,
or gives them tickets to an event they’ll enjoy. Buckingham Asset
It’s Not Always About Money
Helping clients through life’s stages may take many
forms. For example, one long-time client of GW& Wade’s Tim
Pinch consulted him before purchasing real estate in Boston.
On the other end of the spectrum, Rick Anzelone at Strategic
Point in Providence, Rhode Island, fondly recalls being called
by a client for advice on selecting a laptop for his collegebound son. Whether the request is complex or unrelated to
finances, one hallmark of a solid long-term relationship is
when the client knows that his or her advisor will always give
counsel that is in their best interests.
Management gives gifts or makes donations at clients’ birthdays, the
births of grandchildren, and other special events.
Stage 3: Specific Life Events
You know that your team of professionals allows you to serve
multiple client needs, but do your clients are aware of this, too.
Every advisor hopes their clients call them first to plan for predictable developments or for help in reacting to unexpected events.
Exceptional advisors take steps to make sure this actually happens.
Anticipate what you can. Regularly consider the services your
clients can benefit from, and use annual or semi-annual meetings to
present forward-looking recommendations, which may include longterm care insurance, establishing trusts, crafting a business succession
plan, deciding when to sell a primary residence, or choosing where
to buy a second home. The clients with whom we spoke emphasized
that knowing their advisors were actively anticipating and forecasting
for such life changes greatly increased their peace of mind.
React immediately to unforeseen events. Anticipating and
preparing for your clients’ needs encourages them to contact you
when the unexpected happens, be it the sudden death of a spouse, an
illness, or a divorce. At these times, your clients’ finances are likely to
be the last thing on their minds and they will appreciate knowing that
they can leave financial matters in capable, trusted hands. “My clients
want to understand what life will look like after major life events like
divorce, sale of a company, and so on. I help them visualize this,”
says Marty Resnick of Resnick Investment Advisors in Westport,
Connecticut. “I want to be the go-to guy for everything.”
Summing up, providing your clients with exceptional service
encourages them not only to stay with your practice, but to entrust
you with more of their assets. Additional assets in turn provide additional opportunities for you to deliver exceptional service—creating
a virtuous cycle of client retention and growth. What’s more, a high
level of service can help you grow your business, as satisfied existing
clients provide referrals and evangelize on your behalf. “My advisor’s
attentiveness and reliability mean a lot to me,” says one client. “At
this point, I wouldn’t make a financial decision without consulting
him first.”
IA
Ruediger (Rudy) Adolf is founder and CEO of Focus Financial Partners, a leading
international partnership of independent, fiduciary wealth management firms. He
can be reached at [email protected]. Rajini Kodialam is a co-founder and senior VP
of practice management at Focus. She can be reached at [email protected].
100 ­| Investment Advisor october 2008 | InvestmentAdvisor.com
Hitting the
Milestones
I
Make the time to plan for the future;
the results will be well worth the
effort.
By Rajini Kodialam and Rudy Adolf
n life, milestone events—a marriage, the birth of
a child, a round-numbered birthday—prompt us to pause and take stock.
We may ponder the past or dream of the future. We might be inspired
to continue on the path we’ve laid, or to investigate new alternatives.
Whatever action we take, it’s frequently accompanied by a thoughtful
analysis of what we’ve accomplished and what we hope to achieve in the
years to come.
Business milestones provide much the same opportunity, though it’s
easy to overlook them in the bustle of day-to-day operations. Consider the
following scenario: You set out on your own to become a registered investment advisor (RIA). Years go by—and when you look up, you realize that
you’re now running a good-sized firm. You might be preoccupied managing operations rather than—or
in addition to—working directly with clients. Your firm may have expanded into business areas that no
longer fit your mission—or that fit better than your original efforts did. You may have clients who are
concerned about your business succession plans. Perhaps without noticing, you have passed several key
milestones that define your business, and you’re approaching several new ones.
We at Focus Financial Partners have helped many of our partner RIAs plan for and manage these
milestones. The key, we’ve learned, is recognizing that you are entering a new milestone and asking
yourself at each stage some crucial questions to take stock of where you are and where you want to go.
Becoming an RIA
Launching an RIA firm isn’t something smart entrepreneurs approach lightly—and it’s not for everyone. Success in this field requires a unique combination of business skill, financial acuity, comfort with
risk and a passion for client service.
Mike Glor and Roger Wade were attorneys working at Ayco in the early 1980s. They loved
what they did, but their jobs changed dramatically when it was bought by American Express.
(Ayco was bought by Goldman Sachs in 2004.)
In search of a corporate environment that would accommodate their entrepreneurial instincts, Glor and Wade joined another firm. Though they quickly became
dissatisfied with the new company, Glor and Wade gained valuable experience
in marketing to individual clients. The financial acumen they attained at
Ayco, along with their newly acquired marketing expertise, gave them the
confidence to strike out on their own. They founded GW & Wade in
1986, and have achieved considerable success: The firm, which offers
private wealth advisory services in Wellesley, Massachusetts, and
58 ­| Investment Advisor november 2008 | InvestmentAdvisor.com
Palo Alto, California, has more than 50 employees and over $2.7
billion in assets under management.
Bob Kresek, on the other hand, took a very different route.
Bob had an extremely successful career at Hewlett-Packard.
He’d always been interested in the investment advisory business, and his interest was piqued further when he searched for
a qualified advisor to give him advice and wound up dissatisfied with his options. Moreover, he had successfully built other
businesses before, so he felt comfortable with his abilities as an
entrepreneur.
Kresek brought these experiences to bear when he started
Founders Financial Network, which provides wealth management services to Silicon Valley executives. Among the keys to
Kresek’s success were his commitment to seeking education
in the field prior to startup, and a close relationship with a
successful, established RIA who served as his mentor. He also
recognized that he would be making a real commitment to this
company, likely the final venture of his professional career, “I
knew I was making an investment in a business that would serve
Gestation Questions
Before deciding to launch your own RIA ask youself
these three key questions:
■ Are you prepared for the financial challenges and personal
sacrifices you will need to make to start up your own RIA
business?
■ What is your business plan and what are the goals you
would like to achieve in 2 years? What about in 5 years?
■ What areas of expertise would you personally like to focus
on? Do you need education in other areas or do you need to
hire others to fill those roles?
on—but he nonetheless spent the first three years working
“nonstop” to deal with changing technology systems and ensure
that he could produce enough revenue to pay his small staff.
RIAs are likely to face other challenges during their firm’s
first few years as well. If, unlike Glor and Wade, you don’t have
experience in marketing to individual clients, you may need to
“One of the largest challenges for RIAs—as it is for all
entreprenuers—is the sheer time commitment
required to run a young firm.”
clients for years to come, rather than trying to make a quick
buck.”
Others become RIAs after fruitful careers as brokers. This
move may provide the advisor with greater potential profitability, independence and flexibility in serving clients—and, in these
tumultuous times, may also reassure existing clients concerned
about the security of their assets.
Running the Business
Once you’ve decided to become an RIA, you face another significant milestone: getting your firm up and running.
Shepherding your business through this demanding time—and
hiring the staff you need to keep it growing—can be trying.
One of the largest challenges for RIAs—as it is for all
entrepreneurs—is the sheer time commitment required to run
a young firm. That commitment begins with your due diligence
process before you officially launch your advisory firm. While
you may be itching to start working with clients, it is essential
first to create a detailed business plan and investigate your competition. The plan should define your market opportunity, or the
niche you will fill, and it should include financial and staffing
projections for the next several years, a marketing plan and the
concrete steps you must take in order to launch the business.
When CPA Marty Resnick founded Resnick Investment
Advisors in 1990, his market niche was clear: he targeted massaffluent consumers who need advice-based investment services
just as high-net-worth individuals do. His instincts were right
seek out professional marketing advice.
You’ll know you’ve achieved some measure of success when
you find that happy clients are referring friends, family members
and business colleagues to you but, despite your best efforts,
you cannot find a way to absorb additional clients. You might
even find yourself contemplating a vacation—which will raise
the question of who, exactly, will handle clients’ inquiries while
you’re out of town, manage their portfolios and oversee other
aspects of your practice’s day-to-day operations.
Strategic decisions such as expanding your staff require a
clear understanding of your firm’s mission, core clients, and client service model. If your business plan and mission statement
have been gathering dust for the last several years, it’s time to
clean them off. Read them carefully and see what needs to be
updated. Think carefully about your overall business strategy, as
well as the tactics you use to implement it. If your mission has
shifted, determine whether you truly want to follow the mission as it exists on paper. You may be happier with the way the
company mission has evolved informally over time—or you may
decide to redraft your mission entirely, based on what you have
learned during your first years in business. Think about your client service model and, as Moss Adams advocates, you will likely
find that you have to evolve beyond a sole proprietorship to a
mature ensemble.
You don’t need to take all of these steps every time you
replace an administrative assistant. But when you’re contemplating a major move, such as completing a merger or taking on new
60 ­| Investment Advisor november 2008 | InvestmentAdvisor.com
partners, this exercise can provide you with valuable perspective
on your—and your firm’s—best interest.
One way to expand beyond sole proprietorship is to initiate a merger of equals. HoyleCohen, a comprehensive wealth
management firm in San Diego, was founded as two separate
RIA firms. Kevin Hoyle and Joe Cohen have served clients since
1983 and 1980, respectively. When the two began discussing a
merger in June 2001, their individual practices were growing
rapidly. Cohen’s firm was small, with just him and two assistants. Hoyle’s was a bit larger, and in dire need of a day-to-day
manager. It soon became clear that neither firm alone had the
resources to achieve the growth its principal desired—but that
together Hoyle and Cohen might be able to thrive. The merger
was completed in January 2002, with the new firm focusing on
wealth management for southern California families.
Marty Resnick took a different approach. After working for
several years as a sole proprietor, Resnick realized he needed to
add staff. He initially limited new hires to CPAs like himself.
But as his practice grew, Resnick began to see the value in hiring
people with different skill sets. Like many RIAs, Resnick ultimately created client-service teams in order to remove some of
the administrative burden from the investment advisors on his
staff. Today, Resnick Investment Advisors boasts three managing
directors, including Resnick, each of whom is also a partner in
the firm. Resnick and his counterparts allocate responsibilities
in a way that leverages each of their key strengths, with one
of them focused on managing the operations of the office and
existing clients, one dedicated to investment strategy, and one
actively attracting new clients to the firm.
Of course, you always need to make sure that servicing clients
continues to remain your number one commitment. At GW &
Wade, the founders quickly realized that a team approach would
work best for them, allowing client relationships to continue to
grow while training and developing future talent who could help
service clients as well. As one satisfied customer says, “GW &
Transition Questions
Once your RIA is an established enterprise, a new set of
questions needs to be addressed, including:
■ What is your timeframe for retirement and how would you
like to transition out of the business? Would you like to adjust
your hours over time so you can maintain key client relationships that you particularly enjoy? Would you like to continue
helping with the management of the firm?
■ Are existing employees ready to assume key leadership
roles or do they need more coaching and development? Do
they understand the path to partnership?
■ Are clients comfortable discussing their financial needs
with others at the firm? How will you communicate changes
to them over time?
■ How will you extract value from the firm that you have
established over time without burdening the next generation
of leadership?
Self-Examination Questions
Successful advisors don’t end their introspection
once they’ve decided to become an RIA. In fact there are
always more question to ask, such as:
■ What have you achieved in comparison to your original
business plan? What adjustments do you need to make to it
based on your success to date and where you would like to
take the business in the future?
■ What are your new growth targets? Are you prepared to
achieve these goals or do you need to make adjustments,
such as:
■ Altering your client service model
■ Making strategic hires including a Chief Operating Officer
and/or Business Development Officer
■ Growing the business through talent recruitment, mergers,
and/or sub-acquisitions
Wade has grown exponentially since I became a client 17 years
ago. But I still believe I have a plan tailored to my needs and a
team of people I can call if I need to.”
Growing the Business
As your firm matures, you’ll likely see ways to expand its
service offerings. With your business plan as a guide, you can
determine whether particular opportunities are a good fit for
your practice. At this point another significant milestone may be
reached: the acquisition of another company or the launch of a
new business within your own firm.
Consider the example of the Buckingham Family of Financial
Services. Two real estate investors and two CPAs founded the
company, after they recognized that clients had financial planning and investment management needs that their respective
firms could not meet. Just two years after launching the firm
started BAM Advisor Services, a turnkey asset management
provider that helps accountants and other professionals create
their own RIA firms.
BAM cites data from independent research firm CEG
Worldwide showing that while only 17% of CPA partners
offered investment management services, nearly half planned
to offer such services within three years—and every firm that
offered such services planned to keep doing so.
Positioning your company for growth may mean temporarily shrinking it. After Kevin Hoyle and Joe Cohen created
HoyleCohen, they analyzed the combined firm and their products and services to eliminate redundancies. Hoyle and Cohen
eventually sold some less profitable lines of business—boosting
profitability, and allowing them to hire a CFO and an operations
manager.
As the firm sets out to become the premier wealth management firm in San Diego, HoyleCohen has begun attracting likeminded teams to join them. The first to join is CullingtonHill
Advisors LLC, an advisory firm that works closely with highnet-worth women and couples. Elisabeth Cullington joined
62 ­| Investment Advisor november 2008 | InvestmentAdvisor.com
HoyleCohen as a senior wealth advisor, and brought four of her
team members with her.
The deal was a key part of HoyleCohen’s growth strategy—
and it provides benefits to clients as well. “It takes time to
understand how high-net-worth women handle money, what
their insecurities about money are and what they really need
from their money,” says Cullington. “It means giving them not
just financial but also emotional support. Joining HoyleCohen
allows me to spend more of my time doing just that.”
Planning for the Next Generation
HoyleCohen’s sub-acquisition strategy also serves another
purpose. It helps ensure that the firm will exist for generations
to come. Therein lies another crucial milestone for RIAs: establishing a succession plan. “Once you have achieved success as an
RIA, it is crucial to move from building a business to building
a business that will last,” says Mark Tibergien, managing director of Pershing Advisor Solutions in Jersey City, New Jersey.
“Developing the next generation of leadership is paramount to
the continuity of your business and to your clients.”
While business continuity is important in every industry, it’s
especially crucial for RIAs. Your clients want certainty that their
assets would be safe and properly managed if anything were to
happen to you. For HoyleCohen, succession planning meant
bringing on Mark Delfino as chief operating officer. A former
management consultant and hedge fund developer, Delfino
joined HoyleCohen last year specifically to grow the business
and help develop and execute a succession plan, with assistance
from Focus Financial Partners. “Joining Focus was the catalyst
for us to stop just paying lip service to succession planning,” says
Kevin Hoyle.
One of Delfino’s early contributions was to clarify the path
to partnership for junior members of the firm. Some longterm employees were slightly taken aback when they realized
what it would take to become a partner at the firm—but these
changes have resulted in important, beneficial conversations
with employees about what they want from their careers at
HoyleCohen.
The team at Buckingham Asset Management has taken a
similar approach to succession planning, taking time to identify the characteristics they seek in future leaders of the firm.
Buckingham has established additional levels of partnership in
order to build the pipeline for succession. And, like HoyleCohen,
the firm has clarified the path to partnership.
Joining Focus Financial Partners was a catalyst for succession
planning at GW & Wade, just as it was at HoyleCohen. With
the help of Focus, GW & Wade’s founders created a financial
infrastructure that provides opportunities for younger employees to buy into the firm’s management. “Our previous model
didn’t give employees the chance to buy a significant portion
of equity,” says Glor. “Now we’ve got younger people in management, which provides peace of mind for our clients—and
ourselves.”
Whether you’re looking for peace of mind or just a better
handle on your business, focused attention to the milestones
you’ve reached—and those you still hope to achieve—can create
powerful results. Take time to assess where your firm stands in
relation to its own milestones. Your business will be more successful for your efforts.
IA
Ruediger (Rudy) Adolf is founder and CEO of Focus Financial Partners, a leading
international partnership of independent, fiduciary wealth management firms. He
can be reached at [email protected]. Rajini Kodialam is a co-founder and senior VP
of practice management at Focus. She can be reached at [email protected].
november 2008 Investment Advisor |­ 63