Firms face 'a cliff' of potential clients dependent on digital leads, not referrals
The “traditional rainmaking” technique of relying on referrals is becoming less important as digital data gains importance and “that cliff is coming faster than we think,” according to Mary Kate Gulick, Chief Marketing Officer and Chief of Financial Services at FiComm.
During an afternoon discussion on succession planning for firms at RIA Edge at The Diplomat Beach Resort in Hollywood Beach, Fla., Gulick said it was “fundamentally unsustainable” for founders and top advisers to drive most of the growth and questioned if the next generation of business leaders did it the same way.
“The answer is no, absolutely not,” she said. “They will depend largely on digital leads.”
According to Gulick, FiComm will release a study later this month showing that only 29% of clients under 60 who have purchased financial advisory services care about a referral or think it's important. This stands in stark contrast to many firms today that have built their books of business on referrals.
“But for consumers under the age of 60, it's not like they're going to turn 60 and say, 'Oh, I need a referral; that's how I get a counselor,'” Gulick said. “No, it's just not the way we shop anymore.”
To properly prepare for when the next generation will step into leadership positions, firms need to create digital lead generation three to five years in advance of success. They can't start that process and expect results on day one, as digital leads take longer to close than referrals.
However, according to Gulick, doing so is the only way G2 can sustain the level of growth enjoyed by today's founders. She also said it was important for founders to remember that their global knowledge of the firm cannot be replicated for the next generation, even if they shadowed the firm's leader for years and knew everything they knew.
“Even if they do, they will never be you,” Gulick said. “You can't replace yourself.”
“If we win together as a team, we can make a lot more money”
Firms should consider what behaviors they want to encourage in their advisors.
David DeVoe, CEO and founder of DeVoe & Company, led a discussion on “Unlocking Growth through Compensation Strategies” with Jim Horrocks, CEO of TimeScale Financial and Molly Bennard, CEO of Connectus Wealth Advisers.
Horrocks said that while compensation is a sensitive issue, his firm changed its model several years ago to discourage certain trends, including client hoarding. Its advisors see 60% of their salary as base and the remaining 40% as a bonus based on factors including professional development and the overall health of the firm.
Bennard agreed that linking the bonus model to a firm's profitability was important.
“It changes the way counselors think,” she said. “They also understand that if we win together as a team, we can make a lot more money.”
Begin with the end in mind
Industry veteran Mark Tibergien recommended advisors “start with the end in mind” during his Visionary Talk on “Middle Innings.”
Firms must “look at the familiar in unfamiliar ways” as they move from “practice to business to enterprise,” he said.
As businesses grow over time, Tibergien said many people confuse size and scale.
He asked advisers to look a decade into the future and think about how old they would be, what their business would be like, who would run it, why people would want to work with them and who their customers would be. Theirs.
Duran for CEOs: Spend 30% of your time selling to ensure growth
According to Rise Growth Partners CEO Joe Duran, if you're the leader of your firm and don't spend 30% of your time selling, it's “guaranteed” you won't have organic growth.
During a conversation with WealthManagement.com Managing Editor Diana Britton at the Wealth Management EDGE at The Diplomate Beach Resort in Hollywood, Fla. on Tuesday, Duran recalled how when he started in the industry, cold calling was a common practice, but said future generations in the industry believed that sales exceeded their fiduciary duties and that it was “a dirty word.”
“There's nothing wrong with being in the sales business,” he said. “By the way, it's the thing that will make you survive or not survive. So how much of your time are you spending on sales?”
If you want your firm to grow organically, you need to set aside time specifically for that purpose, spending about 30% of your time tracking how you're selling, how many meetings you have, and your close and win rates, he said. he.
Without originality in your firm's ideas and approach, sales can be even more challenging, forcing a leader to spend up to half of his time on that part of the business.
“But if you have an original idea, if you feel different, if you're clear about who you're serving, you'll only need to spend 20% of your time selling,” he said.