Where are the customers?
Whether you call them clients or customers -- preferring the latter term, I may be an atavistic throwback to earlier times in the securities business -- they are hard to find.
Some advisors spend $5,000 or more every month or so to run a mailing program to fill seminar or dinner seats; others prospect by telephone. Some (like me) have an occasional informational dinner to discuss the economy or a specific type of security and will invite a handful of customers, or invite 10 couples and ask them to bring guests. To produce periodic referrals, I also rely on my Web site, which some of my customers use for reference, and simply stay in touch with customers and provide good service.
Whatever we do, finding clients is our lifeblood. It's particularly tough when there's a sustained downturn -- the tech bubble and the credit crisis are both very much in everyone's memory, including in the memories of prospective customers.
Have you tried looking at third-party managers who did reasonably well during both downturns? BTS, Foxhall, PSI, Morningstar and Hanlon Investment Management come to mind, as does Signalpoint, an ETF manager in Springfield, Mo. Histories of appropriate tactical responses to black swans should be of great interest now. And there are mutual funds that are interesting -- ones with a little history, like Ivy Asset Strategy and Blackrock Global Allocation, as well as newer ones like Pimco Global Multi-Asset. Each of these three funds can float like a butterfly and sting like a bee; they are not mandated to stay 90% in small-cap value, or large-cap, or one kind of bond where there is no tactical escape valve other than going to a relatively small cash position. These funds can pretty much go anywhere and do anything, including buying and selling gold and maybe even George Foreman Grills, or the latest Ron Popeil kitchen gadgets. Can you say flexible?
Have you branched into limited partnerships? Things like self-storage (U.S. Advisors Strategic Self-Storage) seem inflation-resistant, and corner real estate (American Realty Capital) and other plays (Behringer Harvard Multi-Family and Grubb & Ellis Healthcare) seem appropriate.
In our business, we seem to have to focus on the past; however, in this instance, the past can be our friend, since it reveals what investment companies can handle horrible market conditions well. We also can focus on the future, using the past to determine what will likely work the next time the investment world bubbles into a frothing mess.
Bruce Sankin's prospecting idea
As to where prospective customers are, Bruce Sankin1 thinks many of them are on the Internet, and he designed a way that will help them find you.
For $24 a month (less if you pay annually), Sankin's company helps you build an exclusive lead-generating Web site online in less than 10 minutes. Your Web site shows the services you provide and offers a free valuable financial and retirement planning book in exchange for a contact or appointment.
Even if you have a Web site, this additional one is complimentary and designed to help market your services. When people search for the products or services you provide, which could relate to insurance, securities or both, they may sign up for the book with the understanding that there will be a contact from you2. The Web site is attractive and is personalized with your name, your company contact information, and a form prospects fill out to request the free book. Bruce makes your Web site construction a bulletproof process. The products and services you provide may be selected from a menu with over 80 choices that include long-term care, investments, life insurance, health insurance and even property and casualty insurance. In addition, subscribers get the top level generic Web site address "insurancehelpcenters.com."
Once the Web site is up and running, Sankin provides five marketing ideas to direct consumers to your site. The books offered in exchange for a contact or appointment are long and short versions of What All Stock & Mutual Fund Investors Should Know, Retirement Planning Edition. You may find out more about Bruce's idea by visiting www.insurancehelpcenters.net.
Of course, this is incentive marketing, and trading a book for an appointment may or may not be your cup of tea. Bruce says that many of his Web customers are doing well, so you may wish to take a trip to his site.
This information is intended for financial professionals only, not the general public. This is not a solicitation to buy or sell any specific security. Mr. Hoe may have positions in the securities or other investments discussed.
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Broker's Bookcase
It's Not as Bad as You Think -- Why Capitalism Trumps Fear and the Economy Will Thrive, by Brian S. Wesbury (John Wiley & Sons, 2010).
Brian Wesbury is the chief economist at First Trust, the giant Chicago manager of unique ETFs, UITs, investment annuity subaccounts and closed-end funds. I visited First Trust in 2008 and was fortunate to hear him speak -- he speaks as well as he writes. I also subscribe to his short-but-valuable weekly insights to the global economy, which you may do, too, by signing up at www.ftportfolios.com.
Not only will you enjoy this book, you'll learn a fair amount, too. Consider the tendency of people to worry about the negative effect of deleveraging on economic growth: "...this is one of the most frequent mistakes in macroeconomics -- confusing debt expansion with money creation." Brian continues, "Contrary to popular belief, individual banks and credit card companies do not create new money. They can provide money to their customers only if they borrow it from someone else first."
The author even quotes Groucho Marx: "Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies." (Groucho, by the way, had significant market losses during the Great Depression, according to his daughter; maybe that led him to ruminate and speechify about politics.)
"The Fed's balance sheet is just like any other bank, but with one huge exception: the Fed can create money out of thin air -- it can produce its own liabilities," Wesbury writes, and then goes on to discuss what happens to its liabilities. Run, don't walk, to the nearest bookstore and buy a copy of It's Not as Bad as You Think. You'll thank me, and you'll meet a fascinating economist who often turns up in the pages of The Wall Street Journal, or on CNBC and Fox. Most importantly, you'll have a fix on contemporary economics that will hold you in good stead for the future.
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The Connectors -- How the World's Most Successful Businesspeople Build Relationships and Win Clients for Life, by Maribeth Kuzmeski (John Wiley & Sons, 2009). I've been a fan of Maribeth since I met and interviewed her a few years ago (I also reviewed her two previous books).
The Connectors plays to Maribeth's strong suit -- making advisors better by teaching them how to find customers. She quotes Pat Boone: "The most attractive people in the world are the ones who are interested in others -- turned outward in cheerfulness, kindness, appreciation, instead of turned inward to be constantly centered in themselves." It might as well be the author herself who wrote those words.
One advisor gives Maribeth credit for moving him from an average practice to one that is super and measures assets in the hundreds of millions, not the tens of millions. She leveraged and focused that advisor's natural ability to connect; that seemed to make all the difference and moved him forward rapidly.
Here's a strategy for connecting from Maribeth, under the "Creating the Feeling" section: "Building the 'I want that' situation for a prospective buyer is a simple key to closing more sales and closing them more easily. Most likely, no one would argue that. But it's not just a presentation of the features and benefits. It's more about how the prospective buyer believes the product will make them feel. If we can connect with a buyer emotionally, the sale will be quicker to close."
You'll be in for some strong self-examination with Maribeth Kuzmeski -- she isn't a pie-in-the-sky kind of advice giver; instead, she walks the walk and gets her hands dirty helping advisors grow practices. In The Connectors, look for self-awareness exercises and tests, and learn from my favorite marketing expert, whether you're reading her book or working with her in person.
Footnotes:
1. Readers may remember Bruce from October 2007, when the short and long editions of What All Stock & Mutual Fund Investors Should Know were profiled in Broker's Bookcase.
2. If you plan to target investments, you will want to contact your compliance department. Three of the largest broker-dealers have already approved the advisor Web sites.
Richard Hoe, ChFC, CLU, AEP, has been an investment professional for 40 years, and is a registered
representative and investment advisor representative. He is a member of the adjunct faculty at the California Institute of Finance, a graduate school at California Lutheran University. Readers may e-mail Richard Hoe at richardhoe@richardhoe.com.
