Guest Post: My Six Best Marketing Tips for Independent Advisors

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When Steve Lyons spoke with me about his tips for helping financial advisors market themselves, I knew that I’d like to share them with you. When I first met Steve, he was a copywriter for Fidelity Investments. Today he enjoys working with clients of all sizes, including individual advisors.

My Six Best Marketing Tips for  Independent Advisors
by Steve Lyons


As a professional marketer and copywriter specializing in advisor communications for print and the Web, I know firsthand the challenges independent advisors face in marketing their business to investors. Whether  you’re a veteran or just beginning your practice as an independent financial advisor, these marketing tips can help you stay on track to achieve your goals.

1.    You’re not just a business, you’re a brand. True, your business relies on you – as a financial advisor and person. But take the initiative to create and build your business as something that is bigger than you are – a brand with goals and values. Work with a reputable marketing consultant or firm to help you understand and tell the world how unique you are. And more, take your brand development and marketing as seriously as the big firms. They’re spending and working overtime to make sure that investors do not notice you.

2.    Quit talking about yourself. Successful marketing begins with telling your audience the BENEFITS of working with you – not the details of your personal or professional life. It may be interesting that you have a master’s degree in finance, but it’s much more powerful to talk about how your degree creates opportunity for your clients.  Use your one-to-one sale time to be more specific about why you as an Independent Advisor and person and why you are the advisor for them (and they’re the client for you).

3.    Remember, you’re not selling only financial advice. You’re selling a lifestyle. What sets the larger and more successful firms apart from less successful independent advisory firms? They understand that money management is only the means to an end. The real goal is to help clients achieve their goals and dreams, whether it’s living in luxury, providing charitable contributions and/or leaving a legacy for family and friends.  Use imagery in your marketing that helps them see their financial future as they want it to be–fun, exciting, adventuresome and secure.

4.    Understand what makes you different.  It’s important to know what makes you different from the advisor down the street.  Is it your investment philosophy? Your investment strategy? Do you offer a fee-discount for multi-generation wealth management?  Do you accept only select clients by referral only? Whatever it is, and the list can be extensive, know why you are different from your competition.

5.    Create a marketing plan. And implement it. If there was ever a time for independent advisors to make a difference, the time is now. There is more cash on the sidelines than any time in modern history. How do you obtain some of the stockpile? By creating a marketing plan that includes long term and short-term goals. Regardless of your budget, there are opportunities for you to get your name out there.

6.    Think out of the box. Your clients are everywhere. You have to find them and they have to find you. Sponsor community programs, leagues and events. Create a billboard. Write guest columns for local publications. Create a blog. Use social networking on the Web. Make calls. Make more calls. If this feels overwhelming, hire a reputable consultant or firm to help you think out of the box and execute marketing programs that builds and supports your brand. 

Steve Lyons’s experience includes marketing, copywriting and content development for both Fortune 500 and small businesses, with clients including numerous independent advisors and wealth managers throughout the country. He is a principal in LD Marketing Communications Consultancy and SoWa Ad Group, a collaborative offering the full branding experience, including public relations, for businesses of all sizes.

J.P. Morgan Funds’ measured optimism about U.S. economy

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The economy is on a rebound, but it’s a long way back to normal, said David P. Kelly, chief market strategist, J.P. Morgan Funds, to NICSA’s East Coast Regional Meeting on Jan. 14, 2010. 

A Jupiter of a recession
Economists have seen recessions like 2008-2009 before. so they can predict the broad shape of the economic recovery, according to Kelly.

U.S. recessions are just like the solar system. There are big planets and little planets, but no medium planets, said Kelly. “This was a Jupiter among recessions,” said Kelly. Even though it’s the largest recession since World War II, it’s not unprecedented. In fact, it’s not that different in size from the recessions of 1957, 1980, and 1982. As a result, he foresees a robust recovery.

“The bigger the recession, the bigger the bounceback,” said Kelly. 

Keys to U.S. economic growth 
The U.S. economy will rebound strongly because the following areas became so weak, they must bounce back, said Kelly.
1. Auto consumption
2. Residential construction
3. Equipment
4. Inventories 

Employment outlook 
Kelly made the following predictions

  • Jobs will begin to grow in the first quarter of 2010, which will produce income to support economic expansion.
  • Unemployment will rise as new jobs are created. This is because unemployment statistics are calculated using the number of people actively seeking jobs. People will return to the market as they see better prospects for success.
  • It’ll take five years to get back to full employment. Employment may rise to 9% by year-end 2010. 

More predictions by Kelly

  • Corporate profits will improve. This is because of low costs, low interest rates, and especially because of the lack of upward pressure on wages. On the wage issue, Kelly quoted the singer Beyonce, saying that employees realize that employers know “I can have another you in a minute.”
  • The risk of deflation is greater than the risk of inflation.
  • The biggest risks to Kelly’s positive scenario are conflict with Iran, which would drive up oil prices; and  banks finding it difficult to lend due to regulation, taxes, and uncertainty about regulation and taxes.

Opportunities 

  • It’s not too late to get back into stocks. Some people worry that maybe they “missed the train.” Davis’ reply? “This is a very long train on a very long platform.” He noted that stocks have recovered less than half of what they lost during the bear market. Also, there’s a lot of cash on the side lines that will eventually flow back into the stock market. On the flip side, bonds have become more risky, so now is a good time to overweight stocks relative to bonds, he said.
  • Non-U.S. economies will continue to outperform the U.S., and international stocks are cheaper than U.S. stocks. Also, a modest fall in the dollar will amplify gains somewhat for U.S. investors.
  • During Q&A, Kelly said, “I think buying a house will turn out to be a good investment, even over the next five years.”
  • On the topic of gold, Kelly said he wouldn’t put his mother into gold, even though the gold bubble has the potential to continue. The fundamentals don’t support gold’s price rise in 2009 because gold is supposed to appreciate in times of rising volatility and rising inflation. Meanwhile, volatility, as measured by the VIX has fallen and so has inflation. This bubble will eventually pop, he said.

Interesting graphs supported Kelly’s presentations. Financial advisors who participate in the J.P. Morgan’s Market Insights program can find the graphs in the firm’s quarterly Guide to the Markets.

Can you make a case for "mitigate"?

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Good writing uses strong verbs. Strong verbs are usually short. Thus, I strongly dislike the word “mitigate.” In fact, I can’t think of any time that I’d use mitigate instead of a synonym.

Some of my favorite synonyms for “mitigate” in the context of an investment or wealth management article include 

  • Cut
  • Ease
  • Manage
  • Reduce

Can you think of a case where it would be essential to use “mitigate” instead of a synonym? I’d like to know.

 

Note: updated 11/18/24

I LOVE this fixed income presentation!

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“Bonds should be boring.” That’s what one head of fixed income of fixed income used to tell me. But that doesn’t mean that fixed income presentations should be boring.

Northern Trust has published the most enjoyable fixed income presentation I’ve ever seen. It’s called “Fixed Income: Almost A Bedtime Story.”

Fixed Income: Almost A Bedtime Story

What’s so great about this post?
— Simple message, plain language
— Uncluttered pages
— Sense of humor — Oh my goodness! Northern Trust wrote an amusing disclosure on slide #23. “Psst: Fixed income may also be volatile in the future.”

These are characteristics that you can strive for in your presentations, though humor is a bit tricky. I think you need lots of experience grappling with compliance to find the laughs in slide #23’s disclosure. 

I would like to shake the hands of the team that created this presentation. It’s amazingly good. If it spawns imitators, that’ll be a great development for the folks who currently snooze through deadly presentations.

Investment management job outlook for 2010

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There are glimmers of hope in the investment management hiring outlook for 2010, especially for job applicants who help to generate revenues or who are in an area where cuts have been too deep. That’s what I gathered from exchanges with three observers, Michael Kulesza, managing director of Horton International‘s Boston office; Bob Gorog, partner in CT Partners’ Boston office; and Michael Evans, president, FUSE Research Network in Boston. This updates my 2008 posts, “Three recruiters talk about hiring at investment management and mutual fund firms” and “Who’s hiring CFA charterholders.“

“I do sense an uptick in hiring for 2010,” said Kulesza. “Many companies scaled back heavily, so now they and are planning to add people to their organizations.” That’s particularly true in the areas of sales, new business development, mutual fund wholesalers, and advanced sales support, he said.

Smaller firms hiring to grow market share 
Small- to medium-sized firms are hiring more aggressively than bigger firms, added Kulesza. They’re taking advantage of large-company layoffs to upgrade their staff and to increase market share. 

Given the big banks’ involvement with mergers and TARP funds, some smaller banks see an opportunity to expand their  high-net-worth businesses. “Customers are gravitating toward more local or regionalized high-net-worth services,” he said. 

Aside from these sales and marketing opportunities, Kulesza believes there may be additions to investment research and analysis. “Back office operations will stay lean,” he said. 

Privately held and mutual companies are freer to take advantage of hiring and market share expansion opportunities, said Kulesza, because they aren’t answerable to the stock market. Meanwhile, it will take four to five years before investment management hiring returns to its previously high levels, he predicted. 

Some niches offer more opportunities  
“The better firms are coming back into the market,” said CT Partners’ Gorog. On the investment side, he sees more searches for international equities than for domestic equities. Opportunistic hiring is also happening in fixed income areas such as credit and distressed debt.

Some hedge funds are beefing up their distribution. They’re trying to upgrade their clients to include institutions as well as the high-net-worth, fund-of-fund, and family office clients with whom hedge funds typically launch. Funds that have survived three years and delivered decent relative performance over that period figure they have a good shot at expanding their client base. 

Hiring in product management
Fuse’s Evans shared the hiring outlook uncovered by the firm’s recent research report on product management at asset management firms. His comments are reproduced below with his permission.

Increased Activity – Two areas in which product leaders anticipate increased activity is improving web content and capabilities, and hiring of additional staff. A review of firm websites indicates that much of the research and marketing content is dated. In terms of the actions listed, improving web content and capabilities was among the least time-consuming and least expensive actions firms could take, but its impact could be great in that it would signal to advisors and investors that the firm is moving forward.

In terms of hiring, firms indicated a strong desire to add back staff. Fully 50% of respondents indicated that they plan to hire in 2010. When asked the areas to which they planned to add staff, responses included:
·  Product managers
·  Marketing managers
·  Associates/analysts
·  Junior product managers
·  Manager research/due diligence

This suggests that firms may be feeling the burden of carrying out new organizational initiatives using skeleton staffs. Recent analysis by Russell Reynolds Associates concurs that hiring should resume in 2010; particularly on the sales and marketing sides of organizations, as these were among the hardest hit in terms of headcount reduction.

For wealth managers and financial planners 
Wealth management professionals and employers should check out Bill Winterberg’s “Your Next New Hire: By Providence or Planning?” Bill lists some resources that may help both job hunters and those who are looking to hire. He also links to some trade publications suggesting that hiring in this arena will pick up in 2010.

By the way, Winterberg hopes that operations hiring is more robust than Horton International’s Kulesza suggests. “If anything, firms need to support additional capacity ahead of growth, rather than hire after growth exposes bottlenecks in operations.” 

Good luck to all of you job hunters out there!

JAN. 12 UPDATE

If you’re willing to be interviewed by a reporter–and you fit the criteria mentioned below–please contact Emma Johnson at the email address she provides.

“Hey Wall St., what’s the job market really like? For a story, looking for those currently or recently employed in finance to comment on job outlooks. Anonymous sources OK. emma@emma-johnson.net“

Harvard’s Charles Collier on "The Practices of Flourishing Families"

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 “The critical challenge you face is not financial,” said Charles Collier, senior philanthropic adviser at Harvard University in his presentation on “The Practices of Flourishing Families” to an audience composed mostly of wealth managers at the Boston Security Analysts Society on December 15, 2009. He believes “The most critical challenges are relationship-based and family-based.”

Of course, money plays a role in these challenges, so this is a topic that should concern all wealth managers. Whether it’s scarce or abundant, money is a challenge in every family, said Collier.

Three questions are critical to addressing family challenges, said Collier.

  1. What topics are easy or difficult for your family to discuss?
  2. How do you manage yourself in life’s transitions?
  3. Is family harmony an important principle for you, and, if so, why? 

Collier’s interactive presentation focused on Question 1 and raised the following difficult questions around finances:

  1. What is an appropriate inheritance for your child?
  2. Who gets the money, and when? Do they get equal shares?
  3. Who gets information about the money and when?
  4. How much will go to philanthropy?
  5. What do you think will be the impact of unearned money on your child’s life?
  6. How can you encourage your children to find their life calling?

Collier did not suggest how financial advisors should raise these questions with their clients. So, I’m asking you, how do YOU address these questions with clients? Do you address them at all?

Recovery will be stronger than consensus, says Barclays Capital chief U.S. economist

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“U.S. economic growth is recovering robustly, receiving the usual cyclical boost from housing and inventories,” said Dean Maki, managing director and chief U.S. economist of Barclays Capital in his “U.S. Economic Outlook” presentation to the Boston Security Analysts Society (BSAS) on December 8. 

Maki said the U.S. economy will recover strongly, as it typically has done following past recessions. He disagreed with the many pundits who say “This time is different” and that the economic recovery will be drawn out because tight credit will keep consumer spending weak. Credit is always tight following a recession, Maki said. “In these strong [economic] recoveries of the past, we haven’t needed strong credit growth,” he added. 

Maki discussed the following drivers of strong economic growth:
•    Production is set to grow much faster than final demand.
•    Housing is starting to rise because of its greater affordability.
•    Business has cut too much during downturn, so companies must boost spending soon to grow profits.

Some predictions
•    Real GDP will hit 5% by the first quarter of 2010 and stay at or above 3% in 2010.
•    Unemployment has peaked and will fall to 9.1% by the fourth quarter of 2010.
•    Inflation–and the fed funds rate–will remain low. However, the Fed will raise rates in the second half of 2010.

A couple of unexpected developments could derail Maki’s predictions, he said. One is a sharp fall in the stock market. The other is a sharp rise in commodity/energy prices as a result of global economic growth. 

Do you agree with Maki’s predictions? Please comment.

Dec. 11 update: 

If you’re a member of the BSAS LinkedIn group, you can join a conversation there about Maki’s talk.

Which wealth managers have the highest profit margins?

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People are always curious about who makes how much money. That’s probably why I zeroed in on the profit margin comments made by investment banker Elizabeth Nesvold, managing partner of Silver Lane Advisors, when she spoke about “Trends Amid Turmoil in the Wealth Management Business” to the Boston Security Analysts Society on November 18.

Because multi-family offices (MFOs) deal with wealthier clients than financial planners, I was surprised to learn that their margins are lower than financial planners’ in typical market scenarios, ranging from 10%-30% vs. 20%-35% for financial planners and asset allocators. However, the difference made sense when she explained that MFOs get hurt by “scope creep.” It’s expensive to service a multi-generational family as compared to an entrepreneur who just sold his or her business, Nesvold said.

Here’s the hierarchy of margins under typical market scenarios, in descending order, according to Nesvold.

  1. Hedge funds, 50%-70%
  2. Hedge funds of funds, 25%-60%
  3. Traditional institutional, 30%-70%
  4. Investment counsel, 25%-40%
  5. Financial planning/asset allocation, 20%-35%
  6. MFOs, 10%-30%

Do these margins sound realistic to you? 

The best private equity opportunity in generations

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“Our database tells us we’re in a multigenerational opportunity to be a private equity investor,” said Martin Grasso, CEO of Pearl Street Capital Group, a private equity fund-of-funds manager. He believes that investors with longer time horizons can get above-benchmark returns without significant volatility. Grasso made his comments as a panelist on “The State of Private Equity: Opportunity Through Crisis,” presented to the Boston Security Analysts Society on November 5.

Data suggests that capital growth and buyout private equity get the highest returns in years with the lowest levels of EBITDA leverage, said Grasso. That’s the situation we’re in now.

It also pays to invest with the best, according to Grasso. Top quartile and top decile private equity fund managers show much higher levels of persistence than long-only public securities managers. In other words, top performers in private equity have a greater tendency to remain top performers. The difference in performance between top and bottom quartile managers is much greater in private equity than among public equity managers.

Implications for advisors:
* Access to top firms is still difficult, so go with a fund-of-funds to gain that access.
* Invest in 10 vintage years and consider some secondary offerings, which are available now that some investors can’t meet their funding obligations as limited partners.
* Best private equity opportunities now are in small-medium companies where there’s less competition and where private equity managers are more inclined to partner with management to “accrete value” and make minority investments.
* Diversify across geography and sectors.


The last two paragraphs of this post were revised on Dec. 7, thanks to some clarifications by Martin Grasso of Pearl Street Capital Group.

If you’re marketing to RIAs…

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…email should be your top method for communicating with them. That’s the message I took away from “Marketing to Today’s RIA: What Every Asset Manager Should Know,” a webinar and report from Morningstar Advisor and Swandog Strategic Marketing. Their webinar and report are based on an online survey of 500 financial advisors that was supplemented by interviews.

Their research suggested some lessons that may apply to everyone marketing to registered investment advisors (RIAs), even though the Morningstar-Swandog report focused on RIAs’ interactions with asset managers. 

Lesson 1: Stay in touch via email rather than heavy-handed personal contact or expecting RIAs to visit your website. The graph on p. 13 shows a strong preference for email communications over web access, wholesaler visits, and phone calls.

Lesson 2: Tailor your marketing materials to RIAs rather than using materials for registered reps. RIAs fall between registered reps and institutional investors in their sophistication. The Morningstar-Swandog webinar quoted one RIA saying, “Give me substance!” RIAs want meatier content than registered reps. Another telling quote: “Most info from investment managers is propaganda. Real objective analysis is rare and valuable” (p. 7).

Lesson 3: Get your company’s thought leaders exposure in  arenas that confer apparent third-party endorsements. Print publications used to be the best method for this. But now, as moderator Leslie Banks pointed out, you can use Facebook, LinkedIn, and Twitter to push out your content AND get it endorsed by people whom RIAs respect.

Take the time to read the report and watch the webinar on “Marketing to Today’s RIA: What Every Asset Manager Should Know.” I’ve barely touched on their content and each covers slightly different content.