Journal of Financial Planning: September 2023
Kristine McManus is chief adviser growth officer at Commonwealth Financial Network, Member FINRA/SIPC.
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One of the many wonderful things about a career as a financial adviser is that it welcomes people who may have started out in a different profession. If you wanted to shift your career to chemical engineering, for example, you would need to complete a specific degree and the bar to entry would be high. But financial advisers can come from a wide range of occupations, and most backgrounds are relevant. A former teacher? Those leadership skills are immediately transferable. A pharmaceutical executive? You could leverage that in-depth knowledge in a niche client base. You still have to learn the financial advisory business and study for the necessary licenses, but the basic knowledge can be acquired by anyone willing to work and put in the time.
But certain client relationship aspects and business development skills are more challenging to learn. Next-gen advisers often start as service advisers and work with senior advisers to serve a list of clients and help them with their particular needs. They shadow the adviser, listen and watch, and learn the mechanics of financial plans, goals, and investment portfolios. It is an important part of the learning process and integrates the new adviser into the firm’s culture.
After some time in this developmental role, next-gen advisers are often given the chance to build their client base. While they may still spend considerable time servicing the firm’s clients, they usually have the support to add clients of their own with increased compensation as an incentive. This is an exciting opportunity for next-gen advisers and a big step forward in their development. Sales skills, however, are the hardest to learn and among the least taught. Some people are “natural” rainmakers, while others struggle to network and talk easily with strangers. So how can next-gen advisers develop the skills needed to help them thrive?
There’s no one answer, but one crucial factor in all of this is activity. More specifically, it’s the client-facing activity that leads to growth. Next-gen advisers can busy themselves all day long, but it will be hard to grow if they aren’t paying careful attention to what gets them in front of clients and prospects. At Commonwealth, we spend time and energy working with younger advisers on their client-facing activity, as it’s the best way to track business progress and see results.
Let’s take a closer look at three key client-facing activities that lead to growth and how next-gen advisers can start tracking their progress. For illustrative purposes, we have put sample point values next to these activities, but the point values are typically assigned by the adviser with a goal of achieving at least 20 points per week.
1. Introductions and Referrals
Successfully navigating introductions and referrals is a valuable skill to master. We encourage advisers to ask for an introduction instead of a referral because it helps them reach the prospect quicker.
Asking for an introduction could look like, “Mrs. Lopez, I’d love to be introduced to your friend, Jean. You’ve mentioned she has the same questions about executing her stock options, and I have the expertise that could help save her money on taxes, too.” This ask is clear and explains why the client might want to introduce the prospect. In contrast, a referral tends to be more general and is the easier, default choice for advisers. An example could be, “If you know of anyone at your firm who also receives stock options, please feel free to give them my name.” While a referral request is better than nothing, there are no clear action items for the adviser or the client. So focusing more of your efforts on introductions will help you achieve ideal, sustainable growth.
Possible items to track:
- Ask for an introduction: 1 point
- Ask for an introduction and get one: 2 points
- Ask for an introduction, get one, and set up a meeting: 3 points
- Send a handwritten thank-you card to a referrer: 1 point
- Develop a repeatable process for introductions and referrals: 2 points
2. Sales
Don’t be afraid to talk about closing sales. A sale occurs when clients agree they need your financial help, whether with a financial plan, a model portfolio, or a specific product sale. Since this is when the money actually comes into the firm, you want to make sure to hone this skill.
Possible items to track:
- Complete a sale: 1 point
- Complete a sale to an ideal client or a client in your niche: 2 points
- Complete a sale that generates annual revenue of more than $5,000: 3 points
- Complete a sale of a new product for the client: 2 points
- Ask for additional assets: 1 point
3. Meetings With Centers of Influence
In a poll by CEG Worldwide,1 more than 70 percent of advisers said their best new clients came from centers of influence (COIs). Developing these important relationships with COIs, such as CPAs and accountants, estate planning and other attorneys, commercial lenders, and insurance brokers, is well worth your time and energy. Typically, these professionals have a good idea of someone’s assets and financial needs, making them an ideal source for high-quality introductions to your ideal prospects. Advisers often refer businesses to their COIs when appropriate, creating strong, reciprocal relationships.
Possible items to track:
- Meet with an existing COI: 1 point
- Meet with a potential COI: 2 points
- Receive a referral from a strategic partner: 1 point
- Convert the referral into a client: 2 points
- Refer a client to a COI: 2 points
Tracking all of your client and COI meetings, marketing efforts, and other business development activities is essential. Over time, you’ll see where you are strong (e.g., gaining additional assets from current clients) and where you may need assistance (e.g., networking events) to take your practice to the next level.
Set Yourself Up for Growth
As a next-gen adviser, if you’re looking to develop your own client base and grow, the best advice we can offer is to track the activities that get you out in front of clients and prospects on a regular, repeatable basis. Talk to the most successful advisers you know about how they built their practices, and you will surely hear the same thing. Like everything else, though, you have to do it in order to create the habit. So start tracking your activity today, and you’ll sow the seeds for growth tomorrow.