Advisers Falling Short on Business Development Goals

Sales team facing tough times? You’re not alone: advisers almost universally agree that business growth is a major challenge today, according to the Financial Planning Association (FPA).

A new survey report from the FPA’s Research and Practice Institute, “2014 Drivers of Business Growth,” reveals more than half of financial advisers believe they are currently failing in business development. This is despite the fact that most advisers say they work hard to create plans and processes to attract new clients and grow the business.

The survey compiled the sales and business development experiences of more than 430 advisory firms across the U.S., including FPA members and non-members, as well as certified financial planners (CFPs) and advisers across all channels and business models. Not surprisingly, the survey also found most advisers who are struggling to grow their business are seeing a direct impact on their bottom line, explains Lauren Schadle, FPA executive director and CEO.

Key statistics from the survey show only 9% of respondents indicated that their business development process is “very effective,” Schadle notes, and over half of firms give themselves a failing grade on sales capabilities. In terms of real stated business development goals, 35% of respondents fell short last year, and only 25% exceeded their goals. While 54% of respondents say having a “strong culture of business development” is important or very important, only 13% report that culture is very strong today, FPA says.

Another challenge: Less than a third of respondents said they had a formal, written business plan, with 33% indicating they had defined growth goals, but not a documented plan.

“This study probed further into the matter and uncovered that while many advisers try similar business growth tactics, it is those advisers who think and plan strategically about their businesses who are succeeding in adding new clients and assets,” Schadle says.

The study found that most respondents feel challenged in executing on the tactics they consider to be very effective. For example, advisory firms appear to struggle with what the FPA calls “the changing face of marketing” in the financial service industry, with only a little more than one in 10 firms (13%) indicating they use a systematic, cross-channel marketing plan that is implemented consistently and measured regularly for effectiveness.

“The fact that only 25% of advisers exceeded their business growth goals in the past year tells us that they are either not taking the necessary steps to create a plan for growth or they are engaging in the wrong marketing strategies,” adds Valerie Chaillé, director of the FPA Research and Practice Institute. “Business planning, based on the business’ value proposition, is what should be driving the growth tactics employed by advisers. It is no surprise that the advisers who are failing to plan are not reaching their desired goals.”

While respondents are facing several challenges, the study exposed two practice management necessities that can help firms grow if addressed appropriately—the need for a clear, defined business plan and the need to focus on the right marketing tactics.

Some pieces of a defined business plan include the following:

  • Defined Value Proposition – Fifty-seven percent of respondents who fell short of their goals had a defined value proposition, increasing to 79% among those who exceeded their goals, FPA notes. Similarly, 62% of respondents who experienced asset growth of less than 10% had a clearly defined value proposition, increasing to 76% among those who grew 20% or more. Advisers in this high-growth group were also more likely to indicate that their team could communicate the value proposition very effectively, the study shows.
  • Elevator Pitch – While high-growth advisers are somewhat more likely to have an “elevator pitch,” it was less of an indicator of growth than being able to more fully define the underlying value proposition of a firm, according to FPA researchers.
  • The Written Business Plan – High-growth advisers were considerably more likely to have a formal, written business plan (38%) compared to low-growth advisers (21%). This distinction was even more profound among those who exceeded their goals (48%) compared to those who fell short of their goals (18%).
  • Niche Marketing – Respondents who grew the fastest were more likely to focus on one or more defined niche markets (65%) than the lowest-growth advisers (47%).
  • Client Events – Using client events as a way to both add value for clients and attract new clients was effectively used by respondents who were growing the fastest (58%) compared to those who were not (41%), the study shows.

Another necessity is focusing energy on the right channels and powerful centers of influence. Respondents who achieved faster growth were more likely to indicate they were working with centers of influence (68%) to generate professional referrals than those with the lowest growth (54%). Common centers of influence in the retirement specialist industry include ERISA attorneys, auditors, benefits consultants, and recordkeeping provider partners, among others.

While a relatively low percentage of respondents are getting involved in thought leadership and publishing, which includes building a personal brand or platform using thought leadership and social media, larger and growing businesses were more likely to be using this strategy.

“Sometimes data reveals subtle but very important trends,” notes Julie Littlechild, contributor to the study and founder of New York-based firm Advisor Impact. “With this study, the fact that so many advisers referred to new forms of marketing such as thought leadership, content marketing and personal brand building, suggests we are moving into new territory.”

A full copy of the “2014 Drivers of Business Growth” study is available here and includes additional details and narratives on these issues.