Spreading the Word
While many retirement plan advisers rely strictly on referrals to grow their business, others turn to marketing either to attract new plan sponsor clients or to create greater brand awareness. As varied as advisories can be, so are their goals and ways of handling publicity and finding expertise. Marketing can be outsourced formally, done in-house or managed through some other arrangement, such as by an affiliated company. For example, Jim Sampson, managing director of Cornerstone Retirement Advisors in Warwick, Rhode Island, says Cornerstone has a marketing firm in its offices.
Blue Prairie Group in Chicago works with outside marketer ShoeFitts Marketing in Portland, Oregon, says Ty Parrish, managing partner. Winning new business, a common reason to embark on a marketing plan, often walks a tightrope between referrals and formal marketing. “There is no magic bullet,” Parrish admits, observing that his firm depends on referrals for about 50% to 60% of its business, based on its reputation in the marketplace, but that formal marketing helps create that reputation.
Creating a marketing plan can be daunting; no one plan or set of objectives works for every firm. Building image and brand awareness is always the first step, according to Jeannie Manis, senior marketing specialist in sales and marketing at Pension Consultants in Springfield, Missouri.
Before beginning a marketing campaign, advisers should decide what they want to be known for and who they want to serve, suggests Sheri Fitts of ShoeFitts Marketing. “Once we know who they want to be, and who they want to reach, we can create a brand that speaks to those people,” she says. Fitts notes that, in her experience, advisers who choose a niche are more successful; honing the practice’s specialization helps an adviser focus marketing efforts on that specific market.
Parrish, who is based in Tampa, Florida, agrees that a strong brand allows an adviser to compete in the marketplace. For many firms with fewer than 25 to 30 employees, generating new business is the reason to market, Parrish says. For Blue Prairie, the goal is to attract plan sponsors as well as small advisory firms to affiliate, leveraging the Blue Prairie brand and the firm’s status in the registered investment adviser (RIA) field.
Some firms are gearing up for a more active approach to marketing initiatives. Blake Thibault, managing director of Heffernan Retirement Services in San Francisco, says the practice had a good year in terms of sales and revenue, and will turn to outside marketing in 2016.
“Typically, a good year is followed by an average one, because we’re servicing and implementing those clients,” he points out. By turning to marketing, he says, “we’re trying to break the cycle and continue the good momentum.”
Until now, Thibault says, about 60% to 70% of their business has depended on referrals from other entities of the parent insurance company or from vendors. But the new focus on formal marketing means more outward-bound initiatives—generally, such conventionally recognized tools as direct mail—with the goal of winning the majority of new business from outside so Thibault’s division can refer business back to the insurance practice. The retirement practice is a division of Heffernan Insurance Brokers, a much larger organization that comprises several lines, including property and casualty, employee benefits and financial services.
Some advisers, though, shun marketing altogether, depending solely on referrals, an approach Manis believes is best for people who are already established and have solid brand awareness.
Ellen Lander, principal of Renaissance Benefit Advisors Group in Jamison, Pennsylvania, started her business six years ago with one client and subsequently expanded solely through referrals. She admits that omitting formal marketing may not be right for everyone, but she suggests that she is proof it can be done.
Small shops that depend on referrals must ensure they avoid getting more referrals than they can handle, Manis cautions, adding, “When we look at building leads, we market only in those areas we can service.” Closer to home, she says, they participate in public relations-type events—such as the variety offered by United Way or educational workshops for people with financial challenges—to help strengthen their brand awareness in the community.
Budgeting Basics
Advisers, like any other sensible businesspeople, want to
know how much to spend and what they get for their money. At Blue Prairie
Group, marketing is 15% of the operating budget, says Parrish.
Thibault says his retirement division has no set figure yet, as it is in the process of reviewing firms, but the unit is considering an annual budget of $20,000 to $30,000.
The annual budget for marketing at Pension Consultants encompasses advertising, marketing department salaries and costs, including an annual conference, Manis says. “It’s a lump sum we decide on at the end of the year,” she says. The budget is the result of a side-by-side comparison of the percentage of revenue the company has to work with and the annual goals it hopes to achieve, such as building brand awareness in a new territory. Next comes setting a strategy and deciding what methods—direct mail, email or third-party calling—make the most sense. “We meet somewhere in the middle on the amount of money that’s decided on and how much we can do,” Manis says.
Todd Clarke, chief executive of CLS Investments in Omaha, Nebraska, says that advisers typically have about 20% in free cash-flow after they have paid operating costs and their own salaries. “Some simply pay it to themselves as a reward for taking on risk as a business owner,” he says. “But those who plow the money back into the business—into marketing, technology or hiring additional people—grow exponentially over time.”
Measuring ROI
Perhaps the biggest concern is how to assess the return on
investment (ROI). Some advisers—and marketers, for that matter—say it is hard,
if not impossible, to gauge; others say trackable, measurable steps work best.
Money spent on marketing campaigns is not a “clean ROI,” Manis says. A specific call to action, such as clicking a link, filling out a form or making a call, gives a firm something to track—but the sales process, from prospect to first check, can, of course, be long and complex. “Perhaps someone read an article about you,” Manis says.
That lack of immediate clarity means it may be difficult to tie initiatives to revenue. “We’re starting to question whether using a third-party calling [service] actually works,” Parrish says, noting that clients have mentioned they get five to 10 calls a week from his competitors.
If such volume inspires prospects to ignore advisers’ marketing calls in general, email might be a more effective method—and a cheaper one. But here’s the rub: A single closed deal can justify the expense. “You might spend $5,000 a month on calling,” Parrish says. “That’s $60,000 a year. It’s a big number. But if you pick up a couple of plans, it can mean a couple of hundred thousand in revenue.”
“You can track how many people open targeted emails or webinar invitations,” Fitts notes, “but it is very tough to gauge what that means in revenue.” She estimates that 20% to 25% of her own annual revenue stems from webinars she hosts and conferences at which she appears.
Even if a direct tie is difficult to establish, Christopher Norton, creative director of Blu Giant, also in Omaha, recommends advisers do nothing in marketing that cannot be measured. “Every piece of every [initiative] we engage in, from building a site to building a media campaign, can be measured,” he says. Blu Giant uses Pardot, a platform that meshes with Salesforce, so that, in an email campaign, they can see all the standard open-rate metrics and also build tools to tie results back to Salesforce. “From any lead,” Norton says, “you can see they opened the email, clicked on the link, watched a video—and for how long—[then] filled out a contact form. You can clearly see this generated a lead. You can break it all down to outbound analytics.”
One thing to factor in is the cost of the adviser’s time. Marketing is a full-time job, Lander believes. “If you’re going to do it, you need a pro. The skill set of a salesperson is very different than that of a topnotch consultant,” she notes, adding that expanding her business through referrals meant not having to hire a public relations firm.
There is every reason to take advantage of the free resources on the Web, declares Mark Rose, a partner at Influence Consulting Group, a public relations firm in New York City. Just be prepared to be patient. “Whether you’re using Twitter or contributing magazine articles or posting on LinkedIn, you should see a change in your stature in the marketplace after six months,” Rose says.
Fitts echoes the need for consistency. “Ongoing, consistent outreach, and building thought leadership, is really where the magic is. It’s not six months, but possibly 18 months later that someone says, ‘I need a new adviser.’” She observes that advisers sometimes give up on a prospect—and “the one who contacted that client most recently is the one they will call.”
Do This, Not That
In a business as carefully regulated as the advisory
profession, compliance is a vital consideration in any marketing or
public-facing communication.
“It’s my nemesis!” says Jeannie Manis of Pension Consultants. “The amount of disclosures you have to have is the hardest thing when you’re developing a marketing piece.”
Manis keeps handy a list of words that must be used cautiously: “the best”; “superior”; “financial security”; “complete,” among others. “Sometimes the word ‘fund’ can be a bad word, depending on how you use it,” she says.
Understand the compliance issues early on, advises Christopher Norton of Blu Giant. “You don’t want to end up with a website or a T-shirt that can’t be used, so people need to look for [marketing] firms that understand the issues and can come up with solutions.” He recommends asking a firm about its plans to handle archiving, proper approvals and the tools needed to monitor social media engagements. “If you’re building a website, what kind of technology solutions do people have?” he says. The dangers of picking up malware or being hacked should be considered, as should whether to install backup systems in the case of a breach, an audit situation or if the site is down.
When an adviser is affiliated with a large broker/dealer (B/D), approvals are mandatory. Jim Sampson of Cornerstone Retirement Advisors, which uses LPL as a broker/dealer, says, “LPL controls everything: our website, our DBA [doing business as] ads and names, even letterheads and business cards.”
Many independent one-man shops market themselves under the LPL name. When advisers use the broker/dealer-issued cards and email address, they can avoid running through compliance, Sampson says. That, he adds, winds up being easier on the budget.