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A Contrarian View of Marketing

The simple truth is not all advisors need to market.

David J. Drucker, 10/19/2006

This January, join Dave in Miami Beach for the 2007 Technology Tools for Today Conference. Learn how today's latest technology can improve your practice.

The need to market your advisory services is self-evident, right? It would seem counterintuitive to suggest otherwise. Yet, industry observers treat the need to market as immutable when, in fact, it may not apply to all advisors.

Let's start by examining some marketing stats. According to recent research by Tiburon Strategic Advisors:

  • Approximately one third of independent reps have a written marketing plan in place.
  • 83% of advisors with annual revenues greater than $1 million have a written marketing plan in place.
  • Approximately 55% of new business comes from passive or proactive client referrals for all types of advisors (full-service brokers, independent reps, and fee-only advisors), yet over half of advisors do not ask clients for additional assets. Not surprisingly, those who do tend to do even better;

The thrust here is evident. If you want to grow your firm, you need a marketing plan. Does it follow, then, that if you want to keep your firm at a size that meets goals other than unfettered growth you should not have a marketing plan?

The assumption underlying every study and every piece of consulting advice we hear in the press is that growth is good. What's not talked about is how much growth? Most advisors don't want to grow indefinitely. Like most small service businesses, advisors start their firms as technical specialists (i.e., financial planners and/or investment advisors) and find out as they go along whether or not they have an aptitude for business. Those who don't fail to grow because they can't. And those who do aren't necessarily inclined to grow their firms beyond the point where the entity they create compromises the lifestyle they want for themselves and their families.

What I've just described is the vast majority of our industry. Consult the studies of any research group whose focus is financial services and you find that smaller firms (solo practitioners and two-principal firms with a handful of employees) comprise the bulk of our industry in spite of perennial predictions that we're in for an apocalypse-like consolidation in just a few years.

So for the average one- or two-principal firm with fewer than 10 employees, which has been around awhile, which knows the ropes, which has efficient operating systems, and, perhaps most important, which is meeting its owners' personal financial goals, what should its marketing plan look like? Or perhaps, more accurately, we should ask--in contradiction to all the one-size-fits-all advice we hear--whether any marketing plan is needed at all?

Martha Kapouch would say no. Kapouch, along with her son and her husband, run More for Less Financial Solutions in West Hartford, Conn., serving 80-plus investment management clients along with occasional planning-only clients. Celebrating her firm's 10th anniversary, Kapouch is happy with her firm and says that its greatest efficiency may just be that it doesn't have a marketing department.

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