Industry coaches are always stressing the power of referrals. And true, passive referrals from existing clients was the top marketing method for attracting new clients in 2013, according to WealthManagement.com’s AdvisorBenchmarkingTrend Report. But a recent report by FA Insight Growth by Design found that the top driver of growth among advisory firms with sustainable growth (significant growth without negative side effects), was their advanced marketing and business development efforts, beyond referrals.
“What really separated the good firms from the best firms was their approach toward marketing and business development,” said Dan Inveen, director of research at FA Insight and lead author of the study. “Your typical firm is passive with regards to marketing. They have this passive reliance on getting referrals from their existing client base.”
What are they doing differently? Firms with sustainable growth focus on cultivating relationships with other related professional service providers, centers of influence, and assigning somebody with dedicated accountability over marketing and business development, Inveen said. They are also more apt to have a specific marketing plan.
According to the study, sponsored byInstitutional, 43 percent of advisors said business development was a primary driver of past growth. Meanwhile, 70 percent expect business development to be the main driver of future growth.
In addition, 85 percent of respondents said they have a strategic plan. But most of these plans tend to be fairly simple, focusing on what Inveen calls “lagging indicators,” such as revenue growth or profitability.
“Those are really all lagging indicators, in the sense that something else has to happen for those results to be achieved.”
The best firms, he said, are also focusing on the measures that need to take place in order to achieve growth and profitability, such as client retention, client satisfaction and grooming and developing employees toward a career path.