Not quite three years old, Clayton Shearer’s firm, Wellness Financial Services, is still pretty small. But a good 30 percent of his $6 million in AUM has come from referrals he met while working on charitable projects.
Over the past few years, Shearer has taught classes on finances and led children’s programs at his church. He’s gotten 20 new clients through referrals made by his fellow parishioners. “I’m planning to build my practice largely through volunteering and charitable activities,” says Shearer, based in Thornton, Colo. “It’s a good way to become involved in the community and help others, all the while getting to know more people.”
Most successful advisors, of course, build their practices largely through referrals. Those recommendations tend to come from satisfied existing clients, happy to send their friends and colleagues over to you. But in many cases, they also arise from contacts made as a result of volunteer work. That means anything from helping out at a nearby food pantry to doing fundraising for the local chapter of the American Heart Association or coaching a Little League team. These recommendations, which are the definition of ultra-warm, often turn into actual business. “When you have a strong referral from someone you volunteer with, it’s kind of a slam dunk,” says Shelly Church, an advisor with Raymond James & Associates in Naples, who has $275 million assets and serves on the board of several charitable organizations. Even if you don’t attract new clients from your activities, your charitable and community work can help solidify your reputation and build a bond with existing clients.
A DELICATE PROCESS
Before you even think about getting involved, you need to understand the number one rule: You can’t do any charitable work unless you have a real passion for it. “Your involvement has to be genuine,” says Kevin Cullen, Director of Practice Management at Loring Ward. “If it isn’t, that will become very visible to anyone who’s paying attention—and it won’t help you or the charity.”
Shearer says he has seen several people join the local Rotary Club, of which he is an active member, and spend most of their time hawking their practice, instead of getting involved in fundraising or community activities. “They show up for one or two months and then they’re gone,” he says. “You can’t make an appearance and expect to win clients.”
Church’s son was born with a congenital heart defect and passed away seven years ago. For the past 17 years, she’s volunteered for the local American Heart Association chapter; for much of that time, she’s been on the board. In addition, eight years ago, she joined the board of Camp Boggy Creek, a summer camp for children with heart disease, as treasurer and head of the investment committee. Before that, she volunteered for Step by Step, a school for children with learning disabilities. She’s gained about 10 clients from referrals or board members, each worth $1 million or more.
“People see how effective you are and how you follow through,” says Church. “When they’re looking for a financial advisor or they know someone else who is, they’re more likely to reach out to you than anyone else. “
That said, you can publicize your involvement, but do so discretely. Take Judith McGee, whose Portland, Ore.-based McGee Wealth Management has $330 million in assets and who says she’s garnered “a dozen” clients thanks to the various boards she serves on.
For one thing, her firm sponsors charity events, partly to help out the causes they believe in, but also for the visibility it affords. “In doing so your name is up before a whole group of people you’d like to meet,” she says. “And it’s a tax deduction.” McGee also acts as an advisor to the president of Warner Pacific College in Portland, which recently featured her in its annual report. Advisors also often include information about their activities on their web sites, with links to the organizations they or their staff belong to.
Or you can take a different approach. Church sends to clients an annual year in review letter that includes the amount of money she’s raised through her charitable work. “They love it,” she says. “They’ll come into a meeting and say something about the most recent heart walk.” About 30 to 40 clients will be so inspired they make donations to the organizations.
NOT ALL BOARDS ARE EQUAL
Keep in mind that the composition of a charitable group board can affect the amount and type of business you get. Some tend to attract more affluent members than others. McGee, for example, devotes much of her volunteer time to social service groups. “They work with underserved populations, something I care about,” she says. “But it isn’t necessarily the most profitable board to go on.”
Then there’s the matter of how local your colleagues are. A board with members from your area naturally will provide more fodder for business than one with people from all over. Church has received many more referrals from her American Heart Association work—the board is comprised of locals—than Camp Bozy Creek, which is governed by a group more national in scope.
You can take that one step farther by getting clients involved with your activities. Take Dale Terwedo, who heads Terwedo Financial Services in Edmonds, Wa. One of his many activities involves delivering Christmas toys to low-income families; he asks interested clients to help out. Last year, with slots for 25 volunteers, the list “filled up immediately,” he says.
Similarly, for the past few years, Ozgur Karaosmanoglu, a managing director with Raymond James based in Chevy Chase, Md., has helped out at a local food bank, along with his three children. He also invites clients to join them. He says that he usually gets about five referrals a year from his these activities.
Some advisors get involved in activities because clients ask them to do so. About four years ago, one of Karaosmanoglu’s clients, who had helped found Results for Development, a group that helps to alleviate poverty in developing countries, approached him about joining the board. He’s now treasurer. He also provides financial advice pro bono to charities clients are involved with.
PUT IN THE TIME
All this work takes time, of course—a lot of it. Church estimates that she spends about 20% of her day on charitable work. But to make a difference, and as a byproduct create a positive impression, there is no other way. “It’s a balancing act,” says Cullen. “You really can get sucked into whatever you’re doing, especially if you like it.”
One answer is to limit the number of organizations you join. “If you can be on only one charity board because of time constraints, that’s better than being on more and doing it halfway,” says Church.
A good solution is to shedule the volunteer work just as you would anything work related. “You put it on the calendar—two hours for your church committee, three hours for client meetings, and so on,” says Cullen. “That way you budget your time wisely.”
You also can try to find work that takes place at least partly during weekends or evenings. Terwedo, for example, devotes part of almost every week to his work as a pilot for a group called Angel Flight. Using his own plane, Terwedo, who got his pilot’s license in 2001, flies sick patients to hospitals or treatment centers, and that can take him away from work for an entire day at a time. His other volunteer work takes place largely at night or weekends.
For her part, Church’s activities don’t always occur outside of working hours. But, they tend to be during the “season”—November through April—when the community is filled with snowbirds in Naples for the winter. Or opt for what McGee calls “advisory” roles, in which you offer your expertise, rather than hands-on planning and other time-consuming activities.
No matter how well organized and devoted to the cause you are, however, don’t expect your activities to reap benefits quickly. You need to establish your relationships with fellow volunteers and your reputation as an effective professional and “That doesn’t happen overnight,” says Shearer. He joined his church four years ago, but says it’s only in the last year or so that he’s really begun attracting a sizeable number of referrals from his activities. For her part, Church has found it takes at least two years before you start to get referrals.
You can’t fake your commitment to a cause. But, play your cards right, and your altruism can reap big benefits to your reputation—and your bottom line.