After switching broker dealers, a long-time advisor is looking to attract a handful of reps to his new branch and to publicize his association with his current b/d.
For advice, as usual, we asked our panel of experts for their opinions: Hellen Davis, president of Indaba Training Specialists, a management consulting and training firm in Treasure Island, Fla; Philip Palaveev, president of Fusion Financial, an Elmsford, NY-based network of advisors; and Chip Roame, managing principal of Tiburon Strategic Advisors, a Tiburon, Calif.-based market research and strategy consulting firm for financial institutions and investment managers.
The situation:
Ken Sweeney spent the past 45 years or so working as a financial advisor in Lancaster, Pa., where he attended college. He started with a small brokerage firm but eventually went independent, running his own registered branch office. Then, just last November, after what he describes as a “falling out” with his b/d, he moved to a different firm, but he’s staying in the same community. Now, Sweeney wants to bring on four or so advisors to his new branch. Because he’s doing business under the b/d’s name, not his own, he wants to find a way to let people in the community know about his current affiliation. For Sweeney, who describes himself as a top-notch people and investment manager, but “lousy” at marketing, that’s not an easy task.
Sweeney started in the business at a small brokerage firm while attending Franklin & Marshall, a local liberal arts college. After he graduated, he was hired full-time by the brokerage, and he stayed there after it was bought by Prudential Securities, working much of the time as an assistant branch manager. Eventually, in 1992, he left to join Legg Mason, and about two years later, decided it was time to become his own boss and go independent. He started a registered branch office, setting up shop across the street from his alma mater. “I can see the dorms,” he says. He also hired three other advisors to work out of the branch.
Then, last fall, Sweeney had a disagreement with his b/d—he won’t divulge the cause of the conflict, but he does say it had nothing to do with any transgression on his part—and switched to a new one, choosing a firm he’d considered when he first went out on his own. His new firm also uses the same clearinghouse through which he’d operated before, something Sweeney figured would make for an easier transition. He’s not looking to grow his book significantly, which was $20 million in assets before he moved b/ds, because he wants the flexibility to attend his teenage son’s basketball and baseball games and other activities as often as possible; his wife, he says, has a much less flexible job. And he already has a number of “very wealthy” clients, he says, including some affluent Amish farmers, as well as loyal clients who have been with him for as many as 30 years.
But Sweeney, who says he has no plans to retire at the moment, does want to “get a little extra” by bringing on perhaps four advisors, hopefully by the end of the year. He’s already close to signing on his first one. There’s also the matter of personal gratification. Sweeney derives a lot of satisfaction from running a branch operation. “When I was at a much bigger company, I managed 50 reps, so this is a piece of cake for me,” he says. “I’m a good trader and manager of people on a day-to-day basis.”
Plus, thanks to his recent move, Sweeney wants to get his new affiliation out there in the community, because he does business under the name of his b/d. “Dealing with publicity—that’s not one of my strong points,” says Sweeney, who doesn’t have his own web site. He hired an outside public relations specialist and, because he’s well-known in the community, has been getting the word out, both for recruiting purposes and to publicize his new affiliation. He’s also placed some ads in local papers and contacted his b/d about his interest in recruiting.
At the same time, however, Sweeney is now a one-man-shop, with no administrative help. So he’s been spending a lot of time on processing the paperwork needed to switch his clients over, leaving little room for recruiting or marketing. And that situation could continue for the foreseeable future. Sweeney says he’s about half-way through his client roster as of now.
The advice:
Hellen Davis: For marketing, I think one of the best things an advisor can do is write a book. No matter what you’ve done in the business, you’re never really perceived as an expert unless you write a book. Of course, you need to be really strategic about it. I would suggest he find a book topic that lends itself to a series and will provide him the opportunity to meet more people in the community. That will help him turn some of those individuals into clients. And you end up being interviewed on radio stations and in other places, which can really get your name out there.
Also, to market himself, he should send out press releases every six weeks on something that is of interest to the media. Not necessarily about financial services, but about something in the news that would attract the attention of journalists and would not be seen as overtly self-serving. For example, he could talk about how what’s happening in the Middle East will affect gas prices and how that will impact people’s disposable income and savings. If he can offer something that’s not seen as too obviously self-promotional and also newsy, he’ll get mentioned in the press. Remember that most media outlets have been downsized and they need to find content.
It’s also important to understand that finding new reps is difficult these days. There’s a fierce competition among branches to recruit advisors so they can make their numbers. It requires a long-term strategy and will probably take longer than one year, maybe as long as a couple of years.
Specifically, I would suggest he seek out small guys, preferably with complementary areas of expertise, and share his office space. This wouldn’t initially be an opportunity to just share resources. Then, if there’s a synergy, they could join forces. A lot of guys leave the brokerage houses to build their own practices and two years later they’re still building. They can’t do it. This is the kind of person he could approach, someone who would find it attractive to band together with someone else through a shared service agreement. And by doing that, he’ll look bigger and able to recruit more people.
In a completely different vein, he’ll also have an easier time recruiting if he operates under his own name. That’s something I would suggest he think about.
Philip Palaveev: Recruiting is very hard now, extremely competitive. I’ve heard about a large b/d that recruited perhaps 100 reps in all of 2010. And it’s especially hard to do unless you’re a full-time branch manager. You generally have to make a choice between focusing on recruiting or your own client business. Otherwise, your profitability may decline. It’s like the concept of the player-coach. You won’t find a major league team with a player-coach, because being a coach is a full-time job.
It also might be hard to find reps without an administrative assistant. In fact, he most likely would be more attractive to other advisors if he had that kind of support. And that’s why I would suggest he not only look at hiring a good administrator, but also consider ways to grow his book of business.
As for marketing, generally it’s not optimal to put the name of the b/d in front of the client and market that firm. Better is to market your practice, your skills, and to do that under your name. The capabilities of the b/d are important, but not for the client.
I would ask: Why not do business under your own name? The reason to be independent is to build your own practice. And operating under your name is an important part of that. Here’s the thing: He just made this switch. What if he wants to make another change? Will he have to change his name again? As important, history shows that b/ds go out of business, get sold to another company. Just look at Prudential. And you don’t want to change your name every time there’s a change in the underlying organization.
By using the b/d’s name, you’re writing off something very important: the possibility of creating and building your own brand. If you create your brand, you control it. You own it. And you can profit from that—and sell it. If you’re operating under someone else’s brand, you can’t do that. It just won’t happen.
Some highly profitable businesses have been built up representing a national brand. Think of car dealerships. But, for the financial advisor, it’s a different situation.
Chip Roame: I think that reaching advisors and getting his name out involves the same step. To be successful, he needs a traditional, broad-based marketing campaign. The most important elements would include starting his own web site, launching a public relations campaign, and advertising in local publications. And it should involve more than just a few ads in the paper. What he needs is a real, coordinated strategy. That means, for example, he would run ads in local papers frequently, as well as keeping his web site up-to-date.
In the advertisements and his public relations communications, he can include the fact that he’s looking for advisors, perhaps in smaller print. And he should think about running more than one ad. He could introduce his new b/d and affiliation in one. And in another, he’d promote his areas of expertise. But, in both, he’d include that he’s looking to grow and adding clients and advisors. That’s going to make the phone ring.
It means he would be brand building and sourcing clients and advisors through the same basic marketing techniques.
But, also, I think he has to go regularly to the right professional meetings in the area. Go to FPA meetings where he’ll be likely to bump into other advisors. What’s more, there are probably estate planning, accounting and a bunch of other groups, and he should try to attend their meetings, too. Also, these groups might have their own newsletters for members and he should think about running ads there, as well. That way, the advertisements would get directly into the hands of the people he’s looking for. It’s a much more efficient approach.
There’s one other issue he needs to consider, however. It’s possible that once he recruits advisors and those reps reach a certain size, they’ll go out on their own. It’s just something he should be prepared for.
