Marketing Corner – Wednesday June 29th, 2016
6 Key Challenges Advisors Face Today
Advisors and Agents face many challenges throughout their career. From establishing a practice, building a client base, marketing, and dealing with downturns, the zigs and zags of an agent’s career can be erratic. Here are six key challenges advisors face today.
Shifting Demographics and Client Bases
America is on the cusp of the largest transfer of generational wealth, ever. Over the next 30 years, some $30 trillion will be transferred from Boomers to Gen-Xers and Millennials. That’s a pretty good opportunity for advisors, except for two things:
Nearly 66% of children release their parent’s advisor
Most advisors only focus on a particular age segment
Retaining clients across familial generations requires skill. Although there is no such thing as “easy money,” focusing only on Boomers does simplify your practice. You are able to understand the key needs of this population segment and positions to continually enhance your expertise. But doing this cuts you off from the next wave, which is going to arrive sooner than you think. Some demarcations put the outer edge of Gen-Xers around 1960, which means that in five-ten years, these will be the new Boomers. Plus many Gen-Xers and Millennials (yes, Millennials) represent planning opportunities now. Take some time understand the key issues facing each generation and expand your target market.
Marketing and Prospecting
Marketing and prospecting will always be a challenge in any business. Financial advisors are in especially prone position, however, when it comes to generating leads and converting new clients, since the service they provide is not a tangible object and often involves long time-frames. As generations shift, so too does the effective means to reach new clients. This is where having an array of marketing solutions is helpful. While you may have one core marketing activity (seminars, social media, referrals, etc.) having many different marketing tools will help you adapt to changing target markets. It’s not digital versus traditional or push versus pull marketing. It’s digital and traditional, push and pull marketing.
One immediate challenge facing the financial service industry at large is the DOL fiduciary rule. While advisors can expound endlessly on the potential impact of this rule, it does raise some concerns about regulation in general and the changing perceptions of what it is financial professionals actually do. We’ll see how this change plays out before full implementation (already there are many lawsuits set to argue against the rule) but it points to the importance of staying abreast of industry-wide changes and being diversified in your offerings.
Balancing Being A Good Advisor and A Good Businessperson
A good advisor provides custom-tailored service and excellent care. A good businessperson understands the true cost of profit and has a vision for the company on several different time scales. The challenge many advisors have is that they have to be both a good advisor and a good businessperson. Independent advisors may pull enough in production to hire a support staff, but the responsibilities of dealing with consumers and protecting the business’s growth fall squarely on their shoulders. Time spent as an advisor can take away time needed to ensure business needs are met. Time focused on the numbers takes away from time that could be spent with consumers, which at the end of the day, helps support the vision of the business.
How do you balance this? It may help to establish a distinct marketing and business plan periodically. You may also wish to align with another producer or agency. Or you might seek out a FMO to handle marketing and back office tasks, as well as help shape the scope of your business. However you do it, never forget that you are a business owner and need time to focus on business needs as much as client needs.
The market is unpredictable. While there are best practices, solutions, and strategies that work within and outside the market, the market still casts a large shadow over financial services. Market volatility presents a challenge to advisors in a few interesting ways. Advisors need to have some idea of how products and solutions will perform in the ecosystem of the stock market. Consumers, watching key stock figures and measurements, come armed with their own perceptions, fears, and concerns. This can lead to behavioral finance biases. While you can’t control the market, you can help people address their specific needs. Having a good understanding of consumers’ biases and issues can go a long way to selling your market-tough solutions.
Generalization v. Specialization
The problem many professionals face is to generalize or specialize. This is true of doctors, lawyers, and certainly financial advisors. If you are too generalized, you may miss opportunities to land advance-market, high net-worth clients. If you are too specialized, you may be vulnerable to changes with your specialty and target market. One possible approach for success is similar to the point we made about marketing: have one core offering, with an array of other offerings. This will allow you to go after niche clients, with a sustaining set of services.
Complimentary Seminar Secrets Guide + Checklist
Fill out the form below to receive
your complimentary copy.