 Cover Story - March 2001 This six-year tradition is a highly anticipated group vacation. It’s also a chance for Schneider, CFP, to spend time with his top clients and brand Bill Few Associates, his Pittsburgh-based financial advisory firm. "This is one of the best things I’ve done for our business in terms of building relationships with clients and meeting their friends, who may become future clients," says Schneider, whose 60-person firm manages about $1 billion in assets. "The original intent, however, was just a day out of the office." As the giant brokerage houses hike up their multimillion-dollar advertising budgets, and the competition for clients grows fierce, independent advisers are bolstering their services - and dreaming up innovative marketing strategies - so they can compete with such well-funded household names as Citigroup and Merrill Lynch. "Independent financial advisory firms must outthink the larger firms, because they can’t outspend them," says Martin R. Baird, president of Advisormarketing, a Phoenix-based consulting firm for advisers. "They can’t compete directly, so they must compete differently." Baird recalls an adviser who sent potential clients a designer shoe filled with gourmet chocolates. The adviser then made follow-up calls, saying, "I just wanted to see if I could get my foot in the door." Out of courtesy and amusement, the prospect usually gave the adviser 10 minutes, Baird says. Marketing consultants and advisers agree that strategic marketing approaches can help smaller firms develop a unique brand with clients. The first step is to develop a niche, whether it’s specializing in 401(k) plans; targeting a client group, such as airline pilots; or serving a less-competitive geographic region. Next, all marketing efforts, including seminars and brochures, should be directed to the narrow target-client group. Another way to differentiate a firm is to use innovative thinking to provide value-added services, such as client-appreciation dinners, birthday gifts, or wedding-anniversary cards. Still other advisers choose to form an alliance with a partner who has deeper pockets, such as a broker-dealer. |
| Going It Alone A cutthroat marketplace isn’t the only reason independent advisers are stepping up their marketing efforts. Increasingly, advisers who want to provide advice without having to pitch parent-company products are leaving large firms. These newly anointed independents strive to establish their own identities. The Denver-based Financial Planning Association boasts more than 24,000 independent advisers, while the Buffalo Grove, Ill. based National Association of Personal Financial Advisers has seen its membership jump to 700 fee-only advisers from about 480 in 1994. "The growing number of independent financial advisers actually have an advantage over the big brokerages," says Dr. Lynda Falkenstein, a Portland, Ore. based marketing and business development consultant to financial advisers, and author of NICHECRAFT: Using Your Specialness to Focus Your Business, Corner Your Market, & Make Customers Seek You Out (Niche Press, 2000). "Without question, people buy people. And this is especially true in financial services, where advisers have a personal relationship with the clients and know what’s in their wallets and bank accounts, as well as their hopes, dreams, and goals," she adds. Falkenstein says independents can "exploit the personal qualities they bring to the table more nimbly" than their brokerage-house counterparts, who face the constraints of a large organization. "In an industry where almost everyone has access to the same products, ultimately, the financial adviser is the niche," she adds. |
| Wielding the Branding Iron The most valuable brand in the world is Coca-Cola, followed by Microsoft, according to a survey by Interbrand, a branding consultancy firm in New York. Interbrand analyzes market capitalization, revenue, and other performance indicators and translates those figures into brand valuations. Advisers say that for branding to work as a business strategy, the brand needs to be powerful enough for consumers to have specific associations that are difficult to shake - just as the brand name Coke is now associated with soft drinks of all types. Although advisers are working on a much smaller scale than Coke and Microsoft, they must narrowly define their unique offering, so clients readily associate the firm’s name with a service. What many advisers forget is that "building your brand goes way beyond advertising," says Andrew Zolli, author of the forthcoming book, Brand and Deliver (Macmillan Press, 2001). Even though the media has been the dominant way companies have built brand awareness, Zolli says that the direct experiences a client has with a product - such as the interaction between advisers and their clients - are actually much more powerful brand builders. "Branding is a function of your firm’s ability to deliver consistent experiences over time. Advisers who have close and information-rich relationships with their clients have the experiences that are the most powerful drivers of brand," Zolli says. Like Zolli, Richard George, professor of marketing at St. Joseph’s University in Philadelphia and coauthor of Success Leaves Clues (Silver Lakes Publishing, 1999), defines brands as the perception the public has of a product based on their experiences. "People think brands are products; they’re not," George says. "They’re perceptions in people’s minds. People only buy good feelings and solutions to problems. And it’s the same thing with financial planners. Clients want to feel that they’re taken care of and that their family and heirs are taken care of." |
| Developing a Niche Deciding what problems a firm can solve better than any other firm, and identifying a target market segment, or niche, are critical parts of branding. "You win the marketing war by serving the client better than anyone else, and in so doing, avoiding the face-to-face confrontation with heavily resourced giants," George adds. This means that to win the branding war, advisers have to be the best in their niche. "You want to create the niche that causes you to be perceived as the only game in town," Falkenstein says. And the more narrowly advisers define their niche, the better. Falkenstein cites the example of Thomas R. Livergood, CFP, whose Hinsdale, Ill. based firm specializes in working with retired commercial airline pilots, a group with whom he developed a rapport while working at Harris Bank in Chicago. "I had been noodling with the idea of targeting pilots, and reconsidered it as I tried to develop a niche practice - not just target marketing but making my whole practice a niche," he says. Specializing in IRA and estate planning for retirement assets is how Eric Donner, CLU, ChFC, focused his Summit, N.J. based firm, Retirement Distribution Strategies. "This country holds $12 trillion in retirement wealth," Donner says. "Most planners focus on the accumulation of those assets, so seven years ago, I decided to focus on the distribution of those assets." Donner has even devised a two-day "IRA Boot Camp" to train other advisers in the intricacies of retirement-distribution planning. And his services have been well-received - so much so that two years ago, Donner was able to sell his financial planning practice and devote himself full-time to helping advisers develop this expertise. Increasingly, advisers are stepping back from their firms to think about how best to position themselves. Another approach to finding a niche is to promote the firm’s identity in opposition to the larger firms. For Steve Milner, whose Newport Beach, Calif. based CPA firm recently launched its own financial planning department, the challenge has been to figure out how distinguish his 80-person firm from the giant firms in Southern California. "We brand ourselves as the anti-big-five CPA firms," says Milner, managing partner of Squire Milner Reehl & Williamson. "Our pitch is that we’re more flexible and client-service oriented, and we work next door to you." Milner’s firm went through a growth spurt in the mid-1990s, causing the partners to reexamine how they wanted to brand themselves. "We debated what our culture was, our vision, and how we wanted people to perceive us," he says. The partners decided they wanted their marketing materials to convey that they were "a little younger, more creative, and more flexible than the bigger firms. We wanted to have humor, and the word we agreed on to describe us was ‘irreverent,’" he says. Milner adds that his firm continues to examine its branding strategy, and that the marketing push hasn’t slowed down. "You can’t kick back," he says. "Marketing is a constant, because clients come and go, they merge, get acquired. We’re always cultivating new clients." Still other advisers decide to establish a name for themselves by exploiting their unique in-house talent. Michael Farr, for example, president and founder of Washington, D.C. based Farr Milner & Washington, a money management firm, used the media to brand his firm. Farr has been a regular commentator or guest host on many television and radio programs, including CNNfn, NPR’s Business News Network, CNBC, and CNN, and has been quoted in The Wall Street Journal. "The thinking was that it’s better to be quoted in The Wall Street Journal than to place an ad in The Wall Street Journal," he says. What’s the result of all this exposure? It helped establish Farr’s credentials so that his firm could attract the interest of its target-client group - foundations. "People who pick their financial adviser off a radio or TV show will leave just as quickly," Farr says. "But with foundations, when the board sees your credentials, it gets them interested." Farr says his firm’s institutional clients make up 20% of the firm’s business, whereas institutions showed limited interest in working with his firm prior to his appearances. The cost of Farr’s appearances in dollars: zero. |
| Spending Escalates at Large Firms One of the biggest myths independent financial advisers have is that to market themselves aggressively, they need to spend a fortune, Falkenstein says. "The best strategies cost the least," she adds. But many advisers are intimidated by the staggering resources larger firms are devoting to marketing. Citibank, for example, the best-known unit of Citigroup, has just launched a major advertising campaign, valued at $100 million, to promote its brand, its bank-branch network, and its credit-card company. This is quite a jump over last year. In the first nine months of 2000, Citibank spent only $14.6 million in U.S. advertising, according to New York based Competitive Media Reporting. Meanwhile, Merrill Lynch & Co. has launched a national advertising campaign aimed at households with $1 million or more to invest, with actor Steve Martin providing voice-overs. The new campaign signals a departure for Merrill, which in the past had positioned itself as a brokerage firm for the masses. Other firms opening their wallets include TD Waterhouse Group, the global online financial services firm, which launched a $165 million marketing initiative last year that featured celebrities Dennis Miller and Rene Russo. Bank of America and First Union Corp. also ramped up their advertising spending last year. |
| Teaming with Bigger Fish Advisers who want access to greater resources and large marketing budgets can consider partnering with a big name broker-dealer. For example, 3,200 advisers got a big break when their broker-dearler, St. Petersburg, Fla. based Raymond James Financial Services, acquired Tampa Stadium in 1998, renaming it Raymond James Stadium. The stadium - home of the NFL’s Tampa Bay Buccaneers and host of Super Bowl XXXV last January - has succeeded in promoting the Raymond James brand, says Richard Saunders, vice president of business development. "This attention helps our financial advisers," he adds. "The mentions we received as a result of the Super Bowl translated into better brand awareness for us." When Raymond James rolled out its multimillion-dollar national advertising campaign in January, the firm’s advisers "were able to piggyback on what we’re doing on a national basis," Saunders says. |
| Compensating for Limited Funds Still, the independent’s most valuable branding weapon is creative thinking, marketing experts say. Baird is among the consultants who promote the use of memorable gimmicks. He cites the example of an accountant, whose pre tax-season branding strategy includes sending custom-labeled bags of coffee to prospects with the message, "Is thinking about your taxes keeping you up at night?" Baird says that most people receive 4,000 marketing messages per day, so "a lot of creative thinking is needed if you’re going to get noticed. I think most marketing efforts aren’t nearly innovative enough." Since most advisers have caught on to the importance of self-promotion, small firms have to turn up the heat, marketing consultants say. "Where I live in Arizona, every week I see ads in the local paper for advisers having their invitation seminar," Baird says. "Advisers need to take their game to a higher level." For Schneider, it was an acute awareness of the competition from larger firms that made fly-fishing a marketing strategy of choice. His firm has also launched a private-client group to target individuals with at least $1.5 million in assets. "We aren’t Merrill Lynch or the big firms. We can’t spend millions of dollars on a marketing campaign," Schneider says. "But we have other ways of showing our clients we appreciate them." Schneider and his partners also invite top clients to a restaurant a friend owns, and to the Pittsburgh Symphony, where he’s on the leadership board. "We’re working to develop more of a community presence," he says. |
| Choosing the Right Seminar Seminars have become an increasingly popular and cost-efficient way to lure new clients. As with all branding efforts, these should be designed to attract the target audience. This means that advisers who want to work with the senior market might invite a nutritionist to a local health-food store to talk about the dietary needs of seniors - and arrange to have free samples available. Or an adviser whose ideal clients are working mothers may want to invite a psychologist to his office to discuss how to raise healthy, happy children, because that topic is important to working mothers. Falkenstein suggests getting sponsors for these seminars so that they’re free to produce. "Identify groups that have a vested interest in the same groups you do. Then encourage them to join you in reaching the target audience you both need," she says. And for advisers who are tired of the seminar route, there’s the example of the Oregon-based adviser who eschews seminars and instead invites clients instead to a golf-learning center. "Some will say that golf and financial planning have nothing to do with one another," Baird says. "But this adviser is telling his guests, ‘You care about golf, so I’ll help you with that. And when you have a financial question, give me a call.’ And you’d be surprised how many calls he gets." |