Advisors prefer fast, flexible marketing aid: Study

As advisors offer greater service to their clients, they are left with less time for building their business. As a result, product providers who offer marketing initiatives that are flexible and not time-intensive are the most successful, according to a poll of U.S. advisors.

Boston-based Financial Research Corporation has completed a study, based on a survey of advisors and branch managers, outlining the most effective marketing methods to obtain advisor business.

Craig Kilgallen, the study’s author and director of the FRC’s Advisor Insight series, says the shift into more holistic planning has decreased the time advisors have to spend on each client and increased the amount of knowledge they need to conduct their business.

This trend in advisor business has been well recognized by product providers and dealers for more than a decade and has manifested itself in value-added marketing, in which product providers, most commonly fund companies, offer additional practice-support services that have little relation to the financial products they offer.

“As outsourcing money management becomes more accepted, and as due diligence groups and research groups at the different distributors rise, the advisors are taking on much more holistic roles, becoming more like personal CFOs or wealth managers,” Kilgallen says.

One-on-one and online value-added programs that complement this business model were chosen as the most popular.

“As we all know, the advisor’s role and time to do all these type of things required for that role becomes decreased. There is a desire to do value-added programs at their own pace and as their schedule fits,” says Kilgallen. “Online access is popular because they can access [the program] as time permits. They want specific programs tailored to their business that are going to impact directly their practice”

When it comes to one-on-one programs, advisors are particularly fond of those that offer them a personal relationship with a wholesaler who takes an active role in helping them with their practice.

As for the subjects advisors are most interested in, Kilgallen says resources that help advisors increase referrals remain a very popular one.

“I would say there is a lot of interest in referrals. Niche building is very popular these days as well. We are hearing more and more about successful practice in niche markets that focuses on specific clients such as doctors, et cetera,” he says.

Another hot topic, though not as much on the radar for Canadian advisors, is Individual Retirement Account (IRA) rollovers — when a client exits an employee-sponsored retirement plan and has the option to transfer the accumulated wealth to another plan. Kilgallen says it’s a topic that has generated considerable press and has proven a lucrative growth area for many advisors.

The services in which advisors are least interested came as a surprise to Kilgallen: estate planning and heritage planning. There was also little advisor interest in topics that address practice benchmarking, which allow advisors to compare their practice to those of others in the industry.

“We think that firms need to get into generational planning if they want to hold on to assets, particularly as the key holders of the accounts pass away. It seems like those assets have moved away from the advisor,” he says. “We thought that would have been more of an important topic for them, but right now it’s not.”

Similar trends are being observed in Canada. Randy Ambrosie, president of AGF Funds, says his company has been reorienting its marketing model heavily toward the value-added programs.

Ambrosie says his company has created a marketing model that mirrors the fact that advisor firms have become more client-centric. The systemic downshift of wealth management responsibilities in Canada from employers to individuals has created a need for more holistic planning on an advisor’s part.

“Advisors are great at doing the right things for their clients. Advisors get looked after as a by-product of doing that work. We want to run the same kind of business here at AGF. If we get it right for advisors, it’s going to help them get it right for investors, and we’ll get our fair share of rewards back,” he says.

AGF has focused on programs that help advisors create a better client-centric model.

“This generation of advisors is shouldering an enormous burden for the long-term wealth of their clients. It’s no longer the play money; it’s the serious money. Their clients are asking, ‘How do I pay for my kids’ education? How do I finance retirement? How can I afford long-term health care?’ Those are critical issues that Canadians face,” Ambrosie says. “As this change in reality happens to advisors, they are looking for solutions and partners that can help them tackle those issues head-on. It’s probably been the last five-plus years where we have seen the greatest shift, and advisors need more help.”

Ambrosie says AGF’s most successful program recently has been its Sound Choices referral workshop, which includes a 24-page booklet that outlines how advisors can go about cultivating referrals.

John Dale, executive vice-president of Mackenzie Investments, says his company has pushed the value-added marketing approach for the past decade.

Dale explains that many of Mackenzie’s initiatives, including the day-long Mackenzie University roadshow, are designed to help advisors streamline their time. For example, Mackenzie sends out a CD called Ideas in Action, which gives about a 20-minute audio preview of recent and acclaimed business books. Mackenzie also launched a website, burnrate.ca, which offers education on how clients can get their spending habits under control.

Mackenzie’s wholesalers take a consultative approach to selling, Dale says.

“It goes back to the concept of running a small business. When you have a good relationship with a wholesaler, you are very interested in talking about how your business is going,” he says. “An advisor may say they want to do client seminars but haven’t had much luck with it, and the wholesaler is able to offer good ways to do this. The wholesaler can say, ‘Let me take you through a program we developed on how to conduct an effective seminar.'”

The core business of companies like AGF and Mackenzie is selling financial products, and there is no guarantee that the value-added program translates in sales. In fact, Dale says, they are not directly supposed to.

“I’m pretty sure the advisor channel would not choose a fund based on the practice management stuff we do,” he says. “It’s just part of relationship management, staying top of mind so that when they are having to make an investment call, they are at least looking at our products.”

Ambrosie says value-added service is the “third pillar” of AGF’s success strategy with advisors.

“Advisors said, ‘You have to do three things well to earn the right to do business with us,'” he says. “You have to have solid investment management. That’s the effort and energy we put into our investment team so we can deliver the long-term performance that investors have wanted or need. The second is the development of a product shelf that helps provide a solution that Canadian investors need. The third is relationship management — advisors want to do business with firms they like, know and trust.”

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com

(05/07/08)

Mark Noble