A great example of building a powerful financial advisory practice through marketing can be found in a short but sweet book by Scott Hanson and Pat McClain entitled Investment Advisor Marketing: A Pathway to Growing Your Firm and Building Your Brand.
The authors are the co-founders of Hanson McClain Advisors, a Sacramento, Calif.-based firm that has grown to US$1.6 billion in assets under management (AUM) during its 20 years of existence.
Hanson and McClain say they reached that exalted level of AUM primarily through effective and consistent marketing. In fact, one of the most revealing comments in the book gives us insight into their perspective: “We are not investment advisors who market; we’re a marketing company that happens to be in financial services.”
Today, the firm spends more than US$1 million a year on various promotional activities. However, the authors note, they started their firm the same way most advisors do: with very modest marketing. In fact, most of their initial activities were free or very low-cost. As they grew, they continued to reinvest in the business with increasingly varied activities.
To help us understand the importance and the process of marketing, the book is divided into four distinct sections:
– Advisor marketing. The first section makes an important distinction between sales and marketing. Sales is solely about converting someone who is attracted by your marketing efforts into a client.
Marketing, on the other hand, has two purposes: to increase the number of sales opportunities and to “back market” to existing clients.
– Community involvement. The second section emphasizes the business-development opportunities that can come from simply being a good corporate citizen. Of course, you become involved in community causes to support their good efforts and, as the authors point out, many of these organizations very much need the skills that an advisor can bring.
– Niche marketing. The third section looks at the strategy of narrowing the focus of your promotion efforts to differentiate yourself from competitors. Can this work for newer advisors? You bet!
When Hanson and McClain were starting out in their 20s, they targeted telephone-company employees. While those prospects typically didn’t have much capital to invest, they had gold-plated pension plans. As workers began to retire, Hanson and McClain were well established as the “go-to guys” for advice on how to deal with financial assets that were much larger than anything most of the workers had managed in their lives.
Herein lies a valuable message: it often takes patience and a willingness to accept delayed gratification to position yourself effectively in many niche markets.
– Assessments and analytics. The fourth section is the shortest but possibly the most important. It explains how to track the results of various marketing activities to gauge their effectiveness and measure return. While some of the techniques are advanced, as you would suspect in managing a US$1-million budget, the lessons are applicable to much smaller-scale marketing plans.
Hanson and McClain didn’t have to write this book. In the grand scheme of things, it will have little impact on the further success of their business. They wrote it because they wanted to share the strategies that landed them on Barron’s Top 100 Independent Wealth Advisors list in 2012 and 2013.
It would be wasteful not to consider their advice.
Investment Advisor Marketing: A Pathway to Growing Your Firm and Building Your Brand
by Scott Hanson & Pat McClain, Irish Canon Press; 117 pages, US$29.95
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