Four Life Stages of an Advice Business

Four Life Stages of an Advice Business

When I was much younger, I used to sail boats up in Gosford. They were called Sabots, small, snub-nosed craft which at first I sailed with another kid, then later on my own.

One of the first lessons I learned in sailing was around equipment. You see, these little boats ended more complicated than I realized.

Certain types of equipment were right for heavy weather, other types for light winds and a whole bunch in between.

If I’m honest I was a bit of a one-trick pony when it came to sailing, and it wasn’t a good trick. I soon gave up.

It wasn’t later the right equipment lesson dawned on me fully.

Businesses are the same. Different challenges demand different growth strategies. The issues comes when the owners of those businesses are like twelve-year-old me in the Sabot, wondering why what worked before doesn’t anymore.

I’ve found that the key to unlocking this problem – the wind selection of growing your business – lies in knowing what stage at.

The diagram below should explain it all, but let me go through it.

The life of an advice business generally goes through four stages. This isn’t exclusive to advice firms; it’s just that I’m talking about the model in terms of advisors.

The bottom level is startup.


These are the initial thralls of a new venture.

Often this is about survival. It may be tough to get clients, hard to build momentum and it’s usually about one or two people with a vision to create something.

At times it might seem like the business is never going to kick start but here’s the thing; consistent efforts directed in the right way means this kind of business kind of kicks in earlier than most people realize, though unfortunately sometimes later then many people’s persistence allows.

Where should the focus be in a startup?

It’s mostly about revenue. That’s what matters. Get enough revenue in to pay the bills. Like air when you’re exercising hard, you just need to get enough in so you can catch breath and move onto the second phase.

The second phase is stability.


This is where your business gets its’ head above water. There’s still not huge amounts of profit, but there’s enough that the pressure’s off and, in most cases, the clarity of thinking starts to develop once the financial pressure eases.

Here’s the important thing; at this phase the focus (if you want to progress up the pyramid) has to stop being about just revenue. It’s got to become about the profit.

That means the right kind of clients. The kind of clients who are going to buy into your offer, agree to engage the way you designed them to, and pay a fee at least30 percent higher than your cost to deliver.

If you get this right, this is the point at which you start looking back at some of the pricing decisions you made at the earlier phase and realizing you may have undercharged.

A word of warning here, although many mature businesses no longer consider themselves to be startups, the reality is, often they still behave as if they’re starting out. It’s still about the revenue.

The bottom line is this; if you continue to focus just on revenue and nothing more, it’s inevitable you’ll yourself with a capacity issue. I see this so often, so it’s a point worth making.

If you manage to get past stability, you’re at the next phase. This is what I call leading.


Leading is where you have stepped above most other advice firms. In many ways you’ve become an actual business. You’ve got systems & processes, a team underneath you and your focus has changed.

If you’re an advisor in this kind of business, you’re focused has likely become time. More specifically, maximizing the amount of time you have to coach your team, work on the business or do the stuff you love.

That means removing the dependence on you, being even more selective about the clients you want to take on board, hiring the right people and spending time building the infrastructure.

Advisers who nail this usually shift into a different mindset. It’s no longer just about the right kind of client. It’s about the personal time required to manage this situation?

Again, failing to make this switch, even if you’re still taking on board profitable clients, you’re going to get dragged back.

The final phase is rare, hallowed turf when it comes to advice firms, because so few get there. This is what I call leveraged.


What’s leveraged? Well it’s the point at which your business has become almost like a franchise, by another name.

Your systems and processes are so well developed that you could pick them up, drop them into another business (whether it’s acquired or started from scratch) and repeat the success you previously had with minor, maybe even no tweaks.

It’s the point at which, maybe you as an advisor are no longer actively involved in training staff. In actual fact, the quality of your staff at below a certain level is less important than the quality of their training.

This is the end game, because if you can create this you’ve got a business that represents the future of advice.

That’s it! If you know where you are, it should make it easier to work out what you should be doing.

If you don’t know where you are, then it’s entirely possible you could unknowingly be the barrier to your business making the step up.

Stewart Bell
Development
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Stewart Bell is founder and business coach at Audere Coaching & Consulting, a practice management firm specialising in business improvement and innovation for professional ... Click for full bio

Capturing the Attention of Millennials: Be Relevant and Digital

Capturing the Attention of Millennials: Be Relevant and Digital

I know Gen Y are stereotyped as being transient, digital natives who are impossible to capture, but that is just the world we live in today. Technology has caused a proliferation of advancements and the financial services industry is (or should be) feeling the pressure. We have seen the rise of the robos, fee compression, virtual advisors, and various regulatory changes, all culminating to challenge financial advisors to find ways to cut through the noise to demonstrate their value.

Developing an effective marketing and lead generation process that’s tailored to millennials is vital for two key reasons:
 

  • It’s the only way you’re ever going to capture their attention
  • It’s the only way your business can remain profitable serving this demographic
     

Let’s be honest; there is a bit of an over-hype and obsession with millennials right now (don’t get me wrong, I’m obviously a fan). Nearly every business is starting to ask itself, “How do we capture this next generation?” And they’re spending tons of time and resources devoted to this one demographic. So think about all the different emails, social media and digital advertising you’re competing with, even beyond just the financial services industry. Whatever you put out there will have to be niche to their needs in order to capture their attention – and will have to feel authentic if you want to build enough trust to get them to engage.

As you begin to assess your ability (or desire) to serve younger investors, the question about profitability will inevitably come up. The traditional marketing advisors do today for their HNW investors is just not an effective or profitable way to target millennials. No COIs, business networking, client events, newsletters – that takes up way too much of your time. Instead, you should take a more scalable approach using digital marketing and messaging that actually resonates with your intended target market. Serving millennials should not be a loss leader; that’s exactly why segmenting and tailoring your marketing will be vital with this demographic.

Bringing it back to our friends Marg, Chip and Drew
 

In order to assess what type of marketing will effectively capture the attention of our three millennial personas, we need to answer these questions:

  1. What are their aspirations?
  2. What are their problems?
  3. When is the best time (in their lives) to capture their attention?

millennial

Marg seems to be more reactive and short-sighted, only seeking advice when there’s a triggering event causing her stress. Chip and Drew tend to have relatively similar characteristics, which you’ll notice quite a bit throughout our research. Aside from income, assets and debt levels, Chip and Drew tend to have the same needs and preferences. This means that you can take a relatively similar marketing approach in terms of messaging, but you’ll need a slightly different approach for each party later on, when we get into fees and service models.

Chip and Drew tend to be a little more financially mature than Marg; they look at longer-term goals and aspirations. The only exception would be that, when it comes to how these three define financial success, they all answered, “Having enough savings to retire when I want” as their top choice.

With the goal of tailoring your marketing messaging and approach to effectively engage these different segments, here are our recommended approaches.

Marketing to Marg
 

Topical blog posts and social media are the way to go. Even though Marg might not be ready for or in need of your professional advice quite yet, you can still find scalable, automated ways to prospect her (with the long-term goal of eventually capturing her once she becomes more like Chip and Drew). The key is to identify those triggers that cause Marg to seek help and find a way to insert yourself into the picture through digital marketing.

Writing a blog with topical posts that address key questions or issues that Marg might Google or research in her time of need is a great starting point. Think of blog titles like: A 5-Step Guide to Building a Budget, What to Do When You Have Credit Card Debt, and How to Improve Your Credit Score. Even though blogging might feel like it takes a lot of initial effort putting together the content, once it’s written, it can be leveraged in so many ways that you can actually realize a return on that investment of your time.

One blog post can be broken down into 10-20 different social media posts, posted on many different social media platforms (Twitter, Facebook, Instagram, etc.), and can be used for months after the blog goes live. And, over time, that content will accumulate and improve your website’s visibility in search engines (that’s search engine optimization) to increase visitors and visits from people like Marg.

Marketing to Chip and Drew
 

Build a targeted marketing campaign focused on life event planning. Retirement is still a very important issue when it comes to emerging wealth prospects like Chip and Drew. Not only do they define financial success as the ability to retire when they want, they also cite retirement planning as the top financial issue they want more help with. However, big life events are the key trigger for Chip and Drew to take action on their finances. And so the key to capturing these millennials is by striking at the peak of their interest – when these life events happen.

But before you can market messaging and content specifically focused on life events like marriage, first-home purchase, first child, and change of career, you have to first address any potential branding issues. If you’re serious about wanting to engage this group, your brand and website cannot be hyper-focused on traditional financial advisor themes like retirement, investing and wealth management. Expand your current brand or create a separate brand geared to this demographic that focuses on financial planning for life events (which can still include retirement as one key component). Then build topical messaging and content that plays to each life event, like “3 Financial Musts After Having Your First Child.”

If you’re fully committed, you could even take it a step further by implementing marketing that specifically targets millennials going through specific life events. For example, you could pay to promote social media posts or ads that only target millennials between the ages of 28-30, the average age most millennials are getting married . Maybe you purchase ads on blogs or other websites like The Knot for newlyweds or The Bump for new parents. You could also identify social influencers who blog or speak about life events and other topics affecting your target market and look for cross-promotional opportunities. The more targeted your marketing and content, the more likely you are to cut through the noise and capture millennial attention.

This brings me to a key point
 

Marg, Chip and Drew are not niches; they are merely personas representing 3 key segments within the millennial cohort. However, niche marketing is a very powerful tool that should not be overlooked when discussing effective ways to market to Gen Y. The more niche your content and targeted your advertising approach, the more effective your marketing will become in grabbing their attention. Case in point: A 33-year-old dentist is much more likely to click on something titled “Dos and Don’ts of Tackling Debt from Dentistry School” than a generic title like “Dos and Don’ts of Tackling Student Loans.” You want millennials to feel your content to is talking specifically to them – and that you’re a resource who understands the needs and issues of people just like them.

To those advisors who still aren’t really interested in serving millennials, but are using this series as an opportunity to review industry trends – this niche thing is not just for millennials; it can be an effective marketing tactic to use with all generations of all ages. There are so many changes going on right now in financial services that can confusion among investors and muddle your value proposition as a financial advisor. Recent technical innovation has caused a proliferation of many different business models in our industry. You’ve always competed with DIY platforms, but now (whether you like it or not), you’re being compared to robo and virtual advisors who likely spend a lot more on digital marketing and targeting than your traditional advisor. That’s why niche marketing can play a key role in helping you to cut through this noise and grab the attention of potential prospects (no matter what age they might be).

To learn more about outsourced services that help you grow - saving you time, increasing profitability, and differentiating you from your competition visit the SEI Advisr Network here.

Missy Pohlig
Insights
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Missy Pohlig is the millennial contributor for SEI's Practically Speaking and also serves as Program Manager for the Solutions Team in the SEI Advisor Network, helpi ... Click for full bio