Smart client acquisition: The way forward for advisers to grow

Client acquisition is one of the most expensive functions in an advisory practice today. Traditional, feet-on-the-street methods for generating leads are still valid, but no longer enough. You work your referral system hard, you network at community gatherings and you offer to conduct awareness programs for potential client groups. But, the one or two percent potential clients who may be considering working with you, will want to research you first. And so, you’re advised to create an online profile, share testimonials, build credibility by sharing content online and in media, and build up your reach using social media. At which point you probably ask yourself – at what cost each new client?

The right question to ask, however, is: which type of client justifies this cost of acquisition for me? And this isn’t as simple as categorising clients into retail and high net worth. Because, the second part of this question is about you or your practice. Recognising that all investors are not your clients is the first step towards investing your time and money wisely in customer acquisition.

Let’s look at three moves that will help you ensure that the growth of your business and client base are well-aligned from the start.

Robo advisers are moving in fast to capture the transactional, mass retail end of the investment market. With open banking APIs gaining ground, they will also probably gain early access to bank account holders looking for convenient and non-expensive investment services. Of course, what they gain in access, they may not be able to deliver in terms of penetration. But their entry into the fray is forcing market players to focus on investor profiles and journeys; this, in turn, can help independent financial advisers (IFAs) identify the kind of investors they want to service, and the type of practice they wish to grow into.

To map your market, start by asking yourself: what services are your practice best geared to offer in a cost-effective manner? What are your logical next steps in terms of expanding your services? In which areas of expertise can you build credibility? Which demographic of clients do you have the easiest access to? Which demographic of clients do you work best with? What size of assets do you need per client to break even on the acquisition costs? These can be painful questions to ask, especially when you need to narrow down your prospects, but setting out to acquire clients without defining your market might actually stunt your business growth rather than contribute to it.

Having identified your potential clients, you will ideally figure out associations and networks that allow you to reach them. Think, also, about how they may find you if they decide to search for a financial adviser for themselves.

Like most other products in our lives today, the search for financial advice also starts online for most investors – and not all of them are looking for online investment platforms or robo advisers. Ensure that your business can be discovered easily online by creating a profile and investing time in keeping it updated. Creating a website for your practice is ideal because it allows you to lay out your services, your philosophy and your differentiators clearly. However, it is by no means enough. If you want to reach potential clients who may not even know your name yet, you need to create a presence across platforms like traditional media, social media, trade directories, and investor focused content platforms. Choose wisely, though, as once created, all profiles need to be managed and kept current. Start off with a profile on one or two platforms that you think are best suited to showcase your services to the right set of clients, and slowly build your credibility with good quality content and regular updates.

When creating your profile, avoid generic or overly exaggerated write ups. Be objective and focus on your credentials, services offered, and strengths. Testimonials are great boosters, but must include client name, city, and designation to be credible.

As more and more services in the financial advisory space get commoditised, forward-looking advisers are moving their positioning away from product focused advisory to holistic wealth management. As long as you position yourself at a transactional level, you are competing on cost. When you position yourself as the Chief Financial Officer (CFO) for your client’s wealth, owning advisory on risk as well as return, you can compete on value delivered.

Being able to do so requires that you are qualified to create financial plans, give investment advice across asset classes, products and managers, and have the infrastructure to create and execute customised asset allocation strategies as per the client’s needs. A strong behaviour management approach, consistent and personalised processes, and a reputation for good governance, all add confidence to your pitch when approaching new clients.

Over the next ten years, we see the competition for rewarding client relationships intensifying. With robo advisers continuing to focus on mass retail, and aspiring to gain a foothold in the mass affluent segment, IFAs adopting a professional approach to deliver niche wealth advisory segments will thrive. Competitive barriers to entry will be created by developing exclusive focus on certain client segments, further raising the costs of new client acquisition. Your client acquisition strategy thus needs to become selective today, in line with how you want to position your business a few years from now.