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Differentiating Your Firm With Advisors

By Rubesh Jacobs

Our Q2 2010 FA Vision study indicates that, on average, an advisor works with 8.33 firms. With at least 7 other firms to compete with, how does a firm attract advisors, and more importantly, grow the amount of business with them?

We have recommended our clients go through a disciplined process to craft a comprehensive program that offers various levels of services to targeted advisor segments.

Here are the three important steps to creating and managing such a program.

1. Segmenting advisors
2. Designing appropriate programs for each segment
3. Managing the programs

Segmenting Advisors

In a regulated environment such as ours, throwing money at differentiation is unrealistic. So, we recommend that asset managers:

1. Really execute on the basic "blocking and tackling" of sales and marketing. This is the primary and easiest place to differentiate. For instance, is your story clear and consistent across all mediums? Is your brand story consistent with your actions? Are your wholesalers aligned and "singing from the same sheet of music?" Are the wholesalers able to clearly articulate your products' value proposition while comparing and contrasting those of your competitors? Are your internals satisfying advisors needs when they call? Fail on these, and nothing else matters.

2. Segment advisors based on the following (or similar) criteria:

• Current AUM with your firm


• Revenue to your firm in the last 24 months


• Size (or rank) of their book of business with your firm


• Potential annual growth of their book of business with your firm


• Profitability of the relationship


• Advisors affinity (or interest) to your brand and value proposition


• Feedback from the wholesaler(s)

Using data on the above criteria, categorize advisors into as few segments as possible. The larger the number the tougher it is to discern amongst them and the more complex (and expensive) it becomes to administer.

For example, start with Diamonds, Rubies, and Pearls. Diamonds should be your top producers, Rubies have a high potential of becoming Diamonds, and Pearls require your help to grow the relationship. As the program grows and matures, you can add more segments.

Designing Appropriate Programs

Programs (a.k.a service programs, asset retention programs, advisor acquisition programs, etc) are important tools in the differentiation game.

But, the key to differentiation in these programs is to see the world from the eyes of the advisor.

What do the advisors need to be successful? Remember, the needs of each segment of producers will vary significantly. Here are a few advisor sentiments from our FA Vision service that provides some insight into their perspectives:

• (Firm's) wholesalers know their competitors products better than their own
• I don't understand (their) products
• (They) have too much marketing material - when do I use what?
• (Their) internals never follow up with me
• The market has moved on by the time (their) commentary is in my inbox

Based on the above, it makes sense to design programs for each segment, focused on the following key areas:

1. Advisor Education - Consider various levels of content and media, including in-person, education and training programs.

2. Sales and marketing support - Consider models with dedicated sales support, customized marketing materials, or exclusive content.

3. Level of firm interactions with the advisor - The number and type of wholesaler meetings notwithstanding, consider a broader set of "interactions" such as exclusive Web sites/apps, meet-and-greets, Webinars, symposiums and the like.

Managing the Program

This is the toughest part of managing Loyalty programs. Our experience with clients yields the following guidance:

1. Make sure the goal of the program is clear and there are metrics to monitor progress against the goals.
2. Develop a scorecard for every advisor in the program and review it regularly.
3. The scorecard should be reviewed by a group that at least consists of some wholesalers, the head of distribution, head of services, and the head of marketing.
4. Use the program to entice advisors to do more business with your firm. However, set up a process to help those lagging stay in the program or civilly remove non-performers.
5. Be patient. Be steadfast. Be focused. The best programs often need time to iron out their kinks. Give your firm time to learn, adjust, and build a program that makes sense to advisors.

Clearly, this is not rocket science. The success/failure of all these programs dwell in the execution. The key to executing well, is to keep your finger on the advisor's pulse. If the program helps them do their jobs better, you succeed.