Respond quickly to market turmoil
By Ed Morrow
Intl. Assoc. of Registered Financial Consultants
All the markets have been falling: the stock market, the real estate market, the automobile market, the employment market, the interest rate market, the currency market, etcetera and etcetera.
For you as a financial advisor practitioner, this means that if you do not take radical action, you are very likely to experience the "falling advisor market."
There are two actions you must take, and you cannot delay:
1. Retention: You must retain as many of your clients as possible. Some clients will attempt to blame you for the falling markets, and that is to be expected. However, previous surveys indicate that even in previous market crashes, clients are far more likely to stay with a financial advisor who maximizes contact.
2. Addition: You must obtain a flow of new, qualified clients. To cope with these economic hard times, you must replace clients who, through no fault of theirs or yours, are no longer as profitable. They may have been laid off, downsized, transferred, outsourced, or suddenly had to support other family members.
New money flow is reduced. Many salaried people are being told there will be no bonuses, and some corporations are instituting a 5 percent or even 10 percent involuntary pay cut -- or a temporary lack of production (that is, non-voluntary vacation with no pay). This means a reduced ability to purchase new insurance, annuities or investments.
AUM fees are reduced. As the principal value of assets under management (AUM) declines, so does the typical advisor's asset-value-based fee compensation. More work is required to guide clients... and you earn less pay!
Can you cut expenses? Certainly, you should evaluate all your expenditures, but the chances are you cannot achieve major reductions without reducing staff -- and now is when you need help the most. You should carve out expenses wherever possible, but this will not solve the problem.
Expensive client acquisition. Now is not the time to embark on an expensive marketing program. If it is not successful, you will be in even worse shape -- both financially and emotionally.
You need to be quick! Your clients and the consumers in your area and your target market are all uncomfortable. To know that you share their uncertainty and anguish will go a long way toward client retention and acquisition.
Promptness counts. You need to take action without delay, and a very effective technique is to hold "Consumer Economic Briefings" -- short meetings where clients and prospective clients check off the areas of greatest concern to them.
Frequency counts. When you are responding to those who have requested a briefing follow-up, it is the frequency that is even more important than the content of the material you send. That may sound strange, but it is true. Many recipients will not read or fully understand what you send. What will register is that you care!
Get media endorsement. If you send a media release you are likely to get some very favorable assistance. The media are concerned as communicators and as individuals. You might get the benefit of publicity that would otherwise cost many thousands of dollars.
Media suggestions. Do you know how to build a media list, using an Excel file for capturing the data and enabling frequent re-mailings, and the mail merge label? If not, learn to do this now. Surveys indicate that less than 5 percent of the financial advisors have a current media list. Without a current list, no media relations can be conducted.
Strengthen your media presence. The only way to do this is with repeated media releases. You must maintain a media list and continue to send releases that might arrive just at the time when they are prepared to feature you.
Conduct "Consumer Economic Briefings." This is an easy and informal communication. Use a short PowerPoint presentation, a simple script, press releases, invitations and follow-up letters.
Request made easy. As you automate your responses, sprinkle in response cards and accompany them with a Business Reply Mail envelope. You will maximize the consumer actions.
Referral requests. You should also be using response cards to secure referrals. This will encourage clients and prospects to direct others to you who need your professional services.
Responding to specific inquiries. Whenever a client or prospect has a question, it is an opportunity for you to offer a fee-based consultancy or a financial product. But if you don't ask, you don't get it.
Get started now
Should you do-it-yourself? You could develop a consumer briefing system on your own -- but it will take time -- and you know time is money. The International Association of Registered Financial Consultants (IARFC), a non-profit professional organization, has developed a program you can use to conduct these briefings. It is designed to equip financial advisors and life agents with all the materials necessary to conduct public economic briefings and deliver all the follow-up materials and services.
Ready to go. The IARFC package comes on one CD-ROM that you can immediately review. All of the steps are outlined, and include a checklist of action steps. Using this checklist makes it easy to customize your plan of action and delegate tasks if practical.
No learning curve. This is not new, complex software requiring intensive study. All you need is Microsoft Office -- Word, PowerPoint and Excel. For mailings, use either the current CRM program that you have already mastered -- or the basic mail merge in Microsoft Word.
Get some help. If you feel your practice is facing real challenges, then now is the time for you to get help from family members -- help building your media list, entering names, processing mailings, etc. Furthermore, most employees would rather log some extra time to support your firm than run the risk of becoming a lay-off.
Schedule your briefings. You will have the PowerPoint, the Script, and full instructions. There is virtually no rehearsal required, and no expensive printing or materials are needed. You are giving attendees an opportunity for information -- there is no need for a lunch or dinner.
Distribute information. As you encounter an article, memo or other item that resonates with your participants, be sure to send it to your participants. This might come from a newspaper, magazine, insurance company, securities firm or the Internet. Then you or a staff member should call and inquire if the person wants help or more information.
This economic turmoil will not go away anytime soon. Some advisors will succeed, some will plateau and unfortunately, many will fail. The key to success is client retention and acquisition, and there is no reason you should not be dramatically increasing your contact frequency.