* Advisers build client base through referrals, networking
* An adviser's strength will determine best approach
* Finding a niche builds early relationships
By Andrea Hopkins
TORONTO, Jan 25 Every financial adviser faces
the uphill battle of building a customer base through referrals,
networking, cold-calling and marketing - and the memory of his
early days of seeking clients still haunts Christopher Dewdney.
"The first years were very difficult," recalls the Toronto
financial adviser, who now has nine years under his belt.
Told to focus on his "natural market" of family, friends and
fellow graduates, Dewdney found mostly impoverished ex-students
like himself, with little money to invest. Marketing efforts
cost money he was not making, and he lacked the credibility to
"Everyone says referrals, referrals, referrals," he said. "I
get it, but when you are young and new at anything, it is very
difficult to get a referral. Everyone wants somebody with
experience, who is credible, who has done it and been
Joanne Ferguson has heard this lament from many young
financial advisers in Canada, where only a minority of new
entrants survive the first five years.
Ferguson, the president of coaching and consulting firm
Advisor Pathways in Toronto, said advisers need to play to their
"Finding your comfort zone is really important," said
Ferguson. "You have to realize if you are a direct-approach
person or an indirect-approach person."
An adviser who likes the direct approach will be comfortable
cold-calling potential clients, while an indirect approach might
involve sending out letters and then following up with a call.
"You have to have a pipeline of at least 2,000 people that
you can be reaching out to," said Ferguson. "For you to get 200
or even 100 clients, you need that many people if you really are
starting from scratch."
Firms typically want advisers to bring in C$7 million to
C$10 million in assets a year, she added.
To a new adviser, prospecting for new clients may seem an
insurmountable task. But a few strategies can help.
First, find referrals, either from existing clients who
recommend you to friends or family, or from fellow professionals
who send their clients to you for help.
Susan St. Amand, an Ottawa financial planner and insurance
specialist, is now a 23-year veteran. But when she started out,
she knew she would not have credibility to win referrals from
senior lawyers or other professionals. She started combing the
new-hire announcements from law and accountancy firms, looking
for people like her.
"I started seeking out allied professionals that were
similar in their professional spectrum - age, years in the
business," said St. Amand, who is a member of Advocis, the
Financial Advisors Association of Canada.
"They want the same as you. They are looking for new
clients, looking to add value."
The exchange of information would begin. She taught them
about insurance and her expertise, so they understood how she
could help their clients when they needed a financial adviser.
For her part, she could then refer her clients to an accountant
or a lawyer.
The relationship had to be based on mutual respect, and not
simply a tit-for-tat referral game.
"You may run across people that want a referral relationship
- if you refer me one I'll refer you," St. Amand said. "They are
keeping score all the time. But you have to have confidence it
all works out in the end, and keeping score just gets in the way
and builds resentments."
FINDING A NICHE
Referrals from clients do not work the way they did 10 or 15
years ago, said Dan Richards, president of Client Insights and
author of the book "Getting Clients Keeping Clients: Essential
Strategies for Tomorrow's Financial Advisor."
Increasingly skeptical clients no longer feel obligated to
help when an adviser asks: "Can you recommend me to your
friends?" But if they are satisfied with their adviser, they
will give a referral when a friend needs one.
"One of the big misconceptions among advisers is that
clients make referrals to help the adviser," said Richards.
"Almost always it is to help friends."
For example, Richards recalls an adviser who helped his top
50 clients draw up a spreadsheet of all their accounts, contacts
and other information that their family would need in case of
emergency. When it was over, several mentioned friends and
family members who would benefit from just such an exercise.
"Even though he made a conscious decision not to turn this
into a sales pitch - didn't raise the issue of referrals - he
got them because clients perceived pure value," Richards said.
Ferguson recommends finding a niche and attending events to
build relationships or focus the aim of marketing.
"If you're targeting doctors and surgeons, they don't have a
lot of time, but there are publications that they do read, or
they have events you can be part of," she said. "And a lot of it
is word of mouth."
Finally, both St. Amand and Dewdney said joining community
organizations, corporate boards or charitable groups can build
relationships and give advisers something positive to focus on.
"There is limited to no cost in doing that, and it is a
great way to get into your community and try to build a business
relationship going forward," said Dewdney.
"But pick something you love. You don't want to do
something that is not near and dear to your heart. Don't fake
it, because people will know."
(Reporting by Andrea Hopkins; Editing by Frank McGurty and Lisa