Executive Summary
For years, independent financial advisors (particularly those who offered holistic and comprehensive financial planning services) had a relatively easy time differentiating themselves from the vast majority of others in the industry by emphasizing the breadth and depth of their financial planning services (as contrasted with competitors that were still primarily in the investment or insurance product distribution business). However, in recent years, the asset management and product placement facets of the business have become increasingly commoditized, and an increasing number of advisors have also come to understand that the real value that they provide for their clients isn’t in the products themselves, but in the comprehensive advice that needed to implement those products (or not). Which, ironically, means more clients than ever actually get qualified financial planning advice… and it’s harder than ever for those who give quality advice to differentiate themselves from other advisors offering essentially identical services.
Which means that, moving forward, identifying and nurturing a clear and distinct niche will only become even more of an indispensable differentiator for advisors (and eventually, might become the only real differentiator!?). Yet, for many, the real challenge isn’t in choosing a niche, but in actually reaching potential clients in a particular target market… or at least enough of them to start building a practice around. And while few advisors are naturals when it comes to networking, the good news is that it is a skill that can be learned, and that there are several proactive steps that any advisor can take in order to connect with members of their niche, which are based on the same principles of any good networking strategy.
In this guest post, practice management consultant Teresa Riccobuono of Simply Organized uses small business owners as an example niche to offer actionable tactics and steps to start building a niche-focused network and provides specific examples of ways you can deepen and expand your own web of connections in the small business owner community.
Of course, the first key in networking is to recognize that it’s all about building a relationship that establishes you as the go-to expert in the community… not necessarily to try to get business from anyone/everyone upfront. Accordingly, strategies that build valuable goodwill for you and your practice through networking include: helping the small business owners in your network connect with other small business owners (e.g., by first making a list of all the business owners in your network, and finding ways that they might be able to work together or help each other), creating an “insider’s” directory of local businesses that your clients use and trust (which can help expand your reach by giving you a great reason for introducing yourself to business owners included in that directory but who are outside your network), and hosting events such as a speaker series or even a full-fledged multi-day expo featuring (local) businesses that provide goods and services to a common target market.
Ultimately, the key point is that an effective networking strategy is based on genuinely providing others value without expecting anything in return… which, over time, builds goodwill and (eventually) trust, to the extent that small business owners (or whatever target market you decide to serve) will naturally turn to you as a resource down the road when they encounter someone who might need your help. Or even to reach out to you when they need help themselves.
Every good marketing book, article, podcast, or blog will likely mention how beneficial it is to develop a niche, and local small business owners have long been one of the most common niches amongst financial advisors. The caveat, however, is that small business owners are busy, and it’s often difficult to actually reach them, even in the local community. But there are ways that financial advisors can reach out and connect with local business owners – built on the same principles of any good networking strategy, which is to start by giving value in order to create meaningful connections.
Connecting (Existing) Business Owner Clients To Each Other To Deepen Your Business Network
For financial advisors who already have some small business owner clients, one of the most straightforward ways to deepen your network is to help them connect with each other.
As a starting point, review your complete client list, and highlight the clients who are business owners. Next to their name, write down the type of business they own.
As you review the list of businesses, you will likely see that there are some potential synergies between some of them.
Here’s the list of business owners one of my advisor clients discovered when we worked through this exercise:
- Carpet cleaning
- Non-denominational wedding and funeral ceremonies
- Commercial and residential real estate appraiser
- Handyman and handywoman (a couple)
- Residential remodels
- Landscape architect
- Health consultant – helps develop care plans
- Yoga instructor
- Wedding photographer
- Bed & breakfast owners (a couple)
- Contract attorney, specializing in executive benefits
- Winemaker
At first glance, this may seem like a random list of business owners, but as we looked closer, the synergy appeared. For example…
- The clients who conduct wedding ceremonies could meet the wedding photographer, the winemaker, and the couple who owns the bed & breakfast. The bed & breakfast could be a great venue for a wedding or photoshoot, a local honeymoon spot, or a place to stay for out of town guests of the bride and groom.
- The winemaker could provide a great venue for an event, such as a rehearsal dinner and as a location for a photoshoot. And who doesn’t love wine!?
- The owner of the carpet cleaning business could be introduced to the bed & breakfast owners, and the client who does residential remodels. Maybe an introduction to the winemaker as well, if he has a carpeted area where events are held.
- The residential remodeler could be introduced to the landscape architect, the real estate appraiser, and the handyman and handywoman couple.
- The yoga instructor could be introduced to the health consultant.
- The attorney could be introduced to any of the business owners who might benefit from his expertise.
Although introducing current business owner clients to other business owner clients won’t garner any new business for you directly, the goodwill created by suggesting new business opportunities for your clients will go a long way. However, business owners who successfully connect with other business owners usually end out with more successful businesses… which means in the long run, doing so may literally make those clients more successful (and therefore looking to you to thank, as they decide where to save and invest their additional income!).
Creating A Local Business Directory Of Your Client’s Favorite Local Businesses
Click to download Teresa's Sample Local Business Directory Information Sheet
The real opportunity in connecting business owners with each other is to go beyond just your existing small business owner clients… and create a local business directory that further expands your own network and reach.
For instance, as you discuss the introductions you will make on their behalf for each small business owner client, you can both add them to your local business directory and find out about the other professionals each business owner relies on. Which becomes a terrific opportunity to meet those small business owners, with which your current business owner clients already partner. Each new business owner you meet will likely have some synergy with your current business owner clients and will likely appreciate more introductions to your existing clients via your growing local business directory (helping them to grow their businesses). The spider web of connections can continue to grow indefinitely.
To extend the tactic even further, consider asking all your clients - not just business owner clients - about their favorite local businesses. It could be an auto repair shop, a dry cleaner, a restaurant, a gardener, or any number of other businesses. Having clients provide the name of more than one favorite local business is encouraged.
If you were to ask me about my favorite local businesses, you would learn about the following:
- Mechanic (I trust Jeff completely)
- Auto body repair shop
- Auto Upholsterer
- Chinese restaurant
- Thai restaurant
- Afghan restaurant
- Indian restaurant
- Hairstylist
- Photographer
- Dry cleaner
- Personal trainer
- Chiropractor
- Jewelry shop
- Veterinarian
- Environmental engineer
- Inexpensive source for plants
- I hope to soon add a contractor – we’ll see how it goes – fingers crossed
Every one of these professionals is a local small business owner where I know the owner personally. If a local advisor would ask me about my favorite local businesses, I would be happy to make personal introductions. That’s almost twenty warm leads of small business owners you can connect with.
We all, including our clients, have these kinds of connections in our lives.
Let your client know that you are putting together a local business directory – i.e., a referral list – to share with other clients. This will be a living document that will be updated on a regular basis. Your advisory firm’s version of the local yellow pages, so to speak.
Also, let the client know that you will be contacting the business owner to share with them the fact that they have a client advocate. Who doesn’t love having an advocate?
Your goal in reaching out to the small business owner will then be to confirm that he/she would like to be a member of your local business directory (they may not be taking on new clients), and if so, to get a clear idea of their exact service(s), and ensure that you have accurate contact information for them.
Once you have secured a name from your client, you will want to contact the business owner. The conversation could go something like this:
“Hello Jeff (mechanic), my name is Teresa Riccobuono. I am a financial advisor with <<name of company >>. I’m calling today because one of our shared clients said that I need to get to know you. You have quite an advocate in Mr. Smith. He said that you are absolutely the best mechanic he has ever worked with. He said that he has referred many people to you over the years because you take such good care of him and the people he cares about.
The reason for my call today is that I am putting together a referral list to share with all of my clients. I am asking each of my clients about their favorite local businesses. I am then following up with each business owner to learn more about their business. It is my personal version of the yellow pages, full of businesses my clients speak of favorably.
My goal is to be able to refer my clients to these top local businesses on a regular, as needed, basis.
When I asked Mr. Smith the question about his favorite local businesses, the first business he mentioned was yours, Jeff. He couldn’t say enough positive things about you and the quality of your work.
What I would like to do, if you are interested, is schedule a time for us to meet. I would like to come by your shop and chat with you for say <<20, 30, 45>> minutes, whatever works best for you, to learn more about your business and to find out who would be a good referral for you.
Since Mr. Smith likes you so much and is happy with your work, I would like to be able to refer my other clients to you.
I care about my clients and it is a great opportunity for me to add value by referring them to a trustworthy mechanic and I want to support and promote my clients’ favorite local businesses whenever possible.
So again, if you don’t mind, I would like to schedule some time with you. I would prefer to come to your shop so I can learn about your business first hand. That way I will be in a better position to refer people to you. Would that be okay?
Great. Do you have a minute to take a look at your calendar?”
When you meet with that small business owner, you can ask about his/her favorite local businesses and/or the businesses he/she relies on as well. Again, an opportunity to develop a web of business owners.
One advisor I know took the idea one step further and tied the referral list to a charitable contribution. Each person who agreed to be featured in the referral booklet paid a small amount, as a charitable donation, to participate (e.g., $25). On the first page of the booklet, the advisor thanked each business for supporting the charity and encouraged the people receiving the booklet to patronize the businesses listed in the booklet. Another great way to show goodwill.
(Note: Depending on your firm structure and compliance circumstances, you may face a compliance issue implementing this strategy. Check first before proceeding down the path of promoting business owners, particularly if you are asking them to donate to a charitable organization to participate.)
Another advisor developed a dream team, working closely with a CPA, estate attorney, mortgage broker, and business broker. They meet regularly and refer almost exclusively (sometimes a unique specialist is required) to one another.
Staging Local Forum And Expo Events To Further Connect With Local Small Business Owners
While developing a local business directory provides a way to open the door to more small business owners and expand a financial advisor’s network, it doesn’t necessarily provide an opportunity to form a deeper relationship. Just being listed in a directory is, in the end, still a fairly superficial connection.
One advisor I know went deeper by developing a monthly business owner forum with a group of interested local small business owners. This is a formal meeting where they discuss a variety of issues unique to small business owners (and have an opportunity to better vet newly-referred business owners into the group/directory). A deep camaraderie has developed over time, and many have referred others in the group to their go-to businesses.
The advisor-organized local small business owner forum was successful for a variety of reasons:
- Information discussed during each meeting remained confidential
- Everyone in the group treated the meetings as mandatory, where no-shows were rare (it’s important to set expectations in advance)
- Each member had a sense of abundance and didn’t feel that any other member was there to take business away from another – the support for each other was obvious
- The business owners felt that the others in the group understood the unique challenges of being a business owner – close friends and family members don’t always understand these challenges, nor are they in a position to provide valuable advice
- It can be lonely at the top, and it is not always a good idea to make friends with the people who work for you, so, at least once per month, the business owners came together to support each other
- In addition to time spent together in meetings, many became friends and spent time together participating in outside activities as well
The monthly topic was decided by the group. Most of the time, the topic was suggested by one of the business owners who was facing a challenge or was considering a possible change or addition to the product or service line. They often discussed HR issues, compensation, benefits, and the like. Lease negotiations came up as renewals neared. The topics were as varied as the issues facing business owners.
For the nitty-gritty on establishing your own group, refer to my article on establishing your own study group.
Creating A Local Retirement Expo or Speaker Series
One more way to interact even more deeply with local small business owners is by putting on an expo. This is a large undertaking, but with the right support, it is possible. If you want to break it into smaller chunks, then take the same idea and turn it into a speaker series, where each month is focused on a different topic.
In a nutshell, the expo is a one- or two-day event, where a variety of businesses come together in support of helping clients with a particular issue. You have probably heard about or attended a home expo. All of the vendors offer something a homeowner might need, from tile to windows.
The expo example here is in support of people who are near or in retirement – which makes both the attendees of the event potential prospects for the typical financial advisor, as well as the small business owners who are involved to showcase their own goods and services at the advisor’s expo.
Following is a list of possible topics, businesses, and organizations:
General Session:
- Prepare for a successful retirement (e.g., have a client or two speak about how they planned for their successful retirement)
- Safe, easy, impactful exercises
- Grandparent’s boot camp, CPR, first aid, water safety
- Recreating your paycheck in retirement
- How to live in your home longer and safely
- Easy, tasty, healthy meals – (this is a great lunchtime session… especially when there are samples provided!)
Breakout Sessions:
- Senior travel specialist (travel insurance, illness while traveling)
- RV specialist
- Volunteer matching organization, i.e., volunteermatch.org
- Local college admissions person – popular classes for seniors
- Appraiser – such as antique road show
- How to break the cycle of supporting grown children
- Identity theft
- Chamber of Commerce – local hidden gems, especially if you have visiting grandchildren
- Estate/legacy planning
- Long-term care
- Hobbies
- Menopause issues
- AARP
- Social Security/Medicare (could also be a general session topic)
- How to have the conversation with your parents – no more driving, no longer living on your own (eldercare), aging in place (geriatric care manager)
- Downsizing – moving into a smaller home
- Disaster recovery – emergency preparedness
- Organizing your important financial documents
Other (more technical and planning-traditional) options:
- Roth Conversion
- Tax Planning
- Education Planning (Kids & Money from American Century, great for teaching grandchildren about money issues)
- Mortgage Information (mortgage accelerator, reverse mortgage)
To help get vendors to agree to participate in the event, consider having prizes available for a drawing. For instance, provide bingo-type cards available at registration, and each attendee who fills their bingo card is eligible for the prize drawings. To fill out the bingo card, the attendee has to get a sticker from each and every vendor. To get stickers, the attendee is required to speak with the vendor about his or her services. (I.e., the attendee will not get a sticker just by walking up to the vendor booth asking for one. There has to be an interaction.)
If the idea of putting together an expo seems daunting, consider the speaker series route. Survey your clients to find out what topics are of interest, and then put together a six or twelve-month series.
Either way you go, you put yourself in a position to support current business owner clients, support business owners your clients know, and introduce yourself to local business owners you don’t know. Not to mention the attendees of the expo or speaker series, who may also be a potential fit for the advisory firm.
The key to financial advisor success in networking is all about putting more into the relationship than you take away from it, building trust and goodwill that allows the advisor to form and deepen a connection.
And while sometimes there are easy and obvious ways that financial advisors can help, implementing strategies like connecting your own local small business owners, forming a local small business directory, or even hosting a local small business expo or speaker series, become more proactive ways that financial advisors can establish a relationship with and give back to the local small business owner community… helping them, and ultimately the advisor as well, to be more successful in their own businesses.
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