Executive Summary
Independent Registered Investment Advisors (RIAs) often face significant challenges in attracting advisors who can proactively generate new business. Many employee advisors gravitate toward service-oriented roles; this preference often stems from their initial motivation for entering the profession – wanting to help clients or perform the more analytical aspects of investing and financial planning. Rarely do they enter the field to be in a sales or marketing role. In some situations, a firm's employee advisors may want to bring in new clients but lack the skills, experience, and confidence. Regardless of the reason, the responsibility of acquiring new clients frequently falls on firm owners, limiting scalability and complicating succession planning.
Furthermore, this reliance on owners to drive growth creates bottlenecks, as the owners are already stretched thin managing operations and client relationships, increasing the risk of burnout and jeopardizing continued growth projections. For RIAs aiming for internal succession, the challenge intensifies, as the next generation often lacks the deep, trust-based relationships that founding advisors have cultivated. Which means that to ensure sustained organic growth, it's important for the next generation of advisors within a firm to develop proactive sales and marketing skills to sustain ongoing growth.
So, how can a firm encourage its employee advisors to contribute to business development efforts, especially when these advisors may not be naturally inclined toward sales and marketing? One of the most effective ways for employee advisors to overcome their challenges is by becoming a big fish in a small pond. They do this by establishing themselves in a niche where everyone in that defined space recognizes their expertise, leading to a steady stream of clients through general awareness and word of mouth. The first step is to identify a small pond, and that is done by defining a niche.
Specializing in a niche enables employee advisors to rapidly develop expertise and build a strong reputation within a focused group of similar clients. The specialized knowledge and positive reputation help advisors overcome the perceived experience gap often measured by years in the industry. It also reduces the need for a broad network or long-standing relationships for referrals, as clients are more likely to choose an advisor based on their expertise in working with people like them rather than on existing connections. Moreover, this specialized experience enhances credibility and trust with prospective clients, who see the advisor as a true expert in addressing their unique needs.
Once firms get their employee advisors to embrace the idea of contributing to business development, it's essential to support their success by investing in the right resources. Sales and marketing may not come naturally to them – they've likely never done this before and need clear guidance. Firms can help them create a strategic plan and offer mentorship to steer them in the right direction as well as the time, budget, and staff support they need to ensure they thrive in their new role.
Ultimately, the key point is that developing marketing and sales skills can take time, but with ongoing support, mentorship, and resources from the firm, employee advisors can gradually build confidence and capability as they develop their marketing skills. And by establishing themselves in a niche that reflects their interests and expertise, advisors can enjoy a more fulfilling career as they refine their niche expertise while helping secure the firm’s long-term growth and overall success!
The Struggle Of Independent RIAs To Attract Business Development Advisors
Many RIAs face a significant challenge: identifying employee advisors who can effectively bring in new business. Many younger advisors are drawn to the profession to work with clients or analyze the numbers, and as a result, they prefer meeting with existing clients or working behind the scenes on financial planning or investment management. While service advisors are key to providing high-quality advice and client satisfaction, they often lack the skills or inclination to attract new business beyond passive referrals. This tendency to 'hide behind their desk' creates substantial obstacles to the growth and scalability of independent RIAs.
When a firm is predominantly composed of service advisors, it becomes heavily reliant on only a few advisors, usually the firm's owners, to bring in new business and generate revenue. This reliance can create bottlenecks in the firm's growth trajectory. The owners, already stretched thin managing operations and a full client load, must also bear the burden of continually attracting new clients.
Succession Challenges In RIAs: Preparing The Next Generation
RIAs aiming to develop a succession plan may struggle to find advisors with proven business development skills while the original owners are in charge, as there's a good chance that they will face significant challenges in identifying suitable successors within their organization. And if the growth rate falls with the successors, the purchase price won't make sense since the valuation of the firm is typically predicated on a continued growth rate. The payments associated with the purchase price may be debilitating for the next generation.
What's more, while referrals are one of the most effective ways to attract new business, successor advisors who rely on passive referrals alone can create a precarious situation for themselves as the firm's next generation of owners. Referrals will often come sporadically and may not be sufficient to maintain the steady flow of new clients necessary for the firm's growth. Moreover, the next generation may not have built the deep, trust-based relationships with existing clients or COIs that the founding advisors have, making the referral pipeline even less reliable. To continue their legacy and uphold the company's reputation, it will be in the owners' best interests to set up the next generation of business owners for success by helping them develop proactive sales and marketing skills.
The Challenges Of Client Acquisition For Less Experienced Employee Advisors
Firm owners with decades of experience have built vast networks and established strong relationships, serving as rich sources of referrals and new business opportunities. In contrast, less experienced advisors are often just starting their careers, lacking the depth of relationships and networks their senior counterparts possess. This disparity makes it challenging for them to generate a steady stream of clients through referrals or personal connections.
Additionally, experienced firm owners have honed their sales skills over years of practice, often coming from a more sales-focused era. They intuitively understand how to engage prospects, build rapport, and close deals. Less experienced advisors may lack these skills and the benefit of a strong sales culture. Without natural sales instincts or the experience to develop them, they struggle to persuade potential clients to engage their services effectively.
Traditional marketing techniques like cold calling and general networking, while valuable, may not resonate with these advisors' strengths. Cold calling can be intimidating for those not inclined toward assertive sales tactics, and general networking can feel overwhelming without a clear strategy, leading to inefficient use of time and resources.
Building Expertise And Reputation In Niche Markets
A key indicator of marketing success is whether an advisor can position themselves as a big fish in a small pond. In smaller cities or rural areas, where few independent RIAs exist, it's easier to stand out, build a word-of-mouth reputation, and increase brand awareness, naturally becoming a big fish in a small pond.
However, in densely populated areas with many competing firms, standing out is much harder.
If advisors can't naturally position themselves as big fish, they can create a small pond by narrowing their market through niche specialization. In competitive markets, specializing in a niche allows employee advisors to become big fish in their own defined ponds. By focusing on a specific niche, they can quickly build expertise, a word-of-mouth reputation, and a clear sense of purpose.
Niche specialization helps advisors immerse themselves in the unique needs and challenges of their chosen market segment. By understanding and speaking the language of their niche, advisors become recognized experts, attracting prospects who seek their specific expertise. This approach reduces the need for a broad network, as clients are drawn to advisors for their specialized knowledge.
One significant benefit of niche specialization is the clarity it provides for marketing efforts. Without a defined niche, advisors may feel like they are fishing in a giant ocean, uncertain about where to focus their activities. A niche offers a clear focus, allowing for tailored marketing campaigns that directly address the needs and concerns of the niche. This focused approach enhances marketing efficiency and effectiveness.
Specializing in a niche also gives advisors a clear sense of purpose, aligning their professional goals with their personal interests and strengths. This alignment leads to a more fulfilling career, greater job satisfaction, and ultimately, better service for clients, which further enhances their reputation and success.
Embracing Niche Marketing For Sustainable Growth In RIAs
Niche marketing provides a repeatable framework for advisors to attract new clients, reducing pressure on firm owners and enabling faster, more sustainable growth. By making marketing a core competency for every advisor, the entire company can contribute to client acquisition, transforming each advisor into a proactive participant in the firm's growth.
Encouraging advisors to specialize in specific niches allows them to differentiate themselves and attract a targeted audience that values their expertise. This approach not only enhances marketing efficiency but also establishes advisors as leaders within their chosen niches, enabling them to generate new business independently of the firm's owners.
As advisors become proficient in their niches, they play a pivotal role in driving the firm's growth. When advisors implement niche marketing, RIAs can achieve faster and more sustainable growth. By having each advisor or advisor team focus on a specific niche, firms attract a diverse clientele. This distributed approach eliminates bottlenecks, ensures a steady flow of new business, and maintains a balanced workload. Moreover, the firm can scale more efficiently as expertise and client bases within each niche expand organically.
In my experience working with RIAs, I’ve seen this scenario play out in various ways. Some firms allow advisors to specialize in niches where they have personal connections or interests. For example, an advisor whose parents were immigrants from a specific country may focus on retirees from that same community. Similarly, an advisor with a spouse in a particular profession, such as real estate or nursing, might choose to work with professionals in those fields. I’ve also observed larger firms, with over $1 billion in AUM, adopting slightly broader niches. For instance, advisor teams may specialize in sectors like biotech professionals, healthcare workers, or oil and gas industry employees.
Empowering The Next Generation Through Niche Marketing
Niche marketing empowers each advisor within the firm to attract new clients independently. By focusing on niches that align with their strengths and interests and with the company's mission and focus, advisors can create authentic and effective marketing strategies, helping them build a solid client base and enhance their credibility.
For example, a career-changer advisor with a healthcare background can target medical professionals, while another interested in technology can focus on the tech industry. This targeted approach enhances advisor confidence and marketing effectiveness, providing a clear path to success – especially for younger or less experienced advisors. Rather than relying on referrals, they learn to identify and address the specific needs of their niche, acquire the skills to serve it effectively, speak its language, and build strong relationships within that community.
Niche marketing also helps bridge the skills gap between seasoned advisors and the next generation. Specializing in a niche allows newer advisors to build credibility and trust quickly, compensating for their lack of experience.
I am currently working with a younger advisor within a larger firm who has chosen to focus on the niche of nurses. After forming relationships with a few nurses, he committed to specializing in this niche. Almost immediately, simply by communicating his focus to the people he knew, he began receiving referrals and introductions to other nurses – even before updating his website or launching a formal marketing strategy. Just by stating his specialty, he found that people within the niche were eager to spread the word about him.
Niche marketing also plays an important role in ensuring business continuity. As the current generation of advisors approaches retirement, it is vital to have a succession plan in place that includes a pipeline of capable advisors ready to take over. Advisors who have honed their skills in niche markets are better prepared to step into leadership roles. They bring with them a solid client base, established relationships, and a track record of business development. This readiness helps ensure a smooth transition and maintains continuity in service quality and client satisfaction.
A major advantage of niche marketing is its potential to reduce reliance on passive referrals. While referrals are valuable, a passive approach can be unpredictable and insufficient to sustain long-term growth. Niche marketing empowers advisors to take a proactive approach to referrals and client acquisition. By understanding and addressing the unique needs of their target market, advisors can attract clients through targeted marketing campaigns, educational content, and personalized outreach.
As advisors become more well-known within their niche, conversations about them increase, leading to a greater number of referrals. Advisors can also get creative in generating referrals by asking clients to invite them to speak to their niche social or professional groups, further increasing the likelihood of attracting new clients from their clients' networks. This proactive approach not only increases the flow of new clients but also provides a more stable and predictable growth trajectory for the firm.
Overall, niche marketing fosters a sustainable growth model that benefits the entire firm. It equips advisors with the skills and strategies needed to attract clients independently, reducing dependence on a few key individuals. This distributed approach promotes a more resilient and scalable business model while creating a culture of continuous learning and improvement.
Aligning The Niche To The Advisor's Strengths And The Firm's Objectives
When implementing a multi-niche approach for employee advisors, firm owners benefit most when they ensure that each niche is a good fit for both the advisor and the company. Firms can start by establishing an overall theme for the company that each niche should align with. For example, if the theme is retirement planning, then each niche should focus on retirement-related services. This could involve targeting pre-retiree employees at specific companies like AT&T or Boeing or industries such as healthcare or technology. Alternatively, if the company's theme centers on major life transitions, potential niches could include divorce, loss of a spouse, inheritance, sale of a business, or similar scenarios.
By focusing on one theme, the company ensures a cohesive message and mission that starts at the firm level and trickles down to the firm's niche specialties. It allows for specialization within each niche while maintaining unity among niches. It is much easier for a firm to have a multi-niche firm focused on people who serve their communities (e.g., teachers, firefighters, military) than to have different specialties with no commonalities, such as focusing on both special needs planning and startup founders.
If a firm already operates within a broad niche, consider segmenting this niche into different categories, such as industries or life stages. For example, if the firm typically serves business owners nearing retirement, other specialties could include startups or solopreneurs. Or it could segment business owners into industries, such as construction, manufacturing, and transportation.
The key is to ensure that every niche within the firm aligns with the company's overall brand, messaging, and mission.
In addition to ensuring each niche fits within the overarching theme, the chosen niche must also fit into the firm's fee structure. If the firm charges a percentage of AUM, any niche should generally have asset levels that meet the firm's minimum account size. Similarly, if the firm has a minimum fee, the niche should have clients with enough income to meet this fee.
Creating new fee structures to accommodate a single niche can be difficult to manage and may not be profitable. Unless the company has carefully assessed introducing a new fee structure across the firm, it is not advisable to do so for only one niche. It is advisable that a company maintain a consistent fee structure that accommodates all its clients, and the niche should fit within this framework.
To help advisors achieve success with their chosen niche, they can be coached to select a niche that aligns not only with the business's mission and fee structure but also with the advisor's strengths and interests. Advisors are more likely to remain committed to a niche if they are passionate about it, are eager to learn more about their niche and service it, and have the network to access the niche. Encouraging advisors to choose niches they are genuinely interested in will increase their likelihood of long-term engagement and success.
Develop A Marketing Plan
Most employee advisors won't know where to begin when it comes to marketing, and they will be looking to ownership for guidance. The firm can help them overcome this hurdle by assisting them in creating an actionable marketing plan they can follow.
There are 2 main phases to their plan. The first is a one-time event of launching into a niche by establishing foundational materials. The second is developing an action plan of the activities they will perform regularly to connect with and nurture their niche.
Launching The Niche
Before the employee advisor can start marketing to a niche, they need to have a foundation to launch from. At a minimum, this means giving the advisor a landing page on the company's website dedicated to the niche and the ability to post content (e.g., blogs, videos) on the website. They will also need to update their social media (e.g., LinkedIn) and online directory profiles (e.g., NAPFA Find an Advisor) to reflect their focus on their niche specialty.
While the employee advisor should spearhead this process, they will most likely need professional marketing help. They should work with the internal marketing team or an outside agency to get these things done.
Developing An Activity Plan
Once the foundation has been set, it is time to establish the activities that will help the employee advisor reach and engage their niche. The advisor should establish a quarterly marketing plan to help them prioritize and create action in the short term. At the beginning of each quarter, they should set an outcome goal for that quarter that focuses on the results that they want to achieve. These goals can help measure progress but can often depend on factors outside of the advisor's control such as prospects being reluctant to schedule an appointment until after an election.
Examples of outcome goals include:
- Adding 150 names of people in or associated with their niche into the marketing automation software
- Scheduling 12 introductory calls with niche prospects
Having this clarity of focus will help employee advisors understand what they are trying to accomplish and establish a certain volume of activity to help them achieve this goal. Notably, setting a client goal may be unrealistic at this phase; it is more achievable to set a goal directly impacted by their activities. If this is the first time creating a marketing plan, the firm leadership can help them set a realistic goal.
With the outcome goal set, the next step is to set activity-based objectives. Activity-based goals are focused on the actions or behaviors that the employee advisor needs to take to achieve their outcome goal. These goals will break down an outcome goal into smaller, more manageable tasks the advisor can work to accomplish. These should focus on the day-to-day actions the advisor can control that can lead to the ultimate outcome goal and should align with the advisor's strengths. Activity-based goals can include:
- The number of people they will reach out to
- The number of pieces of content they will create
- The number of networking events they will attend
In our OnNiche® program, advisors use a one-page quarterly marketing activity plan, shown in the graphic below. Specifically, we emphasize routines: daily, weekly, and monthly actions that contribute to advisors’ success. This consistency of effort is key to achieving meaningful outcomes. We also document the outcome goal for the quarter, allowing advisors to see how their routine activities directly influence their results. If they aren’t reaching their outcome goal, they can either increase their activity or adjust the goal to reflect what’s realistic given their available time and resources.
Additionally, this plan encourages long-term planning without detracting from the immediate actions needed to drive results. It outlines special one-time projects (such as creating a new campaign) and events (like attending a conference) that the advisor aims to complete during the quarter. We also document long-term ideas (annual initiatives) that might not be feasible now or could be distractions at this stage. Ongoing passive activities, such as online advisor directories, are also included to provide a complete view of the advisor’s marketing efforts. This comprehensive view makes it easier to adjust tactics as needed to meet their outcome goals.
Continuous monitoring and adjustments are essential for the success of the marketing activity plan. At the end of each quarter, a regular review of the activities from the quarter can help advisors monitor their progress. Were the activity objectives that were set accomplished? Did the advisor reach their outcome goal? If so, do they need to set a loftier goal next time? If not, what can they tweak in their activity plan to reach the outcome goal next quarter? Make necessary adjustments based on performance data and feedback.
Having a clear marketing game plan is key for employee advisors and will give them the guidance they need to be successful.
Give Them Time And Support
To set employee advisors up for success, the company should provide the time, budget, and support needed to develop their niche. While it can take about 3 years for a niche to see exponential growth, advisors should observe signs of progress along the way, such as setting appointments with niche prospects, receiving invitations to speak at events or on podcasts, and having opportunities to create content appearing in relevant publications.
Mentorship or coaching is a critical element of success. Providing access to a coach offers personalized guidance and accountability, helping the advisor stay on track and overcome challenges.
As stated, the firm should ensure that the advisor has access to marketing resources, whether in-house or through an external agency, to equip them with the tools and expertise needed to effectively reach their niche audience. While advisors should lead these efforts, they shouldn't be expected to master all areas of marketing, such as writing, graphic design, and video editing. Providing support in these tactical areas allows them to focus on their strengths of showcasing expertise and building relationships.
Financial support is also necessary. The company should allocate a budget that allows the advisor to explore various marketing strategies and channels that align with their niche. This budget can cover costs for content creation, advertising, attendance at networking events, and other promotional activities. The advisor should have the freedom to experiment with marketing channels that the firm does not use on a company-wide basis, provided they comply with SEC regulations and firm policies.
Continuous evaluation and feedback are vital for ensuring the advisor's efforts are aligned with the firm's goals and the niche's needs. Regular check-ins with the advisor should focus on assessing their progress, providing constructive feedback, and adjusting strategies as necessary. This iterative process allows for the refinement of tactics and ensures the advisor remains focused on achieving long-term success within their niche.
Giving employee advisors the time and support they need to develop their niche involves a combination of realistic timelines, financial backing, access to resources, and continuous evaluation. By setting clear expectations, providing necessary support, and allowing for experimentation, firms can help their advisors build successful niche practices that contribute to the growth of the company. This comprehensive approach not only empowers advisors but also contributes to the firm's success.
Empowering employee advisors with niche marketing is not just a strategy for growth; it can also be a transformative approach that aligns their individual strengths with the firm's objectives. By providing a structured framework, clear guidance, and ongoing support, firms can help their advisors overcome the challenges of business development. This approach enables advisors to build expertise, credibility, and a solid client base within their niche, fostering a sustainable growth model for the entire firm.
Niche marketing bridges the gap between seasoned and less experienced advisors, equipping the next generation with the tools they need to succeed. By focusing on specific market segments, employee advisors can differentiate themselves, creating marketing strategies that resonate with their niche. This targeted approach enhances the firm's ability to attract new clients and paves the way for a smooth leadership transition.
Ultimately, niche marketing is about more than just growing the business – it's about creating a fulfilling career path for advisors, empowering them to thrive in their roles, and ensuring that the firm remains competitive even when the original owners have retired. By investing in niche marketing, firms set the stage for a prosperous future where every advisor draws on their strengths to contribute to the company's collective success!
