New clients are critical to any financial services firm, with satisfied customers being the best source of new referrals. In addition to increasing assets under management (AUM) by as much as 30% a year, advisors adept at managing positive client experiences reap other rewards, too, such as improved lifetime value (LTV) and lower churn. But doing this successfully requires advisors who can skillfully identify the client’s financial needs and risk profile, and then map these to a customized plan for long-term prosperity and security.

As straightforward as this may seem, clients are barraged with headlines on the economy, political events, foreign developments and more. Even as money shifts to younger investors accustomed to information rich, technology-assisted investing services, there remains strong demand for professional advice and agility in financial planning to keep pace with these market swings.

Since wealth advisors are increasingly valued for their guidance – and not necessarily the specific products they sell – they’re also most directly responsible for convincing potential clients to pay for their advice, and can subsequently struggle from a lack of critical business development skills. That’s due in part to the fact that most “sales training” in financial services today is provided by product groups or third-party firms who teach advisors how to sell their products, while relatively little training exists in the way of advanced selling skills.

What’s Good for the Advisor is Good for the Client

As we’ve seen, building strong relationships is the foundation of a successful financial advisory practice. But cultivating vital relational, listening and communication skills are frequently neglected in contrast to the technical skills involved in achieving CFP or CFA designations.

At the most basic level, the business development process for an advisor is about turning strangers into prospects, and then transforming them into clients. This starts with target marketing, followed by selling – e.g. taking a client who’s potentially interested in doing business and persuading them to pay for your services. Doing this effectively requires focus on building up a number of core sales competencies on the advisory team, including the ability to successfully:

  • Understand and apply business marketing techniques, such as networking and profiling;
  • Build and manage client relationships through effective and compliant communication and messaging and;
  • Collaborate with clients to optimize the conversion of assets into income by asking the right questions and identifying client triggers.

Achieving success with the latter competency demands more than strong sales and marketing skill, however; it requires up-to-date product knowledge. Even if product-centric training is available periodically throughout the year, product expertise that’s not continuously reinforced will eventually compromise the advisory team’s ability to increase AUM. This is especially true if the team sells a complex or continually evolving set of products. As market conditions shift, new options may trigger an advisor to recommend an investment idea that fits more appropriately within the investor’s risk/return profile – further enhancing LTV.

Coaching: The Rising Tide That Lifts All Ships

In addition to continuous reinforcement, the most successful financial firms use coaches to bolster onboarding activities for new advisors and supplement training until they become established. At Fidelity Investments, for example, the company’s practice-management unit works directly with the firm’s independent financial advisors, acting as management consultants to help advisors grow and improve. They also help advisors enhance and refresh their messaging, especially as it relates to compliance, or finding and retaining new clients. An added benefit of this approach is that it can actually help firms find and recruit the best talent. For example, if you are known as an organization committed to helping individual advisors thrive, they will gravitate to you.

Still many organizations face obstacles in implementing such coaching practices. Frontline managers are strapped for time, many lack the knowledge or experience on who or what to coach, and often don’t have the tools or technology to be effective. At best, managers may provide coaching on an informal basis, focused on a single client situation rather than helping new hires gain the core advisory skills required to achieve success across a customer base with varying financial needs. Recognizing that established coaching practices may not be readily available for these reasons, there are a growing number of third-party coaching providers that RIAs can engage, either as an advisory team or independently, to achieve performance improvements. Many of these are Qstream partners.

Performance Driven by Data, Not Hunches

It’s no secret that even the best advisors can benefit from an “extra set of eyes” on their business practices from time to time. Mapping measured sales skills against critical performance KPIs can help diagnose the behaviors most likely to put AUM at risk. Managing knowledge and skill gaps via a real-time dashboard, for example, simplifies the process of personalizing coaching to the individual needs of the advisor.

By first identifying the most significant business development metrics, it’s possible to quickly pinpoint necessary areas of improvement. For example, what percentage of the advisor’s prospects turn into clients? What percentage of their prospects agree to a second meeting? How many sign up for their services on the spot without a second meeting? Correlating sales skill data against these metrics will quickly reveal if there’s an issue with the advisor’s ability to profile prospects, or perhaps deliver a compelling “pitch.”

This approach can also help organizations manage compliance from a messaging and behavior standpoint, including an advisor’s grasp of compliance procedures, regulatory filings and code of ethics – three areas that trip up RIAs most, according to a recent report by the Securities and Exchange Commission’s exam unit. By shaping a coaching conversation in this way, managers can take action immediately and focus on the areas that will have the greatest impact in terms of AUM or regulatory risk.

The Bottom Line

Whether they pursue it on their own, work with a sales coach, or via the “school of hard knocks,” it’s important for financial advisors to recognize that advanced sales techniques are essential for their own success – from being ready to ask for the business, to managing a sales pipeline and monitoring business development metrics. For in the end, it doesn’t matter how sound your advice is if you can’t convince clients to pay for it.

As demonstrated over and over again, companies investing strategically in technology to support sales processes tend to outperform other firms on a number of financial and productivity measures. Platforms like Qstream are helping some the world’s top financial firms address this challenge through effective knowledge reinforcement in minutes a day, data-driven coaching, and CRM-integrated performance analytics. To learn more, request a demo today.

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