As a financial advisor, your most important asset is Client Capital. Yet, it does not appear on your Balance Sheet or Income Statement. What is Client Capital? It is the sum of three elements:
- The depth of relationship you have with your clients – Measured by the number of products and services your clients buy from you and the degree to which they turn to you for advice or counsel as a Trusted Advisor.
- The breadth of relationship you have with your clients – Measured by the degree to which you have made yourself referable–your clients willingly introduce, recommend and refer you to the important people in their lives.
- Their degree of attachment or loyalty to you – We are all fallible human beings. At some point, you may disappoint your client. Their decision to stay with you will be based upon the attachment they feel to you.
For most financial advisors, the challenge is to make Client Capital scalable. Client intimacy is the foundation of Client Capital and is based upon the ability to establish and maintain a relationship of trust and involvement. Dunbar’s Law states that a financial advisor can establish client intimacy with up to 150 clients. One of the ways to make Client Capital scalable is to utilize technology, particularly Social Media. Sites such as LinkedIn, Facebook and Twitter allow you to touch a large number of people and remain “connected”. Social media is a new medium for relationship building and can be a valuable tool in an advisor’s marketing strategy. Through social media outlets you can build a web presence, capitalize on your network and create additional lines of communication. You can also use the Internet to blog or send e-newsletters and keep in touch with a large number of people who are important to the success of your business.
One of the advisors I coach, Thane Stenner, sends an e-newsletter twice a month to 1400+ recipients. The newsletter contains articles of interest from various sources and Thane’s own articles. The newsletter demonstrates his interest in keeping people informed and is a way of demonstrating his own expertise.
Ted Oyler is another advisor in our program based in State College, PA. Ted reconnected through Facebook with a high school friend who had moved to Maryland and was relocating back to State College. The old friend is now a new client. In May, Ted attended one of our workshops in Chicago. He posted his trip to Chicago on LinkedIn where another old friend, now living in Wisconsin, reached out to him and arranged to meet him in Chicago. He also became a new client.
The Internet and Social Media have the power to redefine your market. Thane Stenner and Ted Oyler now operate nationally. They are no longer limited by geography. The power of technology and the influence of the Internet are also demonstrated through Ron Roberts. Ron is 50 and a 26 year veteran in financial services. He has a practice in Northern California with over 900 clients. In the first seven months of 2010, Ron’s advisory firm has added 75 new clients. In the last two years, his son-in-law, Jared and daughter, Marie, have joined the business. Jared has an MBA and Marie has a degree in marketing. They are also very technology literate. The US is the most socially mobile society on earth. One in four American families relocates every four years. The majority of Ron’s clients are seniors. Most of the firm’s new clients are family members of existing clients. Utilizing technology, Ron’s firm reaches out to the children and grandchildren of their clients across the US. As a result, they now have clients in Chicago, Dallas, New York etc. In the process, the firm has become a multi-generational practice serving two, three and, in some instances four generations in a family.
When I first started coaching Ron, his primary means of communicating with clients and potential clients was face to face and by phone. Today, his firm utilizes the power of the Internet and Social Media to deepen relationships with existing clients and get introductions to potential clients, creating Client Capital. In the process, they have increased client loyalty and degree of attachment. The firm’s revenue has quadrupled and the business is scalable. Utilizing Social Media and the power of the Internet enables you to convert Client Capital into Financial Capital.