Journal of Financial Planning: March 2023
Gretchen Halpin is the co-founder of Beyond AUM, which provides growth, client experience, and adviser experience support to financial advisers to drive business success. Over the course of her 25-year career, Gretchen has founded more than five businesses in addition to serving as the chief strategy officer for one of the financial services industry’s leading wealth management firms. She has been featured in Advisor Perspectives, Financial Advisor magazine, and Forbes for her insights and has served as a speaker at numerous industry conferences, including NAPFA, Financial Planning, and Invest in Women. She also serves as a facilitator in the Financial Planning Association’s Women and Finance Knowledge Circle community.
Let’s face it: M&A is big news in our industry. It’s hard to go more than a few days at a time without seeing in an industry periodical or one of your social media feeds that Firm A has been acquired by Firm X in a deal worth a zillion dollars. It’s not hard to understand why. In our business, scalability and sustainability go hand in hand, and one way to get a lot of scalability in a short time frame is to buy it.
But it’s also important to remember that the heartbeat of the financial advisory business is and always will be our interactions with clients on a personal, one-on-one basis. It really is true, as some have phrased it, that “business happens at the speed of trust.” For that reason, even firms that are growing through acquisition should care—and care deeply—about organic growth: attracting new clients and their assets to your firm and bringing in new assets from existing clients. In fact, according to a study by InvestmentNews, from 2019 to 2022, 41.5 percent of all increases in RIAs’ AUM came from organic growth.1 And if you’re just starting with a recently launched RIA firm, organic growth is essential—it’s your bread and butter. So, how can you build a strategy that allows you the sort of growth that can be maintained over time and that can serve as the foundation for yet more growth?
What we’re talking about, of course, is the networking that works. There are several ways to do it successfully: cultivating centers of influence (COIs), obtaining local media exposure, positioning yourself as a community expert, and, of course, asking for and obtaining referrals from existing clients. And there are other ways in addition to these. It doesn’t so much matter which method or methods you employ; what matters is making sure that your networking methods are tightly integrated with the identity you want to build for your firm or practice. Your unique value proposition, mission statement, and ideal client persona (You do have these, right? In writing?) should all build off of and complement each other if you want your networking to be truly organic and—to extend our gardening metaphor—fruitful.
Ultimately, networking is about community: creating it, participating in it, sustaining and nurturing it. We’ve written elsewhere2 about the concept of community conversation circles and how they can help you position your firm to benefit like-minded persons. But when you think about it, the idea of community as it applies to networking goes beyond conversation circles.
After all, what is a referral? Isn’t it a trusted person talking to another trusted person about yet another trusted person? That’s community. When you serve as a teaching volunteer for your local chapter of Junior Achievement, that’s community. When you sponsor a youth sports team, that’s community. You see, the basic principle of community is mutually shared benefit. You are providing something of value to someone else, and in return, you may expect to receive something valuable. When a community is working properly, everyone wins. No one is “sold”; rather they get something they want or need while also providing something someone else wants or needs.
Principles for Effective Networking
Whether you’re hitting the civic club circuit or working with COIs, the foundational tenets of effective networking are pretty much the same.
- It’s about what you can give at least as much as it is about what you want to get (see “Community,” above).
- Your focus is on them. It has been said that the most beautiful word in any language is the name of the person you’re talking to. Saying it a different way, if you evidence interest in me and my life, I will probably think you are also very interesting. Ultimately, that mutual interest is what fosters the synergies that lead to networking opportunities.
- Be more focused on creating connections for others than for yourself. The main stipulation here is that you should never connect with anyone who has not earned your trust on some level.
- Stay in touch. It’s probably impossible to over-emphasize the importance of following up. Your network is a living thing, made up of living people; it requires care and feeding (more gardening language).
Very likely, you’ve heard all of these principles before. They’re familiar to anyone who has ever listened to Dale Carnegie or Zig Ziglar. But the trick is to create a system that helps you apply them consistently to your interactions, day in and day out. Whether you’re at an event, making a presentation, or even in a casual conversation, these concepts will help you create a networking persona that is natural, not forced, and genuine, not “salesy.”
As we’ve said, there are multiple ways to approach the building of your network. Once you have established the “personality” you want your firm to have and project, you’re in a position to adopt one or more strategies that make sense, based on who you are and whom you intend to serve.
- Know your niche. This is a function of both “know your client” and “know yourself” (two concepts, by the way, that are often sides of the same coin). You can’t be the best in the world with every type of client there is. Instead, your goal should be to become the best in the world at serving the particular niche you’ve chosen. Do you come from a family of doctors and have an intuitive understanding of the financial planning needs of medical professionals? Do you love small businesses and identify closely with business owners’ challenges and needs? Are you looking to work with retiring executives of large companies? Whatever your target niche is, let that dictate the places, times, and ways you structure your networking attention.
- What do you like to do? People talking business on the golf course is a stereotype for a reason: we enjoy being around people who enjoy the same things we do, and we tend to be more relaxed in those settings. Are you on a church baseball team? A member of a book club? Volunteer for a museum? Involved in community theater or a music group? Chances are, there are others involved who not only share your interests but also have needs—or know someone who has needs—that you could help to fill.
- Events. Job fairs, expos, and other community events offer chances to meet others who may also be searching for networking opportunities.
- Professional collaboration. At some point in your career, it is almost a certainty that you will need to refer a client to another professional: a tax expert, an estate planning attorney, or even a physician, a therapist, or a career coach. Why not start now? Meet other professionals in your area and explore networking possibilities.
Making Plans, Setting Goals
Of course, none of these concepts or ideas will accomplish anything until you have developed an implementation plan and, just as important, established what success looks like. Suppose that you have determined that your niche will be late-career professional women who are preparing for retirement. Your plan might look something like this:
- Join the Executive Women’s Networking Group of your city
- Develop executive women’s compensation and retirement seminars
- Host and present two seminars over the next six months, partnering with your tax expert
You might measure the success of your plan something like this:
- Obtain seven prospects and one new client
- Obtain one new professional/referral relationship
If you are employing more than one networking strategy, you will want to craft a similar plan and measurable benchmarks for each method. The point of this, of course, is to not only give yourself a track to run on; it’s also important to measure your efforts for effect. If something didn’t work as well as you thought it should, figure out why. Talk to a colleague or mentor to see if your methods were appropriate or if your expectations were reasonable. Revise, try again, and keep at it until you feel your outreach is both genuine and effective.
Bringing It Together
It is an axiom of marketing and sales that referrals are the gold standard for generating new business. That’s because if done correctly, they arise from a sense of community and mutual benefit; they are not forced or “extorted” through sales pressure. The chief benefit of organic growth through networking is the same: it feels natural, and it proceeds both from the core strengths and competencies you have built into your firm and from the desire of your ideal clients to help someone else. The time you spend in building an organic networking approach that is uniquely right for you and your clients is a direct investment in the long-term success and sustainability of your practice.
- Benjamin, Jeff. 2022, October 11. “Here’s Why Organic Growth Still Drives the Advice Industry.” InvestmentNews. www.investmentnews.com/why-organic-growth-still-drives-advice-industry-227561.
- Beyond AUM. 2022. “Virtual or IRL, How to Create Community with Conversation Circles.” https://beyondaum.com/create-community-with-conversation-circles/.