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If you want to see how business leaders respond to a volatile climate, there’s no better vantage point than a room full of entrepreneurs.
I’ve had the privilege of belonging to my local 180-member chapter of Entrepreneurs’ Organization. EO Los Angeles has been an amazing experience for many reasons, not least of which is giving me a front-row seat to watch how different owners approach business cycles.
Right now, the wealth management industry is on an uphill climb. Volatile markets, failing banks, rising prices and mortgage rates, and a long war all have consumers nervous. By the end of last year, high net worth individuals lost over 7% of their wealth, according to a Capgemini survey. They turned way more conservative, with 67% now putting wealth preservation first.
Of course, firm revenues and profits are under stress. It really is a whole new environment.
The Impact That Stress Is Having on Leadership
So how are entrepreneurs responding? Watching business leaders in their natural habitat, I’ve observed three kinds of behaviors:
- Deer. Paralyzed by fear, some businesses just stare motionless into the headlights. Afraid of doing the wrong thing, they don’t do anything at all. I mean, no judgment here. Very few people expected such a quick turnabout in macro conditions. Still, it’s distressing to see people just shut down.
- Squirrels. It’s natural to pull back on spending late in a cycle, but some businesses are overdoing it. They’re cutting deeply into salaries, headcount and marketing, trying to hoard every penny and hunker down. The danger is, cutting investments puts the future of their business at risk. When the climate eventually gets better, they may be too weak to survive.
- Eagles. I see leaders driven by a hunger to innovate. They look at times like these as peak opportunity to soar—to become aggressive and creative, setting themselves up to thrive through the current cycle and beyond.
A lot of platform leaders and RIA firm owners fall into this last category. They’re visionary. And inspirational. I want every wealth management executive to feel like them right now—like an eagle.
This is still a growth industry. The demand for advice exponentially outstrips the number of advisors and always will. There is so much headroom to deliver a more customized experience to clients, to reach out to new generations with technology, to respond to growing interest in ESG and alternatives and to explore new target markets. The mass affluent segment alone is a $27 trillion opportunity today that can grow to become tomorrow’s high net worth clients.
Why Not Listen To Your Own Advice?
What do you tell clients to do when markets are down? Cash-out? Time the markets? Of course not. You advise them to take a long-term perspective, stay invested and position themselves to capture early gains when the market eventually comes roaring back.
Sounds like smart advice. Now apply it to yourself. If you believe in your future, stay invested in your own business—even when growth gets harder.
Three Ways to Invest in Your Own Business Now
If I wanted a wealth management business to soar like an eagle, here are three initiatives I would invest in today from a marketing perspective:
- Build a scalable prospect experience. You’ve heard the cliché about not knowing which half of your advertising budget is wasted. Let’s find out. Rather than slashing marketing randomly—and risking your whole growth trajectory—build an automated prospect journey that can help pinpoint wasted spending while dramatically improving conversion rates.
If you haven’t mapped out a defined prospect journey yet, you have no way of knowing which marketing programs are working. Imagine you’re an advisor who regularly engages on social media, hosts webinars and posts about them to drive registrations. If every single post and webinar links to the same “Contact Us” form on your website, you can’t tell where each prospect came from. What’s worse, we know from experience basic contact forms yield horrible response rates. For many prospects, starting an open-ended conversation with you is too much to ask too soon, especially after only one look at your content.
Instead, you can create a roadmap of your prospects’ experiences across every channel where they might find you—referrals, search, social media, events and so on (you’ll need a good automation tool for this). Rather than inviting everybody to “contact us,” you can nurture prospects from one touchpoint to the next with free value and answers that feel tailored to—and even anticipate—their questions. They can move at their own pace, learn more about you and get an authentic look at what it’s like to work with you. Gradually, they can build up enough confidence to click your Calendly link and get to work.
A defined prospect roadmap lets you quickly see what works and what doesn’t and offers prospects easier options for staying connected.
- Dominate client communications. Only half of high net worth clients are satisfied with their firm’s touchpoints—even though digital experiences are a top criterion for picking providers, according to Capgemini. After consumers saw what other brands could do during COVID-19, they expected the same convenience from their advisors. They didn’t get it, which creates a perfect opportunity for you.
A volatile environment is the best time to upgrade client communications because they are already eager to hear from you. To strengthen engagement, expand the value you offer. Send out a weekly “here’s what’s on my mind” email—not a boring market outlook, but your own thoughts shared frankly and authentically. You can humanize your touchpoint even further with audio notes and video clips.
If you don’t already have a killer mobile app, buy or build one. A good app will differentiate you from the blob of underwhelming mobile wealth advice tools, which rarely deliver the kind of experience consumers expect. An app makes engagement easier for clients and gives you another place to deliver on your values and message.
- Explore new market opportunities. Growth-hungry advisors are salivating over all the opportunities ripe for the taking. Just look beyond the obvious and consider the following:
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- Affluent investors with $250,000-$1 million in assets who will become tomorrow’s high net worth clients. Only 18% are satisfied with their current wealth management provider, most admit they lack the knowledge to navigate volatile markets, and almost half complain their portfolio is out of whack with their goals, Capgemini reports. They’re perfect candidates for recalibrating your aging client mix—if you build an automated, scalable experience to serve them profitably.
- Alternative investments, including digital assets as well as hedge funds, private equity and structured products. Allocations have not kept up with interest among high net worth investors and the client experience is often clunky.
- ESG products remain hot topics. You can score a win here if you move fast to meet clients’ demands for better traceability and transparency
Yes, a lot has changed over the past several years. But you can’t turn back time or pause it while you figure everything out. Tough environments test the fittest competitors, teaching them to survive and thrive while the rest are shaken out. I’ve been in this industry for many years, and this is the most exciting time I can remember. I can’t wait to see how you innovate next.
If you’re ready to become more active and aggressive about your growth, but aren’t sure where to start, click here to schedule time on my calendar so we can start talking about specific changes you can make.
Megan Carpenter is the founder and CEO of FiComm Partners
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