For many wealth managers, growing their practice through passive referrals is sufficient to achieve the growth they require.
However, if you want to build your business at a faster rate, you should consider developing “Centres of Influence”.
High-net worth individuals rely on a number of professionals, typically lawyers and accountants, who have the specialised know-how to ensure their wealth is efficiently managed and maintained.
These professionals who sit within the affluent person’s inner circle can be referred to as Centres of Influence (COI), and they will understand the details and nuances of both the client’s business and personal life.
However, the scope of their advice has limitations, and there will be situations where your specialist knowledge will be required.
For the attentive wealth manager, Centres of Influence should be seen as a prime opportunity for building strategic partnerships which, if managed correctly, can form powerful alliances that can be mutually profitable for both parties.
But the nature of these delicate business relationships is too often misunderstood. Wealth managers tend to presume that this is a simple referral process, not dissimilar to the recommendation you might receive from a satisfied client to whom you have provided a good service.
However, a Centre of Influence is not just anybody to the client but an existing trusted adviser, and so a favourable mention from them carries significant weight and persuasive power – possibly even a transference of trust.
This social currency can be especially effective for wealth managers who run their own practices and often do not have the marketing budget of larger organisations. The outcome of many hours spent trying to connect with prospective clients with significant sums to be managed can be achieved through one well-placed contact. But recognising the business development potential these intermediary advisers represent is often not the issue.
The most pressing questions that wealth managers should be asking are: how do I build relationships with Centres of Influence? And how can I ensure that they produce tangible and profitable client referrals?
In answering the question of how to form a powerful strategic partnership it is necessary to first establish some ground rules.
Defining your ideal Centre of Influence
It is important before reaching out to someone with whom you would like to form a strategic partnership that you first define the profile of an ideal Centre of Influence.
Of course, you want them to provide you with profitable and attractive clients; however, you will need to consider whether their clients have the sorts of problems you will be able to solve.
Ultimately it is their clients’ business you are seeking, and so the focus should be on what value you can add to their clients’ investments. Identify a client need that the professional is unable solve and demonstrate how you are best placed to find a solution. This will help create relevancy and utility, and will mean that Centres of Influence are more likely to be receptive to your approach.
Identifying potential Centres of Influence
Once your ideal client profile has been identified and their needs assessed, you can then identify possible Centres of Influence whether it is a divorce attorney, business valuation professional or mortgage specialist.
It is best to take a top-down approach, imagining your ideal client and the kinds of investments they make; then consider what professional advisers they would have working for them. Think strategically and outside the box.
Do not forget to capitalise on your existing clients and the value of the good working relationships you have with them. Chances are they will have business ties to the kinds of influencers with whom you would like to connect. Is it possible that they might be able to introduce you?
Arranging an initial meeting with your identified strategic partner has more to do with tact and how to broach the situation than the simple act of making the phone call.
It is important to bear in mind that Centres of Influence are approached regularly by people saying “I manage money, please refer your clients to me”.
If you are to secure a meeting with a potential Centre of Influence, you will have to go beyond your job description. Make it about them and their clients and the value you can bring to the mutual needs of both. Demonstrating that you are the person to solve their clients’ problems is the only way to set yourself apart from the noise of the crowd in this hyper-competitive market.
The biggest mistake you can make in cultivating a strategic partnership is to sell yourself, or to go into the meeting with an agenda to gain immediate client referrals.
The first meeting should be about getting to know the influencer better and the challenges they and their clients face. Once you understand their challenges you can start to give them the comfort that you can help to solve the problems they face. To build that comfort level, you need to find opportunities to demonstrate your three C’s: Competence, Caring and Consistency.
This can only be done over time through consistent contact and by showing how you can add value to their business.
Patience is a key virtue in this business of relationships. Too many people go in with the mind-set that you are trying to get a quick win out of one introductory meeting. But a true and enduring strategic partnership is built up over time as both parties come to know and trust each other.
During periods of time when your partnerships with Centres of Influence are not producing any results, you may be tempted to question the value – yet it is at times like these that it is essential you maintain the relationships and persevere, as you never know what lucrative benefits they might bring further down the line.
David Hazelton is head of business development at Raymond James Investment Services
Key points
- If you want to grow your practice at a faster rate, you should consider developing “Centres of Influence”.
- The most pressing questions that wealth managers should be asking are: how do I build relationships with Centres of Influence?
- Patience is a key virtue in this business of relationships.