Once financial advisors discover how costs and benefits shape everyday experiences, their mastery of growing their practice improves over time. But if you want to grow your financial planning practice, you must think like a business owner. This means focusing on sales and marketing. As you make your practice—just like your bed—you must lie in it. That’s why I thought some good examples from an article I read recently would help. The article I’m referencing is “How Can They Charge That? (And Other Questions),” by Robert. H. Frank, which was published in The New York Times in May.
Frank teaches an economics course at Johnson Graduate School of Management at Cornell University and assigns his students writing assignments. The assignments encourage students to question something they have observed and then use economic principles to solve it. I find the assignment beneficial as a sales trainer for financial advisors, because the exercise helps advisors, like you, think like business owners when developing sales and marketing plans.
Let’s look at some examples that Frank shares in the article and then apply them to financial advising and financial planning.
Higher Fines For The Wealthy
One of Frank’s students, Chris Kissane, observed that governments charge different prices for speeding tickets. Charging fines based on one’s ability to pay would be unlawful. However, discounts are given to those people that fight the ticket. For those that will appear in court, even if they don’t provide good evidence to support speeding, the fines declined by 40 percent, according to Kissane.
The cost, or specifically the time it takes to appear in court, is a good way of discerning those people that find the fine economically prohibitive, versus those that choose not to attend, because their time is better spent elsewhere. Kissane proposed, “The challenge of local governments is to devise an incentive system that deters high-income motorists from speeding without imposing crushing economic burdens on drivers with lower incomes.”
Advisors Want To Grow
The purpose in sharing this example is that I have found that financial advisors want to grow their businesses, but they are not willing to put in the time or the money, which is like trying to get out of a speeding ticket without making an effort. So what I can do as a coach for financial planners and advisors is to help you think differently about your businesses in order to encourage you to master sales and marketing.
Many times, the hurdle is having money, or rather not having the money, to invest in your business. When such is the case, it just means you have to be more creative. You can still use the discrepancies of how individuals think about money and costs—like the speeding ticket example above—to get new clients in the door and procure your financial advising services. How?
As a coach, I encourage financial advisors to think critically about two things:
- What do individuals need?
- What value can you provide to clients?
Then it is time to test the answers to the questions. Don’t get me wrong; this process takes time and money, as it is an investment. The benefit is that financial planners begin understanding, “ If I do A, B happens, and I get paid this amount.”
I had an advisor who did this with tennis players. He began noticing that tennis players tend to have more discretionary income. So he started doing things with tennis players that would encourage them to meet with him, like offering tickets to a tournament. He became well known in the tennis community and began to understand their concerns and what they thought in terms of costs and benefits. As a result, he was able to offer financial planning services tailored to them, which helped him attract more clients, who happened to be worth more than his initial client base.
Apply This To Your Own Community
Think about some common characteristics in your community. What do people do for hobbies? Where do people work? As a result of these activities, do people do things differently? How can you help them?
By asking these questions, we are thinking critically of ways to market and sell to prospects. This exercise helps you look at your practice as a business. As a result, you can achieve growth in your business.
Here is another example you can use to practice this approach. Peter Hlawitschka, another student in Frank’s class, noticed cost differences between movies and plays. By keeping prices low, movie theater operators fill many more seats and generate far more revenue than if they charge higher prices. They are able to do this, because once a film has been produced, overhead costs are minimal, making the cost of each additional showing relatively low.
Live productions don’t have the same cost advantage since each performance comes with labor costs, specifically for performers and musicians. Therefore, Hlawitschka argues that live productions must ration scarce seating by charging a premium price.
Think about your own business and what services you can offer at “movie theater prices” vs. “live performance prices.” Does your target community lean toward one more than the other?
Use the examples above to think about your business differently. Are there cost discrepancies that you can recognize among various target markets? Are there certain community groups you might be able to offer services to by understanding their unique needs? You don’t need a lot of money to get started, but you do need some time. Give it a try.
photo credit: JD Hancock via photopin cc