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Press: Our Advice on Marketing Basics, Step #1 Make Marketing a Line Item

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Marketing as a balance sheet item

While hiring Mitchell to boost business development was a smart move on Tiedemann’s part, the firm will have to be patient, according to marketing guru Elmer Rich.

“I admire their commitment but marketing is not ‘plug-n-play’,” said Rich, principal of Chicago-based Rich & Co, a business development and mergers and acquisitions consulting firm for RIAs and retirement plan third-party administrators. “It’s likely she will have a long learning curve entering the RIA world. Her old firm, JP Morgan Chase is one of the biggest brands in the world; Tiedemann Wealth Management is not.”

According to Rich, the biggest marketing and business development challenge for independent advisory firms is making marketing a balance sheet and P&L line item.

“Just calculating the cost of sales is a first step,” he said. “But the strategic decision to make marketing a formal business process is absent in pretty much every financial services firm.”

To get more business, wealth managers above all need to “get out of the office and away from the computer screen,” Rich said. “Face-to-face meetings with prospects and, mainly referral sources, is what’s necessary. The rule is simple: 90 per cent of your marketing time should be talking personally to someone who can give you assets or has direct access to people who can give you assets. The computer is a tool to get you those conversations, calls or meetings.”

Summer Surge: Marketing, Business Development Emerge As Top Priorities For Wealth Managers 5 July 2012  Author: Charles Paikert

Marketing and business development, long considered the bane of independent wealth managers, suddenly seem to be at the top of the industry’s “to-do” list.

Just last week, Dynasty Financial Partners, one of the hottest companies in the wealth management business, launched a new subsidiary, Dynasty Marketing Services, that will offer advisors branding, strategic support, public relations, web design and turnkey marketing material.

In the spring, Charles Goldman, who has headed the RIA custody units of both Charles Schwab & Co and Fidelity Investments, and Steve Lockshin, who founded both Convergent Wealth Advisors, a $10 billion RIA, and Fortigent, a leading outsourcer, rolled out Advizent, a co-op for high-end advisors that is being set up to provide sophisticated marketing under the umbrella of a national brand for its members.

Boutique independents are stepping up their game as well. Tiedemann Wealth Management in New York, for example, recently hired Jennifer Mitchell, a former managing director at JP Morgan Private Bank, to head up the firm’s new business development and client services initiatives.

Branding challenge

Mitchell’s challenge – “the lack of name recognition and branding” – applies to all independent firms, and has helped spark the sudden surge of interest in marketing. Indeed, one of the major disadvantages independent firms have traditionally had when competing against large multi-national financial service behemoths has been not only the lack of name recognition, but the lack of a budget to establish one.

Wealth managers have had to suffer in silence as year after year the massive marketing budgets of the Merrill Lynches and Morgan Stanleys of the world guarantee them a place at the table, no matter how damaging the latest embarrassing news story about a particular firm may be.

By contrast, wealth managers, no matter how pristine their reputations may be, simply don’t have the scale to mount an effective campaign to let people outside of their local “circle of influence” know who they are and what they do.

Advisor interest in Advizent

Advizent hopes to remedy that by pooling co-op members’ money – which could range from $25,000 in fees to over $100,000, based on firm revenues – and put together national marketing and branding campaigns.

To be sure, the venture is at an early stage and many details have to be worked out – starting with the actual name the advisors will be branded under.

But so far, advisors appear to be receptive. The firm reports it has received commitments from over 70 RIAs ranging in size from $250 million to $16 billion in assets and has reached $100 billion in provisionally committed assets. Advizent hopes to eventually sign up as many 1,500 firms.

And wealth managers don’t appear to be flinching at the fees. Despite potentially having to lay out $50,000 to $100,000 a year, Jon Jones, co-chief executive and founder of Seattle-based Brighton Jones, thinks the fee will be worth it to help grow his business, which already has over $2 billion in assets under management. “Five years ago, I would have said I would never spend $500,000 a year on marketing,” Jones told industry website RIABiz. “But now I‘d be surprised if I don’t eventually spend a million.”

Dynasty’s big guns

Dynasty is bringing in big names to bolster its marketing initiative. David Westcott, a top marketing executive at Smith Barney and then Citi- Smith Barney, will head the new division, and Sally Cates, who headed global communications at Citigroup Wealth Management, will oversee public relations and communications for the unit.

Branding is the single most important area advisors need to work on, according to Ed Swenson, chief operating officer. Advisors especially need help telling their story, Swenson said, which is where Dynasty sees its business opportunity.

“The fiduciary standard is such a powerful and exciting client servicing model – over the suitability standard within the broker-dealer environment – that RIAs need a partner who can help them articulate these important differences along with their unique value proposition,” he explained.

For now, the marketing services will only be available to the 13 advisory firms (who have a combined AuM of $12 billion) in the Dynasty  network, according to Swenson. Costs “must be below market rate,” and the pricing structure will include spending time with Westcott and Cates who will help advisors “craft and refine their unique messaging and marketing strategy,” he said.

Raising Tiedemann’s profile

Many advisors are also choosing to tackle marketing and business development on their own by bringing in new blood, as exemplified by  Tiedemann Wealth Management, which has $3.3 billion in assets under management, $6.5 billion in assets under advisement, and offices in Florida and Santa Monica, CA, in addition to Manhattan.

After a lengthy search, Tiedemann hired Mitchell, a twenty-year industry veteran who, in addition to an eight-year stint at JP Morgan Private bank from 1997 to 2005, has also worked at Sanford Bernstein, Lehman Brothers and Barclays.

“Jennifer fit all the criteria that we were looking for,” said Michael Tiedemann, the firms’ senior managing director and chief investment officer. “Professional, organized, very competent, team player and high quality character.”

“Differentiating the firm,” according to Tiedemann, is the biggest marketing challenge currently  facing independent wealth managers. “People, performance, process. Having a Delaware trust company helps, and a proven service model which is properly staffed.”

As for business development, Mitchell wants to “raise Tiedemann’s profile in the advisor community and the prospective client base in a way that translates into new relationships for Tiedemann.”

Target market

The firm targets clients with at least $25 million in investable assets, she said, who tend to be either first- or second-generation wealth holders and have most likely owned and sold a private company.

Quality referrals via credible intermediaries remain the biggest driver of growth at the firm, according to Tiedemann, but Mitchell says the firm also needs to “cast a wide net to get to the desired client.”

Those efforts will include public relations, sponsorships of professional groups, and participation in industry forums and associations, Mitchell said. Using social media and advertising are currently being evaluated, she added.

Tiedemann’s competition includes other independents, trust companies and “money-center banks” with large wealth management practices, according to Mitchell.

The firm’s branding message is being hammered out now, she said, and needs to convey “how we are different from the competition.”

And that is?

Tiedemann offers “objective investment advice across all asset classes,”  Mitchell responded, “and has a deep history in investing in alternatives such as private equity and hedge funds.”

As it happens, Tiedemann’s sister firm is Tiedemann Investment Group, a well-known hedge fund run by Tiedemann’s father Carl, a former president of Donaldson, Lufkin & Jenrette and a co-founder of Tiedemann Wealth Management.

Clients of the wealth management firm are not invested with Tiedemann Investment Group, said Michael Tiedemann. “There has always been a separation,” he said. “There is shared market knowledge, open dialogue about macro issues and broad market opportunities. Zero conflicts for either side, and we plan to keep it that way.”

Marketing as a balance sheet item

While hiring Mitchell to boost business development was a smart move on Tiedemann’s part, the firm will have to be patient, according to marketing guru Elmer Rich.

“I admire their commitment but marketing is not ‘plug-n-play’,” said Rich, principal of Chicago-based Rich & Co, a business development and mergers and acquisitions consulting firm for RIAs and retirement plan third-party administrators. “It’s likely she will have a long learning curve entering the RIA world. Her old firm, JP Morgan Chase is one of the biggest brands in the world; Tiedemann Wealth Management is not.”

According to Rich, the biggest marketing and business development challenge for independent advisory firms is making marketing a balance sheet and P&L line item.

“Just calculating the cost of sales is a first step,” he said. “But the strategic decision to make marketing a formal business process is absent in pretty much every financial services firm.”

To get more business, wealth managers above all need to “get out of the office and away from the computer screen,” Rich said. “Face-to-face meetings with prospects and, mainly referral sources, is what’s necessary. The rule is simple: 90 per cent of your marketing time should be talking personally to someone who can give you assets or has direct access to people who can give you assets. The computer is a tool to get you those conversations, calls or meetings.”

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Written by Rich and Co.

July 9, 2012 at 8:14 pm

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