Weeding through dozens of broker/dealer marketing kits as I do every year, and listening to advisors sounding off about them on a daily basis, I have concluded that more often than not, there is much room for improvement.
Some firmsâ€™ marketing kits are two-to-three-inch-thick doorstops, bogged down with mind-numbing amounts of informationâ€”plus a lot of generic claims that say little. Broker/dealers routinely advertise that they provide representatives with â€œflexibility,â€ â€œgreat service,â€ and â€œthe latest in high technology,â€ when, in truth, they donâ€™t always live up to these claims.
You Call That Flexibility?
No matter what a broker/dealerâ€™s marketing kit says, it doesnâ€™t take long to determine just how flexible a firm really is. A few minutes on the phone with a firmâ€™s principal usually does it. The conversation typically goes like this:
Henschen: So you feel youâ€™re flexible with advisorsâ€™ individual needs?
B/D firm: Oh, sure. Absolutely!
Henschen: Well, Iâ€™m working with an advisor who has his own RIA with some of his advisory held at Schwab.
B/D firm: Oh, thatâ€™s a problem. We donâ€™t allow reps to have their own RIAs or work with Schwab.
Henschen: Another advisor weâ€™re consulting with is working with several REITs, limited partnerships, and a futures fund.
B/D firm: Iâ€™m afraid that wouldnâ€™t be a good fit, either. Weâ€™re currently working with three private REITs, and no limited partnerships or futures funds.
Henschen: Well, then, would you be able to add some LPs and a futures fund?
B/D firm: Sorry, but weâ€™re not comfortable with those investments and weâ€™re pretty well settled with our REITsâ€¦
By this time, itâ€™s obvious that despite what I was told and what the broker/dealerâ€™s marketing kit may have claimed, this firm isnâ€™t flexible at all, but rather is set in its ways. In contrast, at Henschen & Associates we place advisors with other firms that really are flexible, genuinely adapting to advisor needs and willingly adding product as needed.
Firms that are truly flexible should spell out what makes them that way in their marketing materials. They shouldnâ€™t make it a guessing game.
Quality service is also easy for broker/dealers to boast about, but is seldom delivered as promised.
One service area that can backfire is special phone lines just for high producers. What message does that send? Only the top producers get quality phone service; everyone else is left on hold? In reality, everyone with a firm should get quality phone service.
Advisory councils are another highly touted service-related, quality-control effort. The broker/ dealer elects a council of eight to 12 top advisors who meet quarterly and are the so-called â€œvoice of the advisors.â€ These efforts have mixed results, depending on a broker/dealerâ€™s management style. If management is open to new ideas, advisory councils can be useful, but in strictly top-down firms an advisory councilâ€™s voice usually rings hollow.
Some broker/dealers try to quantify quality of service through representative surveys, which may be effective at first, but have little long-term impact. As time goes on, every department seems to rate â€œhighâ€ or at least equal, so representative surveys should be taken with a large grain of salt.
High Tech? How High?
Another popular term that crops up in a lot of marketing kits is â€œhigh technology.â€ Some broker/dealers advertise that theyâ€™re â€œstate-of-the-artâ€ if they have consolidated client statements, while others make that claim because theyâ€™ve adopted WinOPS, client relationship software, or some other forms of operational technology.
Firms that have gone paperless have the most to crow about (justifiably so, and they should highlight that fact in their marketing materials). But others exaggerate to make themselves look better than they really are.
Bottom line: Broker/dealers need to go into detail about their level of sophistication, what types of technology they provide, and how they help their advisors get the job done more efficiently.
Broker/dealer marketing kits donâ€™t have to be doorstops. To be most effective, marketing kits should have six to 12 pages up front, with a folder in back for five to eight inserts. Think quality over quantity!
The front pages are used for describing the firmâ€™s universal value proposition, mission statement, philosophy, culture, target market, the kind of help provided to representatives in transferring of their books (go into detail here), and any special qualities or niches the firm fills.
The inserts in the back of the marketing kit can provide need-to-know information for prospective representatives, such as:
â€¢ Payout grid
â€¢ Rep costs including E&O insurance coverage, fidelity bonds, monthly charges and what they cover
â€¢ Costs to the client
â€¢ Lists of mutual funds and VA & VUL carriers. (This is pretty well commoditized in our industry so just the company names are needed.)
â€¢ Lists of alternative investments including limited partnerships, REITs and futures funds
â€¢ Ticket charges and miscellaneous fees. Or, if you have unusually low ticket charges, or donâ€™t charge DCA, systematic deposit and withdrawal charges in mutual funds, highlight that because it helps set you apart from the crowd.
â€¢ Advisory platforms. Make sure to include the administrative fees on these platforms. Some firms charge as little as a five-basis points administrative fee, which should be highlighted as a major savings.
â€¢ Lists of third-party money managers
â€¢ Miscellaneous items, such as deferred compensation or equity participation plans
â€¢ Broker/dealer marketing kits should only use terms like â€œflexible,â€ â€œquality service,â€ and â€œstate-of-the-art technologyâ€ if theyâ€™re all true and can be thoroughly substantiated. For example, the following are several different ways â€œquality serviceâ€ can be quantified:
â€¢ 48-hour turnaround on compliance approval for seminars, radio shows, and articles
â€¢ 24-hour compliance approval on business cards, stationary, and signs
â€¢ You will nearly always reach a person direct. If not, youâ€™ll get a call back within 24 hours or weâ€™ll pay you $25, guaranteed!
Some firms have switched to online marketing kits. Thatâ€™s fine, but paper-and-ink versions should also be made available. For some reps, having something to hold and read has a longer lasting impact than scrolling through a website, no matter how well designed. Give prospective reps a choice.
Financial advisors have a lot on their minds and donâ€™t have time for reams of paperwork. Telling your story concisely and specifically and explaining the things that set you apart from the crowd, while at the same time providing the information that matters most to advisorsâ€¦now that makes for an effective broker/dealer marketing kit!
Jonathan Henschen, CFS, is president of Henschen & Associates, Independent Advisor Recruitment, in Marine on St. Croix, Minnesota. Mr. Henschen has worked in the financial services industry for more than 15 years, and for the past six years his firm has specialized in placing advisors with independent broker/dealers. He can be reached by email at email@example.com, or by telephone at 888-820-8107.