Becoming an independent financial advisor (IFA)? Here’s what you need to do.
Financial institutions, such as brokerages or insurance companies, typically provide financial advisory services for their customers. However, if you leave a company to start your own independent financial advisory (IFA) business, one of your key challenges is finding new customers. In Europe and the US, IFAs can sometimes transfer some of their existing client relationships to their new business. This is not the case in others, where all client ties cease once an employee leaves.
Win the confidence of your customers
Holding seminars is a tried and tested approach for IFAs looking to consolidate their customer base. By focusing on a specific topic or theme, you can target the type of client you want to attract. For example, “How to reduce your tax bill” is a topic that will appeal to company managers and executives; “First time investing in your 40s” would be of interest to 30-40 year olds looking at ways of improving the returns on any wealth they have accumulated.
Seminars are an efficient way of establishing contact with potential prospects, but they do not have to be large-scale events, targeting big audiences. Often all you need is a small gathering, with four or five people participating, held one a week or once a fortnight. Doing this as a series of consecutive events can help you steadily build up relationships with your clients.
You need a venue, but you do not need to have an external venue every time you hold an event. You can do it in a meeting area in your office. Or alternatively, you could get a brokerage that you work with to host and sponsor your event.
Marketing yourself through the written word
This is the internet era, but the impact and influence of the written word remains significant. Many IFAs publish their own books and use these as a calling card. Having a book enhances your credibility. You can give lectures on it, and speak about it in public.
Another way of raising your profile is to put up information on your company website or blog. If you are a prospective customer looking for financial advice, the obvious place to start is an online search. You can voice some opinions, or your write articles about current financial affairs, technical terms, or your own investment strategy – it may not be information which leads directly to a sale, but it can be invaluable for your profile if it generates hits on your website. If people like what you post, that may even lead to newspaper or magazine coverage. Being quoted in the media is good publicity for you: a good article can function as a sales tool.
Keep working on your IFA profile
One marketing indicator which is increasingly popular amongst IFAs these days is the “net promoter score” (NPS). This measures customer loyalty, and shows you where you need to improve. Your score is calculated on the basis of responses to questions like, "How likely are you to recommend the product you are using to a friend?”
If people feel comfortable about recommending you as a person they can trust with managing their wealth, that is a major step towards widening your appeal to prospective new customers. To that end, you need to come across as sincere and credible when you meet customers face to face. Your role is to look for, share and present ideas and solutions for customers’ financial issues and affairs. At the same time, you need to keep working on your own skills, keeping them up to date and expanding your knowledge as you need. For example, you should make use of any events and study sessions hosted by the brokerages that you work with, as well as the data and learning materials that they provide.
Also, you should not only rely on referrals from your existing clients. You can work with banks, building societies or real estate companies to market a range of financial products as an IFA which they cannot handle themselves.
As with any independent business, you need to keep in mind the importance of continually marketing yourself, keeping your skills and knowledge fresh, and being open to new ideas in how you go about building up your client base.