Institutional leverage

By John J. Bowen Jr. | May 26, 2005 | Last updated on May 26, 2005
2 min read

(May 2005) Elite advisors know what they’re good at, and then strive to focus on those core competencies while outsourcing tasks they don’t perform as effectively.

They leverage their talents and expertise by partnering with financial institutions that support them so they can fully focus on providing worldclass service to affluent clients. That trait, more than any other, separates elite advisors from the pack.

So, if you want to be successful make sure you choose institutional partners who will help you along the way. The right partners make you more effective at reaching your target market. They provide optimal investment solutions to your clients and streamline your operational processes. All these things help differentiate you from the competition.

But many advisors never make a conscious decision about which institutions to work with. They form partnerships almost by accident, and become so busy with day-to-day activities they never think about whether different institutional partners would better serve their needs.

Our research shows the most successful advisors are much less likely to make this mistake (see chart). Nearly three-quarters of surveyed Canadian advisors earning more than $200,000 a year said obtaining resources from their investment firms is a key issue. In contrast, only a third earning less than $100,000 took that view. Clearly, higher-income advisors better understand the crucial role their institutional partners play in their success.

There is no shortage of financial institutions that would be eager to work with you. Your challenge is to identify the best partners and get the most out of those relationships. Most institutions recognize they must do more than bombard advisors with sales material, especially since products such as mutual funds have largely become commodities. Progressive firms also understand financial advisors are indispensable in reaching the affluent market.

Ideally, your partners should provide your practice with support in each of these major areas:

  • Marketing and sales. Focus on training or turnkey processes to build your business by attracting affluent investors.
  • Practice management. The institutions should bring you ideas and best practices from other advisors so you can apply them in your own firm.
  • Technical. Institutions should offer technical support for their own products, and for issues you face when delivering services.

While examining the value proposition of various institutions, it’s easy to be attracted to features that won’t help build your business. Too often, advisors select institutional partners based simply on the products they offer.

So keep coming back to one fundamental question: “How can this institution help me grow my business by better serving my clients?” Never forget the goal is to form strategic partnerships with financial institutions that can help you profitably attract, serve and retain wealthy clients.

John J. Bowen Jr. is founder and CEO of CEG Worldwide, a U.S.-based global training, research and consulting firm. “The Bowen Report” appears monthly in Advisor’s Edge magazine.


John J. Bowen Jr.