by Jonathan Henschen, CFS and featured in Broker Dealer Journal
Weeding through dozens of broker/dealer marketing kits as I do every year, and listening to Advisors sounding off about them (a daily occurrence), I have concluded that more often than not, there is quite a bit of room for improvement!
Some firms’ marketing kits are two-to-three inch thick doorstops, bogged down with mind-numbing amounts of information—plus a lot of generic claims that say little. For example, broker/dealers routinely advertise that they provide Representatives with “great service”, “flexibility” and “the latest in high-technology”, when, in truth, they don’t always live up to their claims.
No matter what a broker/dealer’s marketing kit says, it doesn’t take long to determine just how flexible a firm really is. A few minutes on the phone with a firm’s principal usually does it. The conversation typically goes like this:
Henschen: “So you feel you’re flexible with advisors’ individual needs?
Broker/dealer: “Oh, sure. Absolutely!”
Henschen: “Well, I’m working with an Advisor who has his own RIA with some of his advisory held at Schwab.
Broker/dealer: “Oh, that’s a problem. We don’t allow Reps to have their own RIAs or work with Schwab.”
Henschen: “Another Advisor we’re consulting with is working with several REIT’s, limited partnerships and a futures fund.
Broker/dealer: “I’m afraid that wouldn’t be a good fit, either. We’re currently working with three private REIT’s, and no limited partnerships or futures funds.”
Henschen: “Well, then, would you be able to add some LPs and a futures fund?
Broker/dealer: “Sorry, but we’re not comfortable with those investments and we’re pretty-well settled with our REITs…”
By this time, it’s obvious that, despite what I was told and what the broker/dealer’s marketing kit may have claimed, this firm isn’t flexible at all, but is set in its ways. In contrast, we place Advisors with other firms that really are flexible, genuinely adapting to Advisor needs and willingly adding product, as needed.
The point is firms that are genuinely flexible should spell out what makes them that way in their marketing materials. Don’t make it a guessing game.
Quality service is another area that is 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’s the message that sends? 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 quality control effort. The broker/dealer elects a council of 8-12 top Advisors who meet quarterly and are the so-called “Voice of the Advisors.” These things have mixed results, depending on a broker/dealer’s management style. If management is open to new ideas, advisory councils can be useful, but in strictly top-down firms, an advisory council’s voice usually rings hollow.
Some broker/dealers try to quantify service quality through Representative Surveys, which may be effective at first, but have little long-term effect. As time goes on, every department seems to rate “high” or at least equal, so I’ve learned to take Representative Surveys with a large grain of salt.
Another popular term that crops up in a lot of marketing kits is “High Technology.” Some broker/dealers advertise that they’re “state of the art” if they have consolidated client statements, while others make that claim because they’ve adopted Winops, client relationship software or some other forms of operational technology.
Firms that have gone paperless would seem to 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 that helps their Advisors get the job done more efficiently.
Fine-Tuning B/D Marketing Kits
Broker/dealer marketing kits don’t have to be door stops. To be most effective, marketing kits should have 6-12 pages up front, with a folder in back for 5-8 inserts. Quality over quantity!
The front pages are used for describing the firm’s universal value proposition, mission statement, philosophy, culture, target market, what help is provided Representatives in transferring of their books (so go into detail here) and any special qualities or niches the firm fills.
The inserts to the back of the marketing kit can provide need-to-know information for prospective Representatives, such as:
- Payout grid.
- Rep costs including E&O Insurance coverage, fidelity bond, monthly charges and what they cover.
- Costs to the client.
- List of mutual funds and VA & VUL carriers. This is pretty well commoditized in our industry so just the company names are needed.
- List of alternative investments including limited partnerships, REIT’s and futures funds.
- Ticket charges and miscellaneous fees. If you have unusually low ticket charges or don’t charge DCA, systematic deposit and withdrawal charges in mutual funds (highlight that because it helps set you apart from the crowd).
- 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.
- List of third-party money managers.
- Miscellaneous items, such as deferred compensation or equity participation plans.
Broker/dealer marketing kits should only use terms like “flexible,” “quality service” and “state of the art technology” if they’re all true and can be described in detail. For example, the following are some different ways “quality service” can be quantified:
48-hour turnaround on compliance approval for seminars, radio shows and articles.
24-hour compliance approval on business cards, stationary and signs.
You will nearly always reach a person direct. If not, you’ll get a call back within 24 hours or we’ll pay you $25, guaranteed!
Online Marketing Kits?
Some firms have switched to online marketing kits. That’s fine, but paper-and-ink versions should be available, as well. For some Reps, having something to hold and read has more lasting impact than scrolling through a Website, no matter how well-designed. So give prospective Reps a choice!
Financial advisors have a lot on their minds and don’t have time for reams of paperwork. Telling your story concisely and specifically; explaining the things that set you apart from the crowd, along with the information that matters most to Advisors…now that makes for an effective broker/dealer marketing kit!