Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
We are struggling to find new prospects. Once we talk to someone, we bring them on as clients but finding prospects has proven difficult. We do ask our clients for referrals at every meeting and we have some fairly strong relationships with local estate attorneys and business accountants but the new introductions are very sporadic.
What’s your thought on hiring a business-development officer (BDO)? Our partners have been discussing this for some time. It’s an expensive proposition but giving the new sales activity solely to someone else is an appealing idea. What would we look for in a person? What kind of package could we offer that ties our success to their success? Before we make a decision that this is the right direction, I’d be more confident if we had a clear idea of what we need and how to structure it.
Your timing is interesting as I have recently been reviewing results from a sales survey we did with Advisor Perspectives earlier this year. The number of firms using a dedicated BDO is less than 20% of those who responded to the full survey. While extremely low, this number actually didn’t shock me because I’ve rarely seen a situation where a dedicated BDO works in an advisory firm.
As someone who has spent a career in sales, I believe it’s because this business is not really “sold.” It’s a business of trust and relationships. For that reason, the people who are best able to “sell” are the ones closest to the clients, or to the centers-of-influence (COIs). The successful ones will ultimately build trust and deliver the peace of mind the client is seeking.
Of course there are situations where a dedicated BDO can work out so I will outline here some of the considerations you should keep in mind if you do decide to go this route:
- This can’t be a hands-off situation. Your note would imply you will all breathe a sigh of relief when new sales becomes someone else’s worry and problem. This can’t happen because ultimately the advisors are the ones who will build the relationship. If you are going to hire someone in this role, it has to be a true partnership where you are working closely together, communicating openly and often, and developing and executing a plan together. While it is tempting to say it is the business development officer’s job, it’s still the job of everyone in the firm to make it successful.
- The role must be clearly defined and success tied to results but you have to be fair in your approach, too. One of the best places to look for new opportunities is with existing clients. I know you say you are asking at every meeting but quite frankly we find this to be an ineffective way of uncovering new opportunities. A talented BDO could work closely with your advisors, and their existing clients, and likely uncover opportunities you did not know existed. You will need to work closely together on how best to introduce this person, their role and objectives but ultimately you can’t just send them off to find new people to talk with. There should be a balance of uncovering new opportunities while leveraging existing ones.
- Set clear expectations. If you have underlying assumptions about what you expect this person to do, and how, then put them in writing. It may sound obvious, but I’ve seen many situations go bad simply because each side had their assumptions and no one wrote them down to confirm they were on the same wavelength.
- Provide support in the form of marketing materials, a clear story, an updated website, and internal sales support. Even the best salesperson/BDO cannot succeed if the marketing hasn’t been done and isn’t relevant and updated. The person could be out there getting your name known, generating interest and often, without you ever knowing, someone will go to your website or request information about your firm as a result. If your story isn’t solid, and your marketing isn’t updated, that prospect might never take the next step to learn more about you.
- Develop a sales culture around this person. Have a business development plan. Hold weekly or every other week meetings to talk about prospects, pipelines, lost clients etc. Make the sales activity a strong part of your fabric and what you do every day. Don’t just set this person off and put it to the side until he/she brings home some bacon for you.
- Measure and give feedback. If you have set mutually agreed upon expectations, you should have milestones and measurements. Be sure you are staying open and connected about these so everyone knows what’s working and what’s not and there are no surprises.
To your point of compensation, you will need to offer a base salary in alignment with your firm and market and then some bonus for closed sales. Don’t offer a bonus on activities like prospect meetings or a filled pipeline because this motivates the wrong activities – filling up numbers instead of qualified prospects. I believe an ongoing bonus of some sort is warranted, too. Even though your advisors will take over and be the relationship people going forward, most likely, if the BDO has done a good job, they’ll find qualified clients who will stay for the long term and should be rewarded for this. In terms of actual numbers, it’s hard to say without knowing more about your structure.
By Beverly Flaxington, read the full article here.