You Don’t Need to Work Harder
Instead, Become Magnetic to Your Ideal Client Personas
There are nine personas of high-net-worth investors. You work horribly with 2-3. You work wonderfully with 2-3. And your greatest growth is when you work with your ideal personas. But most advisors aren’t swinging in their strike zone. Focus on your best three and ignore the remaining six for your greatest growth opportunity.
Hollywood perfected the art of creating magnetic personas. They know the formulas to make you love some and hate others. And they know how to move the hearts of millions of people at scale.
Speak to your ideal personas with messaging that drips like golden drops of honey. It should be as tasteless as tofu to the other six personas. Just like a movie, your firm has a character. Make that character deep and complex just like Hollywood writes.
Once you do that, you’ll have a magnetic draw to your ideal personas. Ideal clients will fall in love with you before they even meet you. Then you’ll build trust on scale – and experience double-digit organic growth.
The Data Is Clear
According to Schwab, RIAs with $250M+ in AUM only achieve 5% organic growth on average [1]. That is barely above current inflation rates. To make matters worse, ITR Economics is predicting inflation will rise again as we approach 2030 [2].
Also according to Schwab, top firms are 15.5% more likely to have documented ideal client profiles [1]. And they’re 21.1% more likely to have a documented client value proposition [1].
But only half of firms have a website that’s been designed for their ideal client persona [1].
Top firms with three critical items grow AUM 67% more than firms without these three items [1]. The high growth firms have:
- Documented ideal client personas.
- Documented client value propositions.
- Documented marketing plans.
Firms that execute on marketing plans grow 2.5X faster than firms without marketing plans [1].
Mercer Capital said firms with 12% organic growth get double the valuation as firms with flat organic growth [3]. Only the top performing firms achieve 12.5% growth (on average) [1].
According to Mercer Capital, organic growth is rewarded more highly for organic growth than EBITDA margin [3]. According to Schwab, RIAs with more than $250M in AUM only achieves about 5% net organic growth. So, 6% organic growth would be above average. Look at what it means in the following table from Mercer Capital [3]. Focus on a company with 6% growth and 20% EBITDA margin.
- Increasing EBITDA margin by five percentage points changes valuation impact from -4% to +20%.
- But increasing organic growth by five percentage points changes valuation impact from -4% to +31%
So, the answer is clear. Improving margin is important but not nearly as important as increasing organic growth.
And it doesn’t matter if you plan to sell your firm or not. If organic growth is more valuable to investors, then it’s also more valuable to you.
Firms Get Stuck in a Negative Productivity Cycle
Too many firms believe than an ideal client is someone with money – or enough money. But nearly-two-thirds of firms report that productivity is hurt by working with non-ideal client personas [4].
They believe that more prospecting is the only way to grow AUM. But most firms:
- Don’t have clearly documented ideal client personas.
- Don’t have a process to quickly (10 min) separate ideal clients from non-ideal clients based on documented client personas.
- Don’t have a steady flow of inbound leads.
- Don’t have a mechanism to build trust in a scalable way.
So, the team tries to compensate by working harder and harder while productivity goes lower and lower [5]. Advisors and planners start burning out and leaving the firm [6]. And firms that once experienced explosive growth now grind to a crawl.
Then they experiment with marketing. But most marketing is some form of direct response. Pay for a lead – get a lead. But that’s transactional marketing. And transactional marketing attracts transactional clients – the least loyal – the least profitable.
So, the team reverts back to working harder while productivity and retention drop.
There is a Proven Formula for Sustainable Organic Growth
You don’t need to get stuck in the downward spiral. The solution is not complex. This step-by-step process will get you there.
Have the entire team identify the 2-3 personas that are in their strike zone. There are 9 personas of high-net-worth investors. Focus on the ideal 3 and ignore the remaining 6.
Document and institutionalize a screening process to segment your ideal clients from your non-ideal clients based on their persona. Don’t spend more than 10 minutes with a non-ideal client. Refer them to someone else.
You can know the answer within ten minutes using four questions at the beginning of your first client meeting.
For inbound leads, add self-selection buttons to the forms on the website.
Completely scrap and rewrite your About Us page on your website. Most About Us pages tell some version of “We were good… Until we became great.” That reads like a resume. It is not persuasive. It does not build trust.
Your About Us page should reveal your “Why.” As Simon Sinek said, “People don’t buy what you do. They buy why you do it.”
Your About Us page should reveal a strategically placed weakness, vulnerability, or flaw. It’s counterintuitive, but that’s an essential ingredient in building trust. Compliance expert, Dr. Robert Cialdini said that increases both your trust and persuasion [7]. It’s also part of Hollywood’s formula for creating magnetic personas that you fall in love with.
Build your magnetic persona using the same tools Hollywood uses to build magnetic characters. This becomes the character of your firm. It should have depth and complexity. It should be based on the founder or managing partner.
Some of the most iconic brands were built around the founder or CEO.
- John Schnatter – Pappa John’s Pizza.
- George Zimmer – The Men’s Wearhouse.
- Bob Parsons – GoDaddy.
- Lee Iacocca – Chrysler.
- Jamie Diamon – JP Morgan Chase.
The character of your company should be revealed on your About Us page and all other forms of communication. Don’t reveal your character in bullet points. The best writers in Hollywood use the principle of “show-don’t tell” via story telling. That’s how you want to reveal the character of your company.
Build an inbound strategy that attracts thousands of strangers to your firm. Offer free content that helps them answer questions and solve problems. Don’t use “appointment setters.” That’s transactional marketing which attracts transactional clients – your least profitable clients.
Send branding ads to everyone that visits your website. The branding ads are intended to create emotional bonds with people you’ve never met. When done right, you can build trust on scale and minimize the time it takes to warm up leads.
The branding ads should tell stories that communicate your values. Leave out the “calls to action” from your branding ads. These are not transactional ads (that draw transactional clients). These are relational ads that draw relational clients – your most profitable clients.
If you want an example of a famous branding ad, search YouTube for Apple’s “Think Different” campaign. It didn’t have a call-to-action. It didn’t even say what they did. But that was the ad that saved Apple from bankruptcy. But unlike Apple, don’t run that ad to mass media. Only run it to those who visit your website.
Train your sales team to engage and close inbound leads. Most likely, they work mostly with referrals and human-touch leads.
You can and should build a referral pipeline. But you’ll struggle to scale by billions of AUM without an inbound strategy. Your sales team needs to be trained on how to work those leads.
Grow your organic growth to solid double-digits year-on-year. As mentioned above, the valuation of firms with 12% organic growth have twice the valuation of firms with flat organic growth.
Even if you don’t plan to sell your firm, there’s a reason the valuation is double for high organic growth. If it’s more valuable to the investor, then it’s also more valuable to you – even if you don’t sell.
We’re not regulated by the SEC, but we still like references.
[1] 2024 RIA Benchmarking Study from Charles Schwab
[2] https://blog.itreconomics.com/blog/on-track-for-the-2030s-great-depression, ITR Economics, On Track for the 2030s Great Depression.
[3] https://mercercapital.com/insights/blogs/ria-valuation-insights-blog/2024/organic-growth-and-ria-valuations/, Mercer Capital, Organic Growth and RIA Valuations.
[4] https://www.napa-net.org/news/2022/3/cerulli-non-ideal-clients-undermine-productivity/, Cerulli: Non-Ideal Clients Undermine Productivity, National Association of Plan Advisors
[5] https://www.capitalgroup.com/content/dam/cgc/shared-content/documents/lpl-elite-engagement/Optimizing%20your%20client%20relationships%20through%20segmentation.pdf, Optimizing your client relationships through segmentation, Capital Client Group.