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Firm Execs: Reputations Are Everything

At the 2015 NTSA 403(b) Summit, executives from small, medium and large practices came together to share their best advice for growing businesses of all sizes. And despite the differences in their employers, all of them agreed that nothing matters in this business without a strong reputation.

D. Kevin Hensley, COO of TSA Consulting Group, Inc., spoke at the session for mid-sized practices, tailored to those who work at firms holding between $100 million and $500 million. He said that advisors — and the firms they work for — must prioritize getting in front of both current and potential clients as much as possible, and make sure that any advice they provide is iron-clad.

“Exposure is so important to your business,” Hensley said. “There are a lot of small and mid-size school districts out there, and you’ll have a better chance of getting access if you have good relationships with everyone, they trust you, and those who know you feel like you’ll come in and provide strong value. An investor does business with an advisor they meet in the school who they grow to trust.”

Hensley said that while advisors should strive to be able to respond to any question a client has, it is more important that they are honest about what they don’t know.

“You don’t need to have all the answers, but you should know where to point people to,” he said. “At the same time, bad advice can cost your clients money and erode your trust, so never wing it.”

Ed Forst, president of Lincoln Investment, spoke to the large practice panel, comprised of firms managing over $500 million in assets. He said that the best “time to income balance” is at the advisor level, so those who wish to start a firm on their own shouldn’t do so lightly.

Forst said that he has seen many advisors who start out on their own who didn’t have an innate desire to basically be business executives. He said anyone thinking of starting a firm must have a “need to lead”; otherwise, they’re not going to have the kind of passion needed to get through the valleys that come with starting a firm.

“It’s very challenging to beat the profitability you have at the advisor level,” Forst said. “You don’t want to go into something like this without having thought about it long and hard.”

Forst added that one benefit smaller firms have over some of the largest is that they are hungrier and more aggressive in trying to find new talent. With such a high number of advisors reaching retirement age, he said, it is important that firms of all sizes remain focused on recruiting, and on setting up succession plans years before advisors actually leave their position.

“You can never stop recruiting; a lot of big firms that get to a certain size, and they stop recruiting, which is, they stop doing what they needed to do in order to get successful,” Forst said. “In addition, you need to plan with the idea that a senior person can stay forever if that’s what they want to do, they’re just going to be working on a smaller and smaller workload because the ‘C’ and ‘D’ clients have been offloaded to younger, newer advisors.”

Josh Decker, vice president at EFS Financial, who spoke to the small-practice panel, said his firm is utilizing LinkedIn and online videos to brand their advisors for both current and future clients. He said that his firm has a full-time marketing arm, which oversees advisors’ LinkedIn accounts and also produces professional-quality videos for each advisor.

“We’re finding that more and more, people are searching advisors before they ever see them in person, so it’s a great way to humanize us in a way you can’t with words on paper,” Decker said.

As far as branding, succession and knowledge go in the advisor world, they’re all components of building a strong reputation for both an advisor and their employer. Forst said that the new Department of Labor regulations will be creating a new playing field in the coming years, and it is up to advisors to make their reputations stick before someone else writes the script for them.

“Your reputation as an advisor or a firm is going to happen whether you want it or not,” Forst said. “You need to lead and decide what your reputation is going to be.”