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Welcome to Mythbusters Registered Investment Advisor Edition. Here we tackle the tall tales of financial services marketing. We're here to show you what really works and what's just Investment Industry, folklore Mythbusters Registered Investment Advisor Edition. Remember to like, share, and subscribe for more financial services, marketing insights, and drop your questions in the comments below.
Welcome back, we're going to talk about the first of three formulas you need to know for success as a registered investment advisory or financial services firm. So the formula is CR, plus PR plus ONL, times CLE equals. R stands for client referrals. How many referrals do you get from in a given time period from your existing clients?
Now I speak in an industry conference or on a podcast and I ask the question, “What's the number one way biggest way you get business?” Other RIA’s do seminars, they do Facebook ads, they do LinkedIn, no kidding, they do in person networking. But the most common biggest one is client referrals. I met numerous RIA’s over the last 25 years, say “I want a referral based practice or 100% referral base.” “Really? That's awesome. How many referrals did you get in the last month?” They don't even know.
Let's talk about that. Let's say you got 10 referrals. That sounds awesome. Out of how many clients? Let's say you serve 100 households. So 10 divided by 100 is a 10% referral rate. Well, if you flipped that number upside down. 100 minus 10 means that 90% of your clients did not refer in that month. So do you really have a referral based practice? Maybe not, check your numbers. We're going to do this exercise for 30 days. So how many client referrals did you get this month?
How many referrals did you get from accountants, attorneys and other referral sources? Honestly, the answer probably be zero, or under five. So I'm just going to say you got two. I talked to an RIA last week that got three, but it was in the last six months, right? Not too many, we would love more of those.
We've got other training videos on our no ask referral method, and how you can get some zeros on the end of those numbers, assuming there's not a zero to start with. Client referrals plus professional referrals, plus ONL which stands for other new leads. These are not referrals. So that could be your seminar leads that could be your Facebook leads that could be your LinkedIn leads, whatever it is. So we're going to pretend that you did a workshop and you had 42 people register and 20 people showed. We're going to say that you had 20 viable prospects. So five plus two plus 20 is 27. Times what's your closing rate, your CLR?
So you might have different closing rate on client referrals, professional referrals and other new leads. So you can actually break this down further, but we're going to pretend that your closing rate is the same across the board.
Now, another thing advisors are always telling me, I just need more quality people to get in front of it, more interested, qualified prospects. You get me in front of somebody, I can close.
What's your close rate? How many new prospects did you see in the last month? How many first time appointments, initial fact finds? Pretend that you did 10 in the last month, how many became clients? Let's pretend that you had five new clients. That is a 50% close rate.
Well, what if you work backwards with a goal in mind and said over the next 12 months, I want 100 new clients. Let's say my closing rate is 50%. I now know that I need this number needs to total, I need 200 new leads times 50% to get 100 new clients. So now that 200 leads, how many are client referrals? How many are professional referrals on their other new leads? If I know I had 27 new leads up here, what percentage are each of these columns? Ballpark, then I need 65 referrals and 65 other new leads to get 200 leads to get 100 new clients. I know the math isn't perfect, but you get the basic idea.
This is formula number one for how to determine what you need to do to get the number of new clients you bought. Stay tuned for the next video will teach you Formula Two out of three.
https://www.yourdream50.com/ria-training
Thanks for watching Mythbusters registered investment advisor edition. Seth Green is the nation's foremost authority on direct response marketing for registered investment advisors. He is a nine time Best Selling Author, a three time Dan Kennedy magnetic marketing marketer of the year nominee. Seth co-hosts the Sharkpreneur podcast with Shark tank’s Kevin Harrington. He is the CEO of the Inc. 5000 financial services marketing company and has been written about and registered rep insurance news net, Forbes, Inc., and many more. Thanks for watching Mythbusters Registered Investment Advisor Edition. Remember to Like share and subscribe for more financial services marketing insights and drop your questions in the comments.
