The Secret to Business Growth

Two Words at the Center of it All

I really can’t tell you how excited I am to see the response to my last B2Bahnsen post, The Biggest ROI of My Career. My public testimony regarding the impact Nick Murray had on me and my business was a real blessing to write and it meant a lot to hear from so many of you what the post (and Nick, himself) has meant to you. I assure you that it will not be the last time you hear from me about Nick. In fact, even when I am not mentioning his name, I promise that his influence on me will permeate so much of what I am doing here at B2Bahnsen.

I have about a dozen topics or so already earmarked for writing here in B2Bahnsen, and I suspect many more topics will enter my inspiration zone over time. I would love to hear from you all as to what topics may be of interest to you so do not hesitate to reach out any time through a substack message or a direct email (DBahnsen@thebahnsengroup.com).

Today I want to share what I have shared for over twenty years now whenever anyone asked me what my philosophy of “prospecting” is. Whether your preferred verbiage is rainmaking, asset gathering, client acquisition, or business development – all synonymous with one another – there is one thing all successful advisors have to do before they can deliver great value to clients: They have to have clients. And because I believe (as documented in last week’s letter) that the key to a fulfilling wealth advisory career is working with the right clients, every advisor has to possess the unwavering confidence that in not taking on a client (or in firing a client) who they can tell is a bad fit, they will be no worse off since they know they will replace that client immediately.

In other words, a robust client acquisition system does two things – one that is obvious, and one that is the most underrated part of our business: (1) It provides the client base that will be the core of your business, and (2) It provides you the confidence and internal fortitude to run that client roster the right way. Advisors without a successful prospecting system are exponentially more likely to take on and keep bad clients, period. Paradoxically, the best way to serve your current clients the right way (with joy, unvarnished truth, trust, and self-assurance) is to know that your ability to replace bad clients is so rock solid, you need not ever taint the system you have created with toxicity, bad trust, bad faith, or bad fits.

“You don’t have to work with anyone who doesn’t like you, or anyone you don’t like” (see, it took me two paragraphs before quoting Nick Murray again), but those words are easier said than done if you do not have a bona fide system behind client acquisition. The more robust the pipeline, the more robust the roster. This is pretty basic stuff, but the anti-fragility embedded in its self-reinforcing mechanism is more profound than you might think.

So the stakes are what they are and I don’t believe there is anyone in the wealth advisory profession reading this who does not understand what I mean. But there is also another little trick of the trade here, and it actually explains a significant part of the compensation premium enjoyed in our profession by top advisors. Are you ready?? It is not that easy to gather assets, generate new business, and sustainably create a growing roster of clients. In fact, it is hard. And the proof of this is that very few actually do it that well. The true data behind real organic growth is an embarrassment to our industry. Strip out market performance and inorganic growth, and whether you are wirehouse, RIA, independent, or any other channel, the industry averages are negative for the bottom 50%, and barely positive at all for the next 30-40%. To get to a robust double-digit percentage of organic growth in our business one has to be a top decile grower – and this is true regardless of channel. That over half of practitioners have year-over-year negative growth apart from market and inorganic activity speaks to (a) How low the bar is, (b) How challenging it is to acquire new business, and (c) Why so much of the industry has turned for years and years to inorganic acquisition (M&A in the RIA world; recruiting in the wire world).

Growth is needed, obviously, so if growth can’t come from organic activity, someone grabs a checkbook. Fair enough. But you are likely not reading B2Bahnsen to hear ideas on how you can use your checkbook (or someone else’s checkbook) to acquire new business. And I can assure you – the “cost of acquisition” goes down exponentially for those who learn a prospecting discipline and system. There are plenty of topics I may choose to skip over here at B2Bahnsen in the years to come because I will humbly acknowledge that we have not been successful at it, or it is an area we lack domain expertise. I am awfully proud of the business we have built at The Bahnsen Group, but I do acknowledge that we are not great at everything. However, I believe business development – organic as can be – is something that has been a bright spot for us for 25 years and so I felt it appropriate to use B2Bahnsen to share my philosophy. Here goes:

#1 - Prospecting is a lifestyle, not a tactic or gimmick or activity

#2 – Prospecting is the demonstration of likability and competence

#3 – The most successful business development is taking #2, and incorporating it into #1

That’s it. That has been the story of $97,000 year-one revenue going to $50 million year-25 revenue.

Okay, over those 25 years there have been three phases of evolution for us (a future post is going to cover TBG 1.0, TBG 2.0, and TBG 3.0 – and how these three phases built on each other, maintained the key things that matter, but were differentiated in some aspects – but that is not the topic for today). No matter what size business you have, or what your time in the business is, the underlying task in business development is the demonstration of likability and competence.

I will talk about tenacity and grit in a future post. I will share different disciplines and strategies. I will even share some of my specific evolution over time to refine and improve the process, the pipeline management, the workflow, etc. But none of that is ever, ever, ever going to replace the underlying tenet of successful business growth: You have to demonstrate likability and competence.

Now, let’s start with point #1 above. Prospecting is a lifestyle. This means different things to different people, but let me tell you what it meant to me when I was a rookie at Paine Webber. I read a book called Never Eat Alone by Keith Ferrazzi, and though I am sure it is vastly outdated now, it challenged a deeply introverted guy like me in ways that changed me to my core. An introvert is not necessarily shy or awkward, but an introvert is drained by people – whereas an extrovert feeds off of people and is energized by them. I am so emphatically in the introvert camp that reading I was to “never eat alone” scared me to my bones, until I discovered what he meant. It did not mean I had to sign up for some hokey community event every night of the week – it meant my mentality had to be meeting people, all the time. And it meant I had to embrace this, not resist it. And it meant that I probably ought to be meeting people who were not likely to hate me, and who I was not likely to dislike, myself. As a devout USC football fan, it may not be a good idea for me to focus my energies on meeting people at the UCLA alumni club. As a devout center-right Reaganite conservative, my early 2000’s political event attendance were not best served at a Michael Moore movie premiere or the Al Gore Fan Club. Our natural affinities provide natural venues for us to be naturally present.

But that is a worthless statement unless you are going to (1) emphatically live this out with intentionality (lifestyle), and (2) be likable and competent when you were present.

And that is the entirety of my business development strategy. To never, ever, ever believe that I stop being a wealth advisor, that I stop having solutions to offer, that I stop being obsessed with capital markets and the engine they represent to meeting human needs and goals. This has to run through your veins, otherwise you become a salesman. I didn’t have anything to sell but myself and my philosophy (I still don’t), and so I had to live out my passions and full-time zeal for what I had to offer with intentionality and presence – even sometimes sacrificial presence. Being visible, being engaged, and being known – this is what it means to have a lifestyle of prospecting. It does not mean handing out business cards at your kids soccer games.

And this is where demonstration of likability and competence comes from. See, I actually haven’t said the real magic word yet. All this business comes down to is trust, and all trust comes down to is trustworthiness, always and forever. It really is that simple. Those who are trustworthy will earn trust, and trust is earned when people see, smell, detect, and are permeated by your trustworthiness. And in your early and persistent interactions with people, you have the opportunity to do this when people like you, and when they think you are competent. I am sorry, but the most likable “fun Bobby” guy in the world who people think is an idiot is not going to get the money of a high net worth prospect. And the smartest guy in the room who comes off as aloof, arrogant, unpleasant, and guarded, is not going to either.

Very few of us are gifted as perfect in both categories – our own asset allocation probably leaves us with one strong hand and one slightly weaker hand. I have always joked that I had an easier time demonstrating competence than likability, but maybe that is because I think I am smarter than I really am (self-deprecation is a valuable thing in all of this, by the way). But it is a both-and proposition, not either-or, and much of what we do to be likable can undermine our competence (too much of a good time at the cocktail hour), and much of what we do to be competent can undermine our likability (too much data citing and “know it all” vibes). Likability comes from self-assurance and humility, and competence can’t be faked. Likability is subjective, to some degree, but there are core basics. It is an art, not a science.

I ended up using my public speaking and heavy volume of writing to be my reinforcement mechanism for competence. Holding court at a tailgate party talking about tax policy undermines likability, but getting to know people there in a fresh, real, organic way reinforces it – and then if they start reading your investment commentary from there, so be it. For me and my journey, frequent dinner events, investment writing, and even extra-curricular speaking on politics, theology, and more all became very real, organic, natural venues to demonstrate competence without sacrificing likability. This was the heart of TBG 1.0. I have no doubt it would be vastly different for most of you, but not the underlying philosophy.

Finding the right organic ways to meet people, and embracing this challenge as a lifestyle, is universal in our business. Building trust with the people you meet (over time) by demonstrating likability and competence, is the universal mandate. Many different people do all of this in many different ways, but successful rainmakers in our business are always doing this, at varying degrees of self-consciousness. If we were just trying to sell a house, or sell a bond, or sell a subscription, it may be different. But the ongoing advisory, consultative, fiduciary, trust-based nature of this relationship calls for something a little different. With a product sale they have to fundamentally buy the product. With the advisory profession they have to buy you, and no one gives their money to unlikable or incompetent people.

This is the greatest profession in the world for those who get this. And in future B2Bahnsen posts I will have plenty to say about what I have learned regarding likability and competence along the way.

Check out www.tbgdividendgrowth.com if interested in hearing more about our core dividend portfolio in ETF form

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