Strategies & Solutions

Systematize Your Advisory Business or Your Clients Will

All advisory businesses have systems. They make the wheels of your practice turn. Some systems are formal, however, too many are informal. Informal systems can prevent your practice from running smoothly when it comes to day-to-day operations, closing sales, gaining prospects and ultimately selling your business when you are ready to retire. Avoid unnecessary business struggles by creating and maintaining formal systems that will grow and distinguish your advisory practice.

Running an FA business requires more than it did 20 years ago. In many practices the client is “running” the advisor, resulting in the day spent in a hectic-stop everything-emergency-mode. Consequently, systems go completely ignored and chaos prevails. KAR Consulting believes one of the best ways to stop operating this way is to start systematizing. Financial advisors must find an organized way to deal with the different aspects of their business. When the processes of your business are proven and organized, you also have a lower chance of making costly errors that are expensive and can hinder a practice’s overall performance.

A system is nothing more than a series of processes that will enable you to grow your business.

  1. Processes are comprised of one or more activities.
  2. Develop and structure day-to-day tasks so they are able to function themselves, or done by another person.
  3. Efficient systems create a better experience for your clients.
  4. Successful systems build trust and attract prospects.
  5. Top producing practices have all their systems integrated and working in sync.
  6. Your systems need to create an experience for prospects/ clients that inspire them for more.
  7. Support staff are well informed and easily adapt at implementing the processes you have identifies/created.

Systematize your practice or your clients will do it for you. You set the vision. You lead the team.  And you determine how to achieve it.

Storytelling—A Crucial Element to the Success of a Brand

Brands can use the emotional response of their audiences to storytelling to achieve their vision and goals.story-telling-collage

Long gone are the days when brands could just rely on broadcasting their messages to reach and motivate their key audiences. We have entered a consumer-centric age in which a new media environment is on 24/7 and digitally accessible from anywhere. This empowers audiences with more control over the information they receive and the brands they decide to endorse.

In this new paradigm, companies must learn the art of storytelling in order to effectively reach, engage and convert their audiences into brand evangelists. Storytelling is what captures an audience’s attention, as it prompts individuals to connect to their emotional and spiritual energies to establish whether they agree or dissent with the story being told.

The use of storytelling to promote the sale of products, services or brands is not a new concept. It is instead the ongoing evolution of technology that has empowered companies with new and highly effective ways in which to engage and interact with their audiences. On a broader level, storytelling can also help a company define organizational values, establish a company culture and, ultimately, educate others giving them the opportunity to better understand its mission, philosophy and core values.

The need for brands to shift from message broadcast to storytelling has become a crucial element for success. A brand is not an abstract philosophical concept that resides outside of a company. It is rather an enduring account of multiple emotional experiences that audiences experience when they think or come in contact with a product or images that evoke that brand. When a company tells an inspiring, motivating and engaging story, social media platforms become the most powerful conduits to share the story virally around the world and drive attention to the brand.

Growing the client base, promoting sales and conquering increasing market share continue to be some of the key goals of the traditional brand building process. However, today that process has undergone significant change. While in the past brand building focused chiefly on feeding customers facts about a product/service, today audiences report that storytelling is what captures their attention and gets them also to fancy a particular product or service over another.

But what is this fascination with storytelling? Some argue that it could be a consequence of the exponential growth of social media, as an optimal conduit to promote and disseminate stories. Others simply state that stories help us to understand who we really are, establishing an emotional connection to the main character or topic of the story–ultimately, connections lead to loyalty. However, a post on the Harvard Business Review Blog Network by Paul J. Zak –a professor at Claremont Graduate University and President of Ofactor, Inc.—reveals how recent scientific work is putting a much stronger emphasis on how stories change individuals’ attitudes, beliefs and behaviors.

In his post Prof. Zak explains, “As social creatures, we depend on others for our survival and happiness. A decade ago, my lab discovered that a neurochemical called oxytocin is a key “it’s safe to approach others” signal in the brain. Oxytocin is produced when we are trusted or shown a kindness, and it motivates cooperation with others. It does this by enhancing the sense of empathy, our ability to experience others’ emotions. Empathy is important for social creatures because it allows us to understand how others are likely to react to a situation, including those with whom we work.”

Further studies conducted by Prof. Zak and his team revealed that character-driven stories do consistently cause oxytocin synthesis. In addition, the amount of oxytocin released by the brain was identified as a strong predictor of the degree of willingness of people to help others; i.e., donating money to a charity associated with the story being told. Subsequent studies also revealed that to motivate a story attention must be generated by developing tension during the narrative. Stories that can trigger that tension will most likely prompt an audience to share the emotions of the characters in it, and after it ends, be prone to continue mimicking the feelings and behaviors of such characters.

A compelling example of the discoveries made by Prof. Zak and his team are provided by the Dove’s Real Beauty Sketches video, which registered within a couple of months nearly 150 million total views. In this short video an FBI-trained sketch artist draws women first based on their own self-perception and then on that of a stranger. The stranger’s descriptions resulted consistently closer to what the subjects actually looked like. This helped Dove underscore the point that women have a propensity to be exceedingly critical of their appearances and failing to recognize their true beauty. The emotional feelings stirred by this video sparked incredible brand awareness, without a single mention of Dove and its products throughout the video.

Undoubtedly, good stories inspire and motivate us all. They ignite an emotional connection to the plot and/or character(s) that sparks passion. Storytelling is crucial to the success of a brand due to its powerful connection-loyalty and trust-building attributes. Ultimately, we are beasts of emotion more than logic. We love to tell and hear stories. Consequently, for a brand the journey to effectively engage and motivate its audience must begin with “Once upon a time.”

ALLIANCES: Together We Are Stronger

A prospective client recently sent me an email that closed with the following:

“Thanks to you for reaching out to us. We seem to strongly agree with you that the key to success in the future is collaboration. As I look at the team you have put together, I have to congratulate you. This is an impressive team of experienced professionals. I have to tell you that every time I see groups like yours formed, I am reinvigorated that eventually someone will develop a service model that truly serves the client. With thanks and gratitude to you for what you all are doing.” IMG_0175 This email was another confirmation for us as to the value of strategic alliances. Alliances provide for a “together we are stronger” atmosphere for the following reasons:

A strategic alliance creates a network that is attractive to clients as a one-stop-shop by creating value beyond what an individual company can deliver. It provides the opportunity to offer a wider range of services to clients that otherwise would not be available. It is vital to a business’ success to focus on its core competencies because when a business becomes a jack-of-all-trades, it becomes a master of none. An alliance allows a company to offer its clients a whole new realm of services without losing focus on its own capabilities and its specialized services.

A strategic alliance increases brand awareness to prospective clients that the business may not have reached beforehand. Each business offers a different set of services that are directed toward similar target audiences allowing the business to increase its market size with little impact on the business. If your brand awareness isn’t growing, your business isn’t growing.

A strategic alliance builds additional opportunities to market for minimal additional spend. In addition to each individual or company marketing on their own, an alliance can collectively utilize websites, marketing materials, social media, and industry conferences to share the value of the alliance and create additional marketing opportunities for members of the alliance.

A strategic alliance can compete more effectively by combining various strengths and expertise. Synergy and competitive advantage are elements that lead businesses to greater success.

A strategic alliance ignites a spirit of innovation, provides for collective thinking and problem solving, promotes networking, increases advocacy, and expands the industry knowledge of the members.

What strategic alliances have you developed to grow your business?

Check out our alliance at The Orchid Alliance is an alliance of experienced corporate executives thriving in the entrepreneurial environment by coming together to utilize their deep experience, to follow their passions and to focus their talents on delivering sophisticated training, coaching, marketing, product and platform solutions. The Orchid Alliance taps into the vast network already established by Orchid Network LLC, an executive search and consulting firm, and solves for some of the most challenging business development issues facing the financial services industry today.

What Does It Cost to Launch a Mutual Fund … Really

My first experience with launching a mutual fund was a little like the old adage about the blind men and the elephant. Everyone I turned to for advice was very helpful about one piece of the puzzle – but I never felt like I had the full picture. A big part of why we launched Independent Channel Advisors was to help RIAs and other Investment Managers bridge this knowledge gap when bringing their new products to market.

So, onto the main question of this post:

What does it cost to launch a Mutual Fund?

The short answer is $70K to $85K depending on whether it’s a traditional or alternative asset class fund. Where your fund falls on this spectrum depends on the type of fund, the number of share classes, whether you want audited performance in the prospectus, etc. Here’s a breakdown of the key expenses:

Advisor Expenses Traditional Asset Classes Alternative Asset Classes
ICA Consulting Fee



Offshore Legal, establishing the Controlled Foreign Corporation (CFC)



Outside Counsel, establishing mutual fund prospectus and filings with the SEC



CCO Due Diligence Visit



Misc. fees Blue Sky, Symbol, Prospectus, etc.



Total origination/registration out of pocket for Advisor for one fund



Can I afford this?

Initial seed capital or cost of distribution is the single biggest factor to consider when assessing the financial viability of a fund. Annual operating costs will run from $185k- $235k/year. Depending on what your pricing model is, your break-even point can be anywhere from $15MM to $35MM in AUM in the fund. Breakeven here is being defined as the point at which the fund pays for itself. Several variables go into the breakeven calculation but the primary factors are the management fee and the fee cap that most managers will set for initial shareholders.

It is essential when launching a fund that managers have a plan for achieving profitability within a reasonable time period. Most plans will include one or more of the following options:

  1. Moving existing clients into your fund (Best option, if you already have an RIA business to support it)
  2. Seed capital through an investor (Can be a good option depending on the economics)
  3. 3rd Party Marketing (Make sure you do due diligence on the 3rd PM before signing any agreement)

We support clients with all three of these options. My earliest experience was with the first of these strategies, option (a). Interestingly, we found that moving smaller accounts out of separate accounts and into a pooled vehicle was great for both our clients and our firm. In our next blog post I’ll detail what we learned.

For more information please feel free to contact us today!