Take 5 steps closer to your customers: to remain competitive, distributors must build more profitable client relationships.

Building and managing a successful and profitable distribution channel is never easy. Today, the many challenges to growing financial services firms include product complexity and commoditization as well as increased regulatory and compliance scrutiny. Perhaps the biggest challenge facing our industry, however, is recruiting, developing and keeping new talent. During the next five to 10 years, many of the best and most experienced leaders, producers and managers in our industry will be retiring. Yet, we need these human resources to expand the distribution of our products and services and to achieve long-term profitability. At the same time, a career in financial product sales or financial planning can be perceived as complex and difficult. As a result, the key to the industry's future success is delivering the business model, career opportunity and infrastructure that attract new, talented advisers and help them build strong, client-centered practices.

The best way to determine the right business model is to identify the biggest challenges facing producers in terms of building profitable, sustainable practices. According to the 2005 Broker Sentiment Index by National Financial, the two driving factors for broker/producer job satisfaction are competitive compensation and marketing. A 2003 study by CEG Worldwide LLC, Winning the Allegiance of Top Advisers, reminds us that advisers want high quality products and help from financial institutions. Since the major industry players continually monitor and improve compensation packages and product lines, it's clear that the opportunity for a company to stand out in the hearts and minds of producers is in marketing support and practice development.

How can we help producers learn advanced techniques that will help them to use strategic marketing to analyze and segment "high potential" clientele and develop a more targeted approach to growing their practice through these clients? How can we develop more meaningful relationships with key clients? The answer lies in a systematic business development process based on targeting, segmenting and building more profitable client relationships. Implementing the process requires a long-term commitment and investment to change traditional sales agencies that have transaction-based, cold-calling cultures into client-centered marketing firms where the culture is based on understanding the client and providing a highly personalized experience that can't easily be replicated.

The Road Map

While producers will tell you that distinguishing themselves among current clients and new prospects is vital to their success, building a local firm to support them must go beyond offering strong marketing support. The firm must build an infrastructure around clients, their values, motivations and aspirations, while it addresses producers' requirements to meet their clients' financial needs within an effective return-on-investment model. The organization must offer all the products, resources, technology, research, branding, training and development in addition to targeted, creative marketing support so coveted by producers. The point is that this model is not simply about finding top clients. It's about finding and keeping those that bring the most lifetime value and profitability to a producer.

John Hancock Financial Network has developed a road map that is effective in transitioning traditional sales agencies into client-centered marketing firms. This road map consists of five stages that build upon themselves over time: benchmark assessment, infrastructure, strategic positioning, tactical alignment and firm of choice. When a firm reaches the fifth stage, it has created a distinct firm culture based on the way it wants to do business with clients and producers. Everyone associated with the firm knows and accepts its values, processes, positioning in the marketplace and its capabilities for continued growth and success.

Step 1. Benchmark Assessment

The first step is to compare your company's strengths and weaknesses to the five-stage business model in an honest and strategic way. The management team must score themselves on the major attributes within each stage that will help them develop the appropriate infrastructure. These elements include:

* Business and financial management

* Management infrastructure and accountability

* Strategic thinking and planning

* Productivity and standards

* Recruiting and selection

* Marketing, including the firm's identity or brand, target markets and prospecting strategies

* Training and professional development programs

* Management training and leadership development

* Compliance

A variety of assessment tools, surveys, consulting and scoring can help in this process, but it is vital to have both quantitative measurements of where the firm is today as well as qualitative measures achieved through open conversations on what works well and what doesn't without attaching credit or blame. It is only by identifying the struggles, the fortes and the weak links of the organization that building blocks for success can be put into place.

Step 2. Building the infrastructure

When the management team knows what they're good at and what they need help with, solutions and resources can be tailored to get the firm where they want it to go. Once the benchmark assessment is completed, the client-centered marketing-firm road map begins with building your infrastructure, a critical step in the business evolution. Each firm must have solid systems in place for management, recruiting, selection, training, productivity and profitability to institute and sustain advanced business-development tactics.

In this step, the management team develops the actions and improvements outlined in the assessment exercise to align the firm toward the same goals and vision. He proper infrastructure leverages systems and processes with stated goals and accountability, which allows a firm to take the next step in the client-centered marketing-firm continuum.

Step 3. Strategic Positioning

In Step 3, the firm's infrastructure is in place and the management team is ready to focus on more strategic positioning. The firm's client base, its market development research and branding are important here as the management team analyzes the best business opportunities for growth. Who are its clients? Where do they come from? Which ones are most profitable? Why? What are the cross-selling opportunities?

In addition to analyzing this data from the firm level, it is valuable to help individual producers uncover what their clients look like from the same perspective. Once producers understand who their top-tier clients are, it becomes easier to help them think about where to get similar clients and how to approach current clients to meet additional needs and garner referrals. Producers quickly see the potential for building their business faster and in a more productive and profitable way. At this stage, the producer analysis is also leveraged to identify firm-level markets that can help multiple producers within the organization.

The best way to use this analysis and create a brand identity around the firm and its value is to hire a full-time marketing director. The marketing director is responsible for integrating local marketing strategies with firm-level business development initiatives and client cultivation through effective top-tier market penetration.

By working one-on-one with producers, the marketing director can show the value of the firm's new approach through enhanced marketing support, targeting techniques within the producers' best and most profitable markets, and creating personalized marketing plans to boost their productivity. The marketing director also can help new producers to identify and penetrate target markets through an interactive process that begins on the first day of the recruiting process. This ensures that a new representative has a market to work on which helps to jump-start the effort to build a successful business more quickly.

During Step 3, the marketing director and the management team continue to incorporate target marketing training as another resource for both new and veteran producers. The training gives producers practical, highly effective tools to get in front of qualified prospects on a favorable basis. To coincide with the training, the firm starts to recruit to the markets it excels in, attracting career changers and new talent because the firm can deliver markets--not just prospects--to financial-services professionals who want to quickly build their practices.

Step 4. Tactical Alignment

The fourth stage involves aligning the management, producers, clients and resources for firmwide execution. This step focuses the firm on its brand and target markets as well as top-tier client cultivation through 90-day plans on both a firm level and a producer level.

Further, teams are being developed around markets and client segments. These teams of producers and specialists will capture and service the firm's target markets. More experienced advisers work with new recruits, taking them on client calls and service appointments, which allows the new producer to learn the business faster and gain confidence more quickly. A client segmentation strategy is best used to leverage the talent and expertise of both experienced and new producers with the appropriate clients. The technique is a win for both kinds of producers, often leading to succession planning strategies as talent can be assessed through this relationship. This is an important process that takes patience and continuous fine tuning, as its success is predicated on the right combination of talent and commitment.

The marketing director continues to act as a catalyst, coach and tracker of how the producers, the teams and the entire firm are progressing toward their goals. In addition, the marketing director promotes the brand, organizes client-appreciation events and advisory boards within firm-level markets.

Training is moving up another level as well. Advanced sales, business and estate planning, marketing techniques and practice management are being aligned with the markets to support producers and specialists in increasing their productivity and profitability while adding to their professional designations. Firms also have been using a leadership development program throughout the stages. Leadership development builds a bench of high-potential sales managers and other management opportunities focused on execution of the client-centered marketing-firm business model. The goal is to provide the training and career paths that best meet the individual's vision of success, which strengthens an organization and leads to higher satisfaction among producers, managers and associates firmwide. It's also critical to have a leadership development program that clearly articulates and demonstrates how to build an innovative firm in today's environment.

Lastly, the firm is continuing to step up its recruiting activities, but in a more targeted, efficient manner. With a solid infrastructure in place, sophisticated marketing strategies and resources, teams and specialists aligned together, the buzz about the firm is highly attractive to new talent. As a result, the firm receives more recruits from producer referrals, clients and other centers of influence, which typically translates into long-term successful producers coming to the firm.

Step 5. Firm of Choice

Step 5 occurs when a firm's operations, recruiting, training, marketing, brand, values and culture are fully incorporated into how it does business. Teams work together to meet the needs of their target markets and top-tier clients, and the firm is well-known in its markets--considered the "firm of choice" for advisers, clients, prospects and recruits. The firm continues to identify and build upon strategic alliances and partners through related businesses, accounting practices, law offices, and property-casualty firms to grow business and broaden its top-tier client base.

The firm will face challenges that may include competitive, economic or regulatory changes pushing their way into the industry and the local, regional or national business environment. The management team intensifies its efforts toward leadership development as well as performing ongoing self-assessments to determine what is working today and what needs to be improved. The marketing director and the firm focus more on strategic planning and teaching sound business and marketing practice and on helping producers to stay on track with 90-day plans to build a client base concentrated on their visions of success. Continuing education about advanced markets, financial concepts and consumer concerns such as retirement income planning are considered priorities for specialists and producers. The entire firm is enveloped in an approach that never loses sight of the clients and the personal, unique experience the firm and the producers deliver to them.

Ongoing Journey

While the steps to a client-centered marketing firm are supported by distinct stages, assessments, and 90-day planning--the journey is ongoing. Reaching Step 5 doesn't mean the end of the road. By continually returning to the proven tools and tactics as well as exploring the innovative, cutting-edge strategies to come, the firm ensures its future success as it invests in and employs the resources it needs to be dominant in its chosen markets. At the same time, the firms and the financial institution backing them are delivering to top producers what they need to win in this competitive and complex business: product, compensation, marketing and help in building successful practices.

National financial services companies and local marketing firms have many opportunities to expand and prosper in the years to come ... if they take the steps today to position themselves. In March, Fast Company magazine listed "financial adviser" as its #2 top job of 2006. Plus, the demand for our industry's expertise, products, and services is growing, especially as we help develop strategies for baby boomers to plan a "paycheck" for 20 or even 30 years in retirement. As a result, we need to recruit new, best-of-the-best talent over the coming years. But, we must put the infrastructure, business development and marketing model in place to attract this talent to our career opportunities. A client-centered marketing firm and its road map will result in an exciting, creative, and highly successful way to get there.

Key Points

* The biggest challenge facing the insurance industry is recruiting and training new talent.

* The key to the insurance industry's future success is to deliver a business model, career opportunities and infrastructure that will attract talented advisers.

* Agencies must change from a cold-call culture to delivering a personalized experience to clients.

Contributor Kathy Klingler is the senior vice president, marketing and business development, for John Hancock Financial Network.