Firms should apply caution when they consider geographical expansion.
Expanding into new offices doesn’t necessarily deliver more clients. Therefore, firms pursuing expansion should do so slowly and tentatively.
Rob Hockett recognized that when he expanded geographically. Until 15 years ago, his firm, Cambridge Wealth Counsel, operated out of just one office, in south Atlanta.
In 2001, however, Hockett, Cambridge Wealth Counsel’s president, decided to launch a second outpost, further north in the city.
“We immediately saw an increase in referrals,” he said.
Hockett nonetheless took it slow and didn’t immediately open a permanent office, nor did the firm start to incur fixed costs because of that office. Instead, he leased, on a monthly basis, executive space, which included the option to lease a conference room hour by hour.
Only after four or five years of working from the temporary office and developing a large client roster in the north to justify the expenses of a permanent expansion, did Hockett lease long term in that part of the city.
When he began to calculate the economic feasibility of opening a third office, this time in Utah, where he already regularly visited two high-revenue clients, he again considered leasing a temporary location initially and incurring no fixed costs until later.
In many cities, temporary office space is available for less than $350 a month or so, Hockett said.
When opening new and temporary offices, however, advisors should take steps to “dispel the concern that you are just dropping out of the air,” he said.
As advisors, “We are dealing with intangibles, like the idea that our clients will be able to retire,” Hockett said.
Therefore, the tangible qualities of an advisory firm, such as its locations, become all the more important, he said.
But even with a temporary office, it is possible to create a sense of “localness,” Hockett said.
In Utah, even before he made his office permanent, he spoke at local business gatherings, submitted his advisory firms to the local business paper’s rankings, and, by happenstance, sent his child to a university in the area, all of which made Hockett more local in the eyes of prospective clients.
Once in Utah, he sought out additional local referrals.
“I specifically asked clients if they had friends they wanted to refer. I said to them, ‘We are growing in this location,’” said Hockett, who now has 17 high-revenue clients in Utah.
Some advisors may be eager to include any new, additional, but perhaps initially temporary locations to their firms’ websites.
A few years ago, Brent Carnduff, who founded and owns Henderson, Nev.-based consulting firm Advisor Web Marketing, used to recommend that advisors include multiple offices, even those that were temporary, on their websites.
But recently Google modified its algorithms; an office location will only be identified on its maps’ functions, only after Google sends a postcard to the address and gets in return confirmation of receipt.
With no physical address recognized by Google, the firms won’t come up in the rankings for location-specific searches.
Miriam Rozen writes about the financial advisory industry and is a staff reporter for Texas Lawyer.
This story is part of a 30-day series on smart ways to grow your practice.