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Balancing Act

Two years ago, Tom Lydon, a small independent advisor running an 11-year-old practice, launched a blog about Exchange Traded Funds (ETFs). Now, he's wondering how to expand that effort without hurting his ability to work with his clients. For answers, we asked our panel of experts: Hellen Davis, president of Indaba Training Specialists, a management consulting and training firm in Treasure Island,

Two years ago, Tom Lydon, a small independent advisor running an 11-year-old practice, launched a blog about Exchange Traded Funds (ETFs). Now, he's wondering how to expand that effort without hurting his ability to work with his clients. For answers, we asked our panel of experts: Hellen Davis, president of Indaba Training Specialists, a management consulting and training firm in Treasure Island, Fla.; Philip Palaveev, senior manager for Moss Adams, a Seattle-based accounting firm specializing in financial advisors; and Chip Roame, managing principal of Tiburon Strategic Advisors, a Tiburon, Calif.-based market research and strategy consulting firm for financial institutions and investment managers.

The Situation:

When Tom Lydon started a blog covering news and trends concerning ETFs, he never dreamed it would take over his life. But, Lydon, who runs Global Trends Investments in Newport Beach, Calif., soon discovered that the effort was seriously eating into the time he could spend with clients. This posed the dilemma of how to balance the demands of the blog with the need to grow his two-employee firm, which has about $70 million in assets.

Lydon started working in financial services right after graduating from Babson College, where he majored in marketing. He took his first job at Fidelity Investments' institutional asset management arm. After two years, he decided he'd had enough of Boston winters, and moved to California, where he began working as an advisor with an RIA firm called Fabian Financial Services in Newport Beach. A few years later, he had risen to become president of the firm, but Lydon had long wanted to start his own practice and, in 1996, he went out on his own.

For the first six years or so, Lydon focused mostly on mutual funds in his financial planning work. Then, five years ago, he started shifting client assets increasingly to ETFs. But as he tried to learn about the funds, he found there wasn't one place to go for all the information, news and analysis he needed. That's when it occurred to him: He could start his own blog that would educate readers about ETFs and turn it into a marketing opportunity for himself — a chance to attract as clients people interested in incorporating the funds into their portfolios. “As individuals decide they want to use ETFs and want an advisor to manage their investments, they'll already know and trust us and will opt to become our clients,” he says.

In 2005, he launched the blog with help from one of his employees and a freelancer. Almost immediately, it drew an enthusiastic response — so much so that last year, he started taking advertising from ETF companies. In fact, the more time he put into it, the more he found that people liked what they read. Soon, his blog was the go-to-spot for ETF information. He wrote three to four posts a day, and devoted more than half his work hours to the effort.

Now, he's at a crossroads. On the one hand, Lydon has ambitious plans for the blog. He wants to expand his daily posts to between six and eight updates, and he has hired a Web editor to help him do that. He would also like to expand the blog's content to include more information about money management. “We're trying to be an objective source on ETFs and money management,” he says. He's even toying with the idea of eventually turning the blog into a standalone company.

But, he fears the work may harm his client relationships. Because he is the firm's only financial advisor — his other two employees handle administration and daily operations — the amount of time he devotes to the blog is turning into a big problem. He's already had to cut the time he meets with clients in half, from at least twice a year to an average of just one meeting annually. If the blog grows a lot more, will he start losing clients? “We feel this will pay off in the long run,” he says. “But it's a challenge to keep up with all that growth right now.”

The Advice:

Philip Palaveev

It's not surprising that his blog has become popular. There's a tremendous need for financial information in the general marketplace these days — especially for people who are about to retire. I think it sounds like a great blog and it seems that he's enjoying it. The challenge is how can he run two businesses at the same time. It's not impossible, but it could be very difficult. There are only so many hours in the day he can devote to each business, and both of them are more or less full-time jobs.

I think he has to consider what he's interested in doing personally and what gives him the most satisfaction — publishing or serving clients. I'm not saying he has to close down the blog and concentrate on clients, or stop working with clients and only do the blog. But, if he wants to make a bigger commitment to the blog, he should pare down his client base; if he really wants to be more of an advisor, he should pare down the blog to a reasonable number of postings.

There's another approach he can take. The blog seems to be an effective way to market the practice, much like having a radio show or writing a column in a magazine. I think he can hire another advisor to serve clients, and then focus on marketing. He has enough assets under management to be able to afford to bring someone on. That would be a way of resolving the time crunch. He will have to pay some money to do that, but he will get back a lot of time, as a result.

At the end of the day, however, he has to be very clear about which is his primary business. Otherwise, it will be difficult to expand both his assets and the blog at the same rate as before.

Hellen Davis

If half of Lyndon's day is being sucked up by this blog, he has to get a grasp on who is actually visiting the site — is it clients, potential clients or other advisors? He needs to know who his readers are. One possibility is to limit who visits the site; he could make it just for clients by giving them passwords. Or, if he isn't already doing this, he could ask people to provide information about themselves when they come to the site for the first time, including an email address where they can be contacted. If the visitors are clients of his, then they would click on a specific link and be given access to, say, a special white paper. If the visitors are other investors who could potentially become clients then they would be directed to another link. Advisors would be sent to yet another link. That way, he would know where the majority of his readers are coming from and he would gain access to their e-mail addresses. Also, he would be able to provide more information about his readership to advertisers, and they would love that.

I think he can put limits on the blog; he doesn't have to do it every day. He can say, I'm only writing it on Saturday mornings, and post that schedule on the blog, so people know the date and time he's doing his updates — that's perfectly okay. Then, if the majority of readers view it on Sunday and Monday, he'll know they're really reading his most recent posts. He has to set different expectations. And I don't think he'll hurt advertising revenues.

The best bet would be to cut back gradually. He could post, perhaps, Monday, Wednesday, and Friday for about a month. Then go down to Monday and Friday. He could also update certain sections one day of the week, and other parts of it on another day. He has to make a schedule and stick to it. The big problem is, he'll be tempted to post new updates when he comes across something interesting. If he sees information he'd like to post on an off day, he might opt to save it in some sort of queue until later.

Chip Roame

The main points to think about here are marketing, client service and focus — those are the areas that matter.

Independent advisors often struggle with marketing. If you want to expand your business, it's clearly one of the most important things you must do. With that in mind, it seems there's a great marketing opportunity with this blog. However, client service is also key to growth, because clients make referrals when they're happy. In fact, we know that about 55 percent of new clients come from referrals. So, if he uses the blog as a marketing tool, but his client service suffers, he's not going to come out ahead. In fact, he may ultimately end up with net zero business growth. That is, he should develop new marketing approaches, but only if he can keep his attention to client service high. Otherwise, every client he wins through the blog may be offset by a client who leaves because he's not getting the service he wants.

That's where the focus issue comes in. Those who have a more streamlined business model do better, not worse. If an advisor is in a million different service markets, that will result in slower growth. The upshot is, he has to focus on the right things — that means setting two courses of action. He could drive client service and find someone to truly run the blog for him, to be a real partner. Or he can run his firm's marketing efforts and replace himself with another advisor on the client side. I almost get the sense he'd prefer to do the marketing; he seems to thrive on it. What I wouldn't suggest is to cut back on the blog.

Ultimately, he has to keep up client service, because that's what will drive referrals and bring in most of his future clients — it's the real growth engine.

Fix My Practice is a quarterly feature that seeks solutions to real-world advisory problems from a group of consultants and industry insiders. Submit your questions to [email protected]

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