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Insights | October 29, 2021

What’s the danger in hot-stock marketing?

Over the years we’ve worked with countless financial professionals operating in the top 10% of the industry. Every one of them has had a different perspective and methodology, but there’s one belief they all share: Short-term stock picking is not a viable or consistent investment strategy.

When you’ve built your success on serving client interests to the best of your ability, you’re likely to decry those who are touting quick returns and crystal-ball theories. So it’s no wonder that the predatory stock picker is vilified almost unanimously by those running established practices. 

The surprising part, we’ve found, is how easy it is for those same financial professionals to miss the “hot stock” mentality when it comes to their own branding and development. 

For us, hot-stock marketing is about promising ROI that is immediate and dramatic, with strategies that are fast and cheap. To a busy advisor who’s looking to grow, this kind of message can be very attractive. But if you’re being told to expect a torrent of new business with very little expenditure, you may want to take a critical eye to what’s really being delivered and what’s likely to result from it. 

Yes, it’s possible to get a winner every now and then, but any knowledgeable investor knows you won’t build a fortune with short-term trading—and you won’t build a thriving practice with tricks and shortcuts, either. You do it by following through on core principles every day.

The opposite of hot-stock marketing, much like wealth management, is about focusing on the activities that have the biggest payouts over the long term. Things like:

  • Establishing a consistently high bar of professionalism across all visible sides of your business
  • Conveying a clear competitive advantage in tangible ways—not just words
  • Developing and systematizing internal processes that align with your outward identity
  • Periodically “rebalancing” your brand to adapt to the current landscape and adopt the latest best practices 

Successful advisors make marketing decisions in the same way they make investment decisions. You’ll find the right strategies only once you’ve defined your objectives and set realistic expectations. And along the way, be skeptical of big promises with short timelines and be aware of what “quick and easy” costs in the long run.

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