Why is Your Firm Not Growing?

#Lifestyle Wealth


By Gordon Ross

If we go by net new assets (and stripping out market growth), how much is your firm actually growing? If you look at most industry benchmarks, top RIAs are growing by more than 15%. If you are not growing by that amount, why not?

This is probably the most common question leaders of firms ask Dynasty. What appears to be very common is that some firms are hitting a ceiling. They reach a particular AUM number and, no matter how hard they work, they are unable to significantly break through. They are providing an excellent client experience, that is not the problem, so what is it?

The answer to this question will vary from firm to firm. It all comes down to a “TTPP Evaluation”: Talent, Technology, Process and Positioning. You will notice I have not mentioned Marketing, more about that later.

Talent

Never mind just having the right people on the bus, are they sitting in the right seats? If you are being brutally honest, how many advisors in your firm are actual rainmakers? I am willing to gamble that it will not be 100% and that is actually fine. Many successful firms have been built using advisors that are fantastic relationship managers but they are not good rainmakers and, if they are honest, the thought of it probably makes them uncomfortable. That is absolutely fine as long as two key factors are in place:

  1. The people who are rainmakers have their workloads lightened so that they can go out and rain-make.
  2. Advisors’ compensation will vary depending on whether they brought in the client or not.

Taking this to the next level, many firms use business development officers, whose sole focus is bringing in clients and handing them off. They have zero client relationship responsibilities and can be a key part in building a growth culture.

Lastly, what does your training program look like for the next generation of advisors? Too many firms have zero training programs for young advisors. What is even rarer is for a firm to have a training program on the most difficult aspect of being an advisor: bringing in new business. At Dynasty, we actually run training programs for young advisors that network firms can send their young advisors to. Finding the next generation of talent is one thing, but you have to enable it too.

Technology

Are rainmakers too busy to go out and rain-make? Technology can offer a great deal of relief. For example, Dynasty once worked with an RIA in Pennsylvania that had hit up against an AUM ceiling and could not break through. We found that this was due to the key rainmaker being tied up in the daily tasks of the client relationship. To alleviate this we worked to dramatically improved their technology package, so high-quality client reports now took seconds, instead of weeks, we then built a support “service pod” structure around the rainmaker, so he could still be the point person on the relationships, but daily tasks could be easily handled by a support team.

Process

Without question, the firms we see that grow the fastest always have two key things in common: they hold regular company-wide sales meetings and they have a clearly defined “prospect pathway”.

Sales meetings, where advisors walk through their pipeline, are absolutely crucial. Not only is it a good psychological tool (since an advisor has to regularly report back on their pipeline, it increases the likelihood of them actually filling it), but it also helps share ideas within the firm on what works.

A “prospect pathway” is the process that every prospect goes through at your firm. Right from the moment you meet someone in a social setting to them signing as a client, what processes do they go through? How does your firm reach out to them and what work is carried out? The fastest growing firms have a very clearly defined multi step process. This has so many knock-on advantages:

  1. It helps maintain a consistent client experience between advisors.
  2. It helps train up new advisors because they never have to ask “what is next”.
  3. Prospects notice this clear structure to an approach and it helps paint the picture that the eventual client experience will be equally structured and thoughtful.

Positioning

The fastest growing firms also often have at least one very specific target client in mind. They then build a whole client experience and business development strategy around that ideal client. For example, the Dynasty Network firm Source Financial Advisors in New York is specifically geared towards independent women of wealth. They have built a whole service structure towards helping women go through a divorce and transition from “Wife to CFO.” They have become the answer to the question. If you ask a divorce attorney who you should see if you need help with your finances post-divorce, Source is top of mind.

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Now, many advisors might respond that they do not have an ideal client and their client book is a good mix of backgrounds and occupations. I would wager that if you were to do an audit of their client book, you might not find similar occupations, but you might find similar personalities or needs. The advisor might not know it, but they are fulfilling a particular need for the client, what is that need?

The danger of not clearly identifying your value proposition is clear. How many times do we see an advisor take on a smaller client because they know one day in the future that client will have a liquidity event. Then, right before the client has the liquidity event, the client switches advisors. The reasons for that is the other advisor proved to the client that they had a specific capability of handling large liquidity events and the old advisor never did. He or she never proved their value proposition.

It is here, right at the very end, where we finally talk about Marketing. Many firms launch into marketing campaigns to help raise their growth. However, if you have not gone through the steps mentioned above, it might be dollars wasted.

Going through the ideal client evaluation mentioned first is crucial because that then allows you to decide between marketing strategies. Which marketing strategy is going to target your ideal client best? Where are they going to see or touch your strategy? If you already know your ideal client, then the marketing decisions become easy.

If you are questioning why your firm is not growing, do not immediately jump for the checkbook and spend on marketing strategies. Hopefully we have shown here that the answer is far more deeply rooted and your needs to have the correct talent, technology, process and positioning in place first. 

Gordon Ross is Director - Enterprise Group at Dynasty Financial Partners

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