- The history of wealth management is rooted in sales culture.
- With a shift to a more fiduciary approach, sales have been deprioritized to the detriment of established firms’ growth rates.
- To re-spark your growth rates, apply the ‘SOUL’ of growth: Sales, Originality, Understanding and Love.
Spring is here, so what better time to discuss growth? For all the hype around acquisitions and inorganic growth, it should be remembered that every fast-growing firm begins — and ultimately wins — by growing its clientele organically, even if it does acquire other, smaller advisors along its voyage.The independent wealth management industry was started a couple of decades ago by the pioneering advisors who left the brokerage and insurance firms where they initially started their careers. Most had grown accustomed to attracting their own new clients to thrive, and without sophisticated sales skills, they would not have made it. Over time, some came to feel stifled in the firms they worked at and wanted to create their own ways of serving clients, so the brave few branched out on their own.Today, the independent wealth channel is maturing, and many of these founders are retiring and being replaced by the next generation (G2).This new generation of fiduciaries was not trained in sales and growth the way G1 was, and they may even feel that a sales focus is inconsistent with being a fiduciary. However, there is no better gauge of a firm’s health than its organic growth. Many firm operators try to be disciplined with referrals, yet they feel uncomfortable when it comes to sourcing new clients and growing organically.
Below, I offer a framework for how modern RIAs can approach organic growth efforts with intention and sophistication while staying true to their independent fiduciary ethos.The ‘SOUL’ of growth has four pillars
Pillar 1: Sales Early in my career, I had a mentor who earned a PhD in economics from the University of Chicago. He studied alongside several Nobel Laureates and brought that knowledge to our partnership for two successful ventures spanning two decades. He loved the expression, ‘if everyone’s gonna eat, someone’s gotta sell.’ I found the expression somewhat distasteful, but it has proven to be true over time. Growing firms prioritize sales activity alongside servicing existing clients; this involves not only respecting the sales process but also investing in, improving and measuring its results across the organization. How are sales treated in your firm? How much management time is spent on your sales process, including tracking results and making improvements? If it’s not at least a quarter of your leadership time, then it’s not surprising if you aren’t growing. Like it or not, sales is a contact sport — it requires time and attention and cannot be replaced with marketing alone.
Pillar 2: Originality Google ‘wealth management’ and you will find a sea of sameness, with nearly everyone telling a variation of the same story. This means that, in order to win new clients, existing firms either have to compete on price or outwork the competition. Having a differentiated firm and service offering allows you to compete on different terms than everyone else. When it comes to brand messaging, ask yourself: How do you tell your story? Does your lighthouse message resonate in a distinct way? What unique solutions do you have in investments, planning and enhanced services so that your message is different from everyone else’s? How often are you upgrading your brand messaging and the way you communicate your value proposition to prospective and existing clients?
Pillar 3: Understanding When you are facing a complicated challenge, how do you go about solving it? Chances are, you look for someone who’s been through what you’re experiencing, understands your situation and has the knowledge to provide potential solutions. Nothing shortens the sales cycle faster than giving a client confidence that you understand their needs and specialize in serving people with their specific issues. Knowing who you best serve and specializing in helping solve specific client segments’ biggest challenges will help you grow faster than trying to be all things to all people. My colleague Michael Kitces has often shared the importance of niche marketing, and I wholeheartedly agree. You must have a clear opinion of which clients you best serve at the core and then expand to tangential clients as you grow. Your service model and your solutions should reflect that.
Pillar 4: Love Love is the selfless care and concern for the growth and development of another person. In a service business, employing people that love clients — as well as the mission and purpose of what they do — is the lighthouse that attracts new clients. If you are helping people with their financial lives, then you are by definition in a deeply intimate relationship with them. Show that you genuinely love to help and serve them; Everything else is just words on a page. People can tell when you really care about their well-being. Ensure this sincerity is a throughout your organization, both for your clients and the people who work tirelessly every day to help realize their aspirations. We all want to be part of growing organizations, but just as a beautiful garden needs nurturing, an RIA requires time, care and attention to blossom. Remember these four key ingredients, and over time, you will build a beautiful firm with strong organic growth that is a pleasure for clients to work with. Happy Spring!Joe Duran is the managing partner at Rise Growth Partners, a minority investor in RIAs. He is perhaps best known in industry circles as the founder and chief executive of United Capital Financial Advisers, one of the first serial RIA acquirers, which he grew to roughly $25bn in AUM and sold in 2019 to Goldman Sachs, where he remained a partner until early 2023.
https://citywire.com/ria/news/joe-duran-these-4-pillars-are-the-soul-of-organic-growth/a2441723
