Growth is the topic du jour for RIAs — how do you define it, how do you measure it, how do you accomplish it, how do you sustain it?
Rather than another article about ‘the three proven steps to grow,’ I thought it might be refreshing to address what the point of being a growth-focused firm is and what real, profitable, meaningful growth can do for your firm now and in the future.
Compete in the war for talent
These businesses we run are human capital-intensive businesses. Sure, technology allows us to do more and to be more efficient in the work that we do — but this is a people business.
The best talent entering the space, and those making mid-career job transfers, are not looking to join stagnant firms. Why would they? There is a definite talent shortage in our industry, so the best candidates out there have leverage and can afford to be picky. Sustainable growth can help bring in the best talent to serve your clients.
The talent that’s attracted to a growing firm will be the cream of the crop — and you’re going to need that when it’s time to exit. This is especially true if you want an internal succession plan that ensures the continuation of your firm’s culture, values and service model after you retire.
Profitably lean into new services
The evolution of the advisor/client relationship has been interesting to observe throughout my 15 years in the industry.
Clients today are more informed. They have come to appreciate more personalized information, at the tip of their fingers, on demand. And technology, industry maturation and client demand has meant advisors need to continue to expand their services to remain competitive. Simply existing (and maybe having a website) is no longer enough to ensure a stream of new clients each month.
Growth allows you to strategically expand your services, refine delivery methods and increase profitability on scalable services to your current (and future) clients.
Some of these services are things clients have come to expect from their advisors, like tax preparation and strategy, trustee services, and other family office-like offerings. Beyond that, growth-focused firms are delivering targeted education to their clients, using technology to deliver more relevant data faster and hosting events to create meaningful communities and connectivity beyond the typical advisor/client relationship.
Run a business, not just a practice
There are many wonderful lifestyle practice groups in our industry — and one of the great things about this business is that you can run a firm successfully at almost any size.
However, if you’re looking to evolve your practice into a business with a true management team, career paths for all roles, growing enterprise value, etc., then you’re going to need to grow. And that won’t happen without action.
As your firm grows, you will need to learn how to manage competing budgets, demands from various departments, client expectations and your own time and expertise.
A healthy operating margin and financial investments in your business via retained earnings or a capital partner will allow you to invest when you need to, spend when you need to and be able to deliver on the demands of a changing industry.
Lackluster growth, on the other hand, will severely limit your ability to make agile decisions that are necessary to secure the future of your business.
After years of experience working with hundreds of wealth management firms, here’s the thing I wish more people realized: Growth, and the activities that it takes to accomplish that growth, can and should be authentic to you, your firm, your clients and your community. An approach that works for someone else doesn’t have to be the approach you take for your firm. And the more authentic you can be about your approach to growth, the more success you will find.
The first step is to make a plan. Once you articulate what healthy, sustainable growth looks like for you and your firm, you can start to take action. It won’t be long before you — and your clients — reap the rewards.
https://citywire.com/ria/news/opinion-what-is-the-point-of-growth-for-rias/a2452651
