The Advisor Business Has a Founder Problem

RIAs, we have a problem. According to the Investment News 2020 pricing and profitability study, 52% of new business growth for advisors is coming from founders. No matter the type of firm – solo, ensembles, enterprise ensembles or super ensembles – the founders were the primary driver of growth. 

A founder-driven growth model isn’t sustainable or efficient. What happens when the founder is ready to retire or transition? 

There is a significant growth opportunity for advisory firms by evolving the expectation of future growth from one or few to many. 

Imagine your entire team was aligned and engaged in development efforts. 

The same study highlights that new growth in 2020 largely came from client and professional referrals. This is evidence that there is a great opportunity to grow from your existing relationships in addition to organically finding new ones. 

Referrals are a result of strong and trusted relationships, where your value is acknowledged and articulated. If you are looking to grow and aren’t focused on your existing relationships, my article, Building Advocates With a Service Model That Delivers, is a good place to start.  

Your entire team is serving your existing clients. Service is a form of sales. 

Over 16 years ago I started my career in financial services at an RIA firm. It was a mid-sized, ensemble firm based outside of Philadelphia. When I reflect on my experience, I see how cultivating a culture of development would have been impactful. 

The firm had three client-service, admin-type team members. They were all service-focused and had great rapport with clients. One, Rainey, was a natural at development. She had a high-school degree and had been in the role for many years. 

At one point, we were trying to generate more referrals from clients and professional partners. We attended “rainmaker” sessions and surveyed our clients, getting stellar results. The firm’s clients were very happy with our service, relationship and their financial outcomes. Yet, referrals were scarce largely due to the lack of implementation of our referral strategy by the founders, who were the lead advisors for most clients. 

One day, while talking to Rainey, she expressed her frustration about the owners’ lack of willingness to do the things they knew they needed to do for development. “I don’t get it, it’s not that difficult,” she said. 

She was right. It wasn’t that difficult – for her. 

She could find money, bring it to the firm and get introductions naturally; it was in her DNA. She was not, “salesy: she was persistent and willing to try.” The missed opportunity was that she never was part of the firm’s development efforts. Because of her role, her priorities were formally limited to client service. 

The point of this story is that there are many more like Rainey – people on your team who are naturally gifted at connecting, building trust and generating tangible results. You don’t have to be in sales, a leadership position or a business owner to be helpful in growing a business.   

Your growth strategy can (and should) be integrated into your service model, prospect experience, processes and communications.

I challenge advisory firm owners and managers to share the burden of growth with their teams. 

To build a culture of development, start here:

  1. Communicate your growth goals
  2. Set and communicate clear team expectations
  3. Have a sales process 
  4. Empower your team

1. Communicate your growth goals

It always surprises me how often advisory firms don’t have goals or don’t communicate them to their team. 

Growth goals may be AUM- and revenue-based or they can be many other things. For example, you may want to increase your referrals, the percentage of your clients that fit within your ideal client profile or improve your retention rate.

Whatever your firm goals are, communicate them to your team. Goals are meant to be shared. When we know what the desired end-result is, we can figure out how to help get there. 

If you don’t have goals, then think about what success looks like short-term – over the next year, six months and one month. 

If you have an AUM or revenue goal but no plan to get there, break it down into a sales, pipeline and activity (SPA) goal. To generate the desired AUM or revenue, how many prospects do you need to have in your pipeline and what activities do you need to do to fill your pipeline?

2. Set and communicate clear team expectations

It’s amazing what people can do when they know what is expected of them. People shrink and expand to the expectations placed on them – by themselves and others. 

As a leader and manager, it’s your job to give your team the guidance and space to expand. 

Having worked at a fast-paced, growth-focused asset management firm, it’s amazing what teams accomplish together. Over the seven years I worked at that firm, I saw the employees more than triple and assets go from $10 to $24 billion – truly unbelievable growth.

Expansion starts with setting clear expectations of desired behaviors, approaches and outcomes. 

For example, explicitly communicate that you expect a growth-minded team. When you interview, be clear, you are growing and are looking for someone who can support and grow with the firm. The right candidates will be excited about this challenge. 

Beyond wanting to grow, be clear what that means to you. If your growth strategy relies heavily on marketing or service, tailor your expectations to those things.

3. Have a sales process

Defining the journey from lead to client, and client to advocate provides transparency around your approach, which empowers your team to support the process. When you know where someone is in the process and what’s the next milestone, it’s easy to take the next best action. 

According to the 2020 InvestmentNewsstudy, only 37% of leads are tracked at the firm level and shared. 

Without knowledge of how your sales process works, it is difficult for your team to support and improve it. However, when you define the steps, deliverables and experience, and track where someone is in the process, you can start to delegate and empower them to help manage.

The same goes for building client advocates. Developing advocates is part of a sales process and the next step once someone becomes a client. 

By defining what an advocate is and your plan to help develop them, you give your team the guidance needed to help.    

4. Empower your team

Building a culture of development is only possible if the firm leadership empowers individuals by communicating goals, expectations, providing clarity on the approach and encouraging them to take action in support of growth. Motivating your team to help the firm grow requires you to allow mistakes. You must accept that your team will not handle situations exactly as you would but can learn best practices with training. Autonomy is a key to motivation – watch this video on the psychology of motivation.  

Development is a skill. Getting comfortable and good at it takes time and practice. 

Anyone can do development. Don’t allow yourself or your team to narrowly define themselves in their formal roles.    

Acknowledge and reward the right behaviors and outcomes. If you meet or exceed your goals as a team, acknowledge everyone involved and celebrate or show your appreciation through a monetary bonus.    

No what matter your role is, it feels good to be part of a team that’s having success, especially if you are contributing to it. 

Related: The Energy To Grow: A Secret To Sales Success