Growing Your Business Effectively

With the breadth of products and economies of scale needed to support today’s investment clients, it’s no wonder that sole advisors—which dominated the industry in yesteryear—are now becoming an endangered species.  Practices now often employ numerous specialized professionals in order to meet the demands of today’s savvy clients. This has been so successful for these practices that many now find themselves facing an issue they didn’t plan for—even more growth.   

According to our recent AdvisorBenchmarking survey, most advisors are optimistic about the future growth of their practices. One in three advisors (33%) believes AUM growth will be in the 11% to 20% range. Increasing assets under management is the most important goal for 57% of the advisors surveyed. However, growing your business and handling your growth are two separate issues. When planning for the future, how do you project your growth and how it might impact your organization? How big of a staff will you need?

According to our data, in 2005 the number of employees per average RIA firm increased by one client service staff member. In 2005, the average RIA firm had a staff of four client services employees compared to just three in 2004. According to Oliver Pursche, senior vice president with more than a half-billion dollars in assets under management at Gary Goldberg Financial Services, “Predicting the future and planning growth is a challenge to any organization. The foundation has to be based on our ‘realistic’ expectation of asset and client growth.”

According to the results of our survey, one of the greatest concerns advisors expressed is their obligation to not only work in their business but to work on their business as well. More than half of respondents (57%) said that this dual role was a real threat to their organization. Add to this the fact that 55% of advisors don’t delegate meetings or client relationships to staff members, and that more and more advisors must also squeeze in time during their workday to market services and formulate strategic plans. The question for advisors is no longer why not delegate nonclient related tasks (and perhaps even a client meeting or two) to trusted employees, but how can I delegate more?

“By assigning all of the responsibilities to various ‘experts and professionals’ within the firm, we allow our investment consultants to focus on gathering assets and doing an extraordinary job servicing and advising our clients. We have established a separate marketing department that structures and executes all of our seminars and client outreach events,” comments Oliver Pursche.

Employees First

In the process of growing your firm, what career track and professional development plan do you consider for key employees? What career growth opportunities do you offer to your employees? Providing employees with a clear career path can help improve staff retention efforts and keep employees engaged. The most popular methods include sending employees to seminars (22%), sponsoring employees for continuing education courses (17%) and providing tuition reimbursement (13%). Unfortunately, 33% of advisors don’t provide any professional growth opportunities for their employees.

According to Oliver Pursche, the mantra at Gary Goldberg Financial Services is “Employees First.” Adds Pursche, “That’s the road to success in our minds. By working closely together, we get to understand each other’s strengths and capabilities—this allows us to have very open conversations about what career paths may be best suited. Subsequently, as we grow and new opportunities arise, we put the emphasis on employees needs as much as we do on the firm’s.”

What Should You Do to Grow Your Practice Effectively?

• Make sure that different areas of the firm continuously communicate with each other
• Assign responsibilities to various “experts” and professionals
• Motivate and work together with your employees
• Provide employees with a clear career path to success