One storm is no longer enough...
When it comes to fueling meaningful growth in your enterprise, the days of succeeding by doing one thing very well are quickly becoming a thing of the past. If you’re a rainmaker who has focused on a particular tried and true practice – whether sourcing leads from existing clients, cultivating a network of professional advocates, steadily increasing your share of wallet from existing clients, or recruiting/acquiring other advisor teams – now’s the time to start expanding your horizons by seeking out new additional sources of growth.
The most recent PriceMetrix/McKinsey State of Retail Wealth Management study found that advisors in the top quartile for growth increased annual revenues by 37% (compared to an 8% decline in growth for the bottom quartile). What differentiates the top performers? Not surprisingly, these firms generate most or all their revenue from fees, and function as interdependent teams rather than sole practitioners. What stands out, however, is the realization that only a small percentage of these leading advisors are actively engaged in acquisitive growth. It begs the question…why?
Beware the fast-track
We hear so much about the aging advisor demographic, and we read profiles in the trade press about advisors who seemingly overnight turn a $100MM practice into a $2+ billion enterprise through a series of aggressive acquisitions. It seems like the perfect quick road to rapid growth. What we don’t hear a lot of talk about, however, is the often grossly inflated price tags acquirers end up paying for these acquisitions or the struggles they have successfully integrating both new clients and new advisors into their business model.
By all means, a thoughtful, strategic acquisition of another practice that closely mirrors your own firm in culture and client service, or – especially one that also brings new wealth management capabilities that can be marketed to your existing clients – can be a tremendous impetus for growth. But don’t make the mistake of focusing so much time on seeking out potential acquisition candidates (which generally take an exceedingly long time to close and can be hit or miss propositions) that you overlook less glamorous but often more effective growth strategies.
How reliable is old faithful?
Ask almost any advisor where the lion’s share of his or her current year-over-year growth comes from and they’ll likely tell you it’s derived from client referrals. Yet dig a little deeper and you’ll quickly uncover the fact that most of these referrals are “passive” – generated not because of any active solicitation on the part of the advisor but simply because the client happened to be asked who they work with by a friend or associate.
Think about that for a moment. For most advisors, the single most effective driver of growth is something that they play little or no active part in and therefore have little to no control over. Is that really the sort of “strategy” you want to hang the long-term future of your business on?
It’s the reason why at ClientWise we actively encourage and work with advisors to build a multi-pronged approach to acquiring new clients that leverages a variety of sources including professional referrals, networks and associations, community organizations and social media. Simply put – the more arrows in your quill, the more likely you will be to consistently hit the target you’re aiming at. Want some help in getting more focused and better organized in your prospecting efforts? Check out our Coaching Guide to Prospecting: The Who, What, and Where for a step-by-step tutorial. For those not yet part of the ClientWise community, click here to enroll in a membership to get access to this coaching guide and library of other content. Join our community of other top advisors committed to growing their enterprises.
Coaching Questions from this article:
- What is your growth goal for the coming year? How much of that needs to be generated through new client relationships and how much can come from share of wallet growth?
- Look at your current marketing strategy. Can it be more optimally aligned to achieve your acquisition goals? How might you better leverage things like social media and community outreach as prospecting tools?
- What strategic steps could you take to more proactively engage deeply loyal clients and begin laying the foundation for developing them into advocates?
- What is your interest/appetite in acquiring another practice? What challenges or obstacles do you envision?
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Topics: Client Acquisition