4 Steps to Prepare for Smart Growth

With many years spent coaching financial advisors comes plenty of conversations around growth. In fact, most of the time, “growth” is the primary focus of any coach/advisor engagement, as it should be. It’s what gets advisors excited and keeps coaches challenged.

In these conversations earlier in my coaching role, I often concentrated solely on strategies and tools to help advisors gain new clients, which was valuable. But I came to realize that it didn’t always solve the issue the advisor was facing. Many times, they already knew how to find new clients and generally had a high level of success converting prospects to clients. I was trying to help them clear a hurdle that didn’t exist.

The real issue was that they were oftentimes past capacity – too many reviews or skipped reviews, the service model was falling behind, longer hours, overworked team members and not enjoying the business the way they wanted to and should. Taking on new clients, while it seemed like the solution, was only making things worse. I guess you could call it painful growth.

That challenge and opportunity is what led to a different path I would lay out for them – preparing for growth. But not just growth for growth’s sake – smart growth. Assessing their business from a fresh perspective and doing the things that would allow them to comfortably take on new clients and grow revenue without the problems that often accompany growth just for the sake of growth.

For the advisor who is who is nearing, at or past capacity, there are a few choices on how to move forward:

  • Stop taking on new clients, which slows growth
  • Keep taking on new clients, work longer and try to manage more households
  • Create capacity so the firm can grow purposefully

Let’s look at the four steps you can take to achieve smart growth:

1. Reset Vision

Draw up a fresh map of your growth path for the next one to five years. Consider key metrics like total households, revenue, AUM, average AUM per household and number of team members. It’s always fluid, but it’s helpful to know the intended direction and pace of your growth going forward.

2. Team Structure

Before you venture out to take your firm to the next level of growth, make sure the team is prepared to grow with you. Team members run into the same capacity concerns that advisors do, so sit down with your team and ask them how much capacity for growth they believe you all have. If they say you need to hire to create capacity, be open to it, because it’s key to a sustainable onboarding experience and service model.

Read more: How a Coach Can Help You Ramp Up Growth

3. Service Model

Ask yourself and your team how efficient your service model is. Are reviews happening consistently – including follow-up? Are the nice “touches” being done for clients? Is day-to-day processing happening efficiently? Are you spending the right amount of time and resources on the right relationships? These are all questions that you should address before you pursue additional growth

4. Revenue Analysis

This is often the biggest hurdle in creating capacity for new growth. It’s critical that advisors properly segment their book and analyze revenue by segment and even by household. Get good data here. Data reveals opportunity. Start grouping your lower-half households and look for a line in the sand that tells you where you should and shouldn’t be spending your time.

For instance, if you have 160 total households, feel you’re about at capacity and discover that your bottom 60 households (37.5% of your total HHs) produce just 15% of your revenue, that’s an issue.

This doesn’t suggest you have to automatically get rid of those bottom 60 HHs. It does mean that you should discern how to best maximize resources and revenue going forward. What if:

  • An Associate Wealth Advisor or licensed Relationship Manager could lead those relationships through a one- or two-year handoff?
  • You, as the rainmaker, had renewed capacity for up to 60 new clients – or fewer that could produce the same or more revenue?
  • You created capacity to address other aspects of your business that have been lacking?
  • Even after hiring someone to lead those 60 relationships, were you more profitable and was time freed up in your schedule?

I know your initial reaction may be, “What if my clients aren’t happy with being handed off to another advisor?” I get it. But they’ll transition just fine. Think of them as clients of the firm and never clients of a particular advisor. Your lower-end clients also tend to have less complex financial pictures, and you can always make yourself available to address anything that comes up that demands your expertise.

You may also believe that “those clients don’t take up much of my time – they’re pretty easy.” I agree – by themselves, very few of them may take up much time. But as a cumulative block of 60 HHs, there’s little doubt they take a measurable amount of time and resources on behalf of you and your team.

Read more: Taking the Next Step: 4 Tips to Get Your Clients and Prospects ‘Unstuck’

Handing off clients to another advisor or relationship manager can seem a little scary, and honestly, you may feel that you’re leaving someone who has been with you from the start. Be confident that their needs will be met and know that there’s no shame in spending your time on the relationships that are the best and most productive use of your time. That C/D client of yours will be an A/B client for another advisor in your firm – or for an advisor outside your firm if that’s the best route for you both.

Wonderful outcomes are possible if you consider the opportunities and develop a strategy for addressing how you can create capacity. It will take some investment on your part, but it always produces net-positive outcomes – on multiple fronts – for advisors who execute this strategy the right way. I’ve seen it work many times.

So when you’re ready to take your business to the next level of growth, step back and look at your business model from all angles to determine not just that you can grow, but that you’re properly prepared for smart growth.

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