Philip Palaveev
Philip Palaveev
THE BIG PICTURE
As the saying goes , “ You don ’ t have to be faster than the bear ; you have to be faster than the other guy running from the bear .”
Where Leads Come From
So , Who Is Growing Fast ?
We ’ ve pointed out several problems , but who has a solution ? To search for firms that grow well , in our study we divided participants into different categories ( 70 % of the advisory participants in our study target high-net-worth individuals — those with more than $ 1 million and less than $ 25 million in assets — while 17.4 % focus on merely “ affluent ” clients ). We found that indeed there are some characteristics that allow advisory firms to grow faster :
• Spending on marketing works . Firms that invest in marketing grow faster . The average advisory firm spends only 1.5 % on marketing . When we isolate firms that spend more than 3 % of their revenue on marketing , we find that they grew median revenue twice as fast .
• Smaller clients help . Firms that focus on affluent clients ( those with between $ 500,000 and $ 1 million in assets ) are growing their net new AUM at a 44 % faster rate than the average .
• Accountability works . Firms that have institutional ownership ( in other words , that have been acquired ) grew net new assets 9.2 % while firms owned by advisors grew by 4.7 %. Perhaps the added discipline of having a corporate parent puts pressure and resources to good use — and the result is faster growth .
• Being younger helps . Firms with younger partners grow faster . If we use the years of experience as a proxy , firms whose senior advisors average less than 12 years of experience grew net new assets by 14.4 %, which was nearly twice as fast as those with older leadership .
Growth in the context of our industry depends on both competition and individual effort , much like running a mara-
We asked respondents : From the beginning of 2023 until now , what percentage of your new clients is attributable to the following sources ?
Referrals : Existing Clients
Referrals : Centers Of Influence
Referrals : Custodian
Networking : Advisors
2.6 %
14.9 %
13.1 %
56.7 % thon . Growth ensures that a firm does not fall behind in how it services clients and how it develops professionals . As the saying goes , “ You don ’ t have to be faster than the bear ; you have to be faster than the other guy running from the bear .”
Growth also requires the work of individuals , though , something that must come from the culture . Some firms have the ambition to be large and influential in the industry ; they feel a need to grow and be as fast as the competitive marathon runners . Others will simply seek the satisfaction of reaching their goal and achieving something to be proud of . We all need to grow though . You can ’ t finish a marathon by standing .
Why It ’ s Essential
Growth is an essential ingredient of success for every organization . Growth creates resources that can be deployed to serve clients better , to take better care of our teams , to generate better returns on investment for our owner-advisors … in other words , growth creates more growth .
But how it is paced will be different for each organization . Some firms choose to grow very fast , and some grow more patiently . But moving forward is the key . As marathon runners will tell you , sometimes you can walk a race , but you can never stop . If you do , you will find it very hard to start again . And just like a marathon , some will finish it in record time and others will take five or more hours . But all deserve enormous respect for doing something remarkable .
In other words , choose your own rate of growth based on your strategy and your resources . Choose a rate of growth that fits your culture and the ambitions of your team . But never stop never stopping , as Andy Samberg would say !
Networking : Dedicated Business Developers
Marketing And Branding
Seminars
Other
1.3 %
9.4 %
0.4 %
1.5 %
* The True Ensemble™ Data Insights 2024 study was issued earlier this year . The findings in this article are from preliminary data analysis . The comprehensive report will be shared later this year .
PHILIP PALAVEEV is the CEO of the Ensemble Practice , the leading business consultants to the financial advisory industry , and founder of the G2 Leadership Institute , a leadership program that trains the next generation of leaders .
18 | FINANCIAL ADVISOR MAGAZINE | JULY / AUGUST 2024 WWW . FA-MAG . COM