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GV Insights – How Top Firms Succeed

Not all advisory firms are created equal, and some are truly head and shoulders above the rest. This month, we’re looking at industry trends and identifying ways that the top advisory firms stand out. By the end of this newsletter, you’ll gain a long-term perspective and a better understanding of how you can make your practice more competitive.

Firm Closures on the Rise

According to FINRA data, branch closures have been accelerating since hitting a recent low in 2014. Heavy consolidation and increased competition are contributing factors, which only serve to emphasize the need to stay ahead of the curve and outperform other firms. Performance is key, but fostering deep relationships and offering a range of services are two main ways that top firms stand out. When you can’t compete on size, the strength of your client relationships can not only keep retention high, but lead to more referrals, as well.

There’s Room to Grow

Data from Statista show that there is ample opportunity for successful firms to add wealthy clients and increase their AUM. As of 2014, the value of private wealth in the U.S. has continued to grow, and is expected to reach $73 trillion by 2021.

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This data is encouraging for firms of all sizes, as it points to increased opportunity over time to grab market share. Emulating top firms and carving out a niche for your own firm can lay the foundation for long-term growth.

Think Deeper, Not Wider

Starting in 2013, an interesting trend has begun to emerge in the advisory industry. Firms are increasingly doing more to serve their existing clients, extracting more value from their current base rather than spending heavily to market elsewhere. In practice, this means securing the household accounts of clients and offering more services that benefit entire families. The firm PriceMetrix conducted a study that underscored this trend as it has continued over the past several years: As advisors age and transition their practice to their successors, having a client list full of deep relationships will make the inevitable easier. Individual clients without strong ties to their advisors are more likely to leave firms as these seismic changes occur.

Clearly Communicate Your Value

Top advisors know that a clear value proposition both attracts clients and keeps them on long-term. When clients understand what they’re getting for their money, they are more likely to sign on with your firm. Clarity has many benefits, not least of which includes bringing on your target clients instead of those that aren’t an ideal fit. People hate feeling tricked or confused, and the clients you work with will only appreciate your honesty. With transparent fees and a no-nonsense listing of services, the clients you want will more likely be attracted to your firm.

Build for Scale

Being successful starts with a framework to grow long-term. The most successful advisors understand that building their practices for scale increases their chances of staying successful. Try an audit of your marketing an onboarding processes to assess how scalable they are. Questions to think about when assessing your scalability include: Are their current ways of doing things that you can easily replicate? What processes would fail with an influx of new clients? Are you hiring in a way that can bring scale later in your practice? Once you know what you’re working with, you can revamp your firm to be able to handle nearly any amount of new clients. Your pipeline will get easier, you will be able to provide better service, and your clients will thank you.

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