The market has carried so many advisors and RIAs who are reporting growth, but when you remove the market from the equation, that growth disappears. Additionally, technology, framework and processes are starting to become dated in many RIAs.
In short, advisors have been coasting for a while on a bull market and a dearth of real competition and disruption. When the market turns and the competition gets real, many RIAs are going to find staying in the race to be near impossible due to three major factors holding them back:
1. CEO/RIA Owner Is Doing Too Much
If you are running a one-person shop, I get it – you are everything. But if you want to grow, you have to start to scale and find ways to offload work to someone else. You need to learn to delegate.
That might be through technology for a smaller office, where you use scheduling applications or other software to help manage your calendar. For growing and larger offices, it means hiring people to delegate tasks out to.
For instance, the CEO of a company shouldn’t be doing data entry, but I see it all the time with RIAs. From where you’re sitting, it seems totally normal and necessary, but from the outside, it’s obviously inefficient and holding you back from growth.
You might think you’re saving money by not hiring, and you’d be right – but viewing everything through the lens of how much it costs is one of the easiest traps for RIAs to fall into. In reality, you’re holding your time hostage from doing the client work and prospecting that will actually allow you to scale and grow.
Don’t be the Chief Technology Officer, Chief Marketing Officer, Chief Compliance Officer, CEO, and advisor. Learn to free up your time to spend on what is most beneficial to growing your business.
2. Lack Of Great Processes
If number one is true, then this second point will naturally follow. If you are doing everything yourself, efficiency has long since left the building. Focus on what you do best and develop processes that allow you to operate as best as you can.
I often describe process as a “blueprint for success.” Without process, you cannot and will not achieve repeatable, high-level success. But, it is also important to realize process does not equal success.
You still need to execute. Process is important in every area of your practice – prospecting, marketing, compliance, hiring, financial planning, investment management, and just running the business effectively.
When I ask RIAs how they would rate their processes, I almost always get, “Ehhh, they are pretty good.” It’s surprising how indifferent some advisors are to anything less than the best considering that the difference between a great process and a good one could be the difference between growth and stagnation.
One of the best ways I believe RIAs can improve in this area is by being part of a community of advisors or having a coach who can help them define and focus on process so they can execute properly.
3. Lack Of A Clear Value Prop
When I look at advisor’s websites or listen to them talk about what they do, most sound the same. We list out services, say we do wealth management, we are fiduciaries, and we do planning.
The reality is that your clients and prospects see the same thing, too. You look like everyone else. If every advisor office is a McDonald’s, then people will just go to the most convenient one because they all sell the same Big Macs. You need to set your office apart to bring people to you.
To grow, survive and thrive in the future, you need to show your true value. Ask yourself these four questions:
1. What is your value proposition?
2. What is the value you provide for the fee your clients pay?
3. Are you clearly articulating and demonstrating that value?
4. Does it differentiate you from the pack?
The reality is you are likely different in some way. You have a unique value proposition, but most advisors I talk to realize they could do a better job articulating it to the world and to their clients.
With fee compression and pressures on the AUM model of “set it and forget it” planning, showing that your services add value for your fee is crucial. In today’s experience economy, just tracking investment returns won’t cut it anymore – you have to focus on planning and build an amazing client experience that lasts from first contact through every meeting you have with the client.
Do you want to grow or do you want more of the same? It may sound like a silly question, but it’s one I would encourage you to seriously consider. Maybe you got where you are today on your enthusiasm and energy alone, but at some point – if you’re serious about growing – you have to step back, build scalable processes and focus your vision.
If you spend all your time working in your business, one day the process, systems and focus will deteriorate and you’ll be left without the framework you need to sustain growth and remain competitive.
Jamie Hopkins, JD, LLM, MBA, CFP, RICP, is the director of Retirement Research at Carson Wealth and a former professor of Taxation at The American College, where he helped co-create the Retirement Income Certified Professional (RICP) education program. His most recent book, “Rewirement: Rewiring The Way You Think About Retirement,” details the behavioral finance issues that hold people back from a more financially secure retirement. He holds his LLM in Taxation from Temple University School of Law and his J.D. from Villanova University School of Law.