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To build a successful practice, start with the future in mind

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One way to build an advisory practice is to re-imagine what the firm will look like in one, three and five years, and plan for those goals.

“We tell our advisers that the strategy of [the practice] will drive the structure of that firm,” says Jeff Sietstra, senior business consultant in the practice management department at Securities America of La Vista, Nebraska. “The types of clients they’re trying to bring into their business or the target markets they’re trying to reach will determine the services offered.”

Where many advisers get into trouble is “spreading themselves too thin,” Sietstra says.

“Would you rather do something a thousand times or do a thousand things one time?” he asks.

A slight variation on this strategy is to look at the business through the eyes of a possible future acquirer, says Louis Diamond, vice president and senior consultant at Diamond Consultants in Morristown, New Jersey.

“Businesses that are predominantly or all fee-based with a select group of [high-net-worth] clients, focused on comprehensive wealth management, are systemized with regards to processes, technology, and talent development represent ideal attributes acquirers look to when valuing firms,” he says.

Grant Rawdin, CEO of Philadelphia-based RIA Wescott Financial Advisory Group, says there are three steps a firm can follow to set itself up for success.

For starters, firms should always choose a fee-only business model, he says.

Second, “train dearly in taxes,” Rawdin says. “It remains a planning area [that] can provide annual savings and efficiencies to a client across their portfolios.”

Next, “be transparent in all you do and construct,” Rawdin says. “With Internet resources, a client can easily gather second opinions.”

In addition, firms, should “invest in next gen advisers, in training them technically and bring them into the client relationship,” Rawdin says. “They provide a disproportionate amount of goodwill.”

Firms should also centralize operations and portfolios for consistency among the firm’s advisers and clients.

“A range of solutions is inefficient and dangerous,” Rawdin says.

He also says that advisers should “focus on the 25% of the job you don’t love and will ignore to you and your firm’s peril. That is likely the first 50% of the position description of a professional manager.”

Finally, “be clear on who is your natural client, by size, firm experience or networked referral services. Focus building on them,” Rawdin says.

These tips can help practices start with the future in mind, the goal being how to better align the firm’s capabilities with the increasingly complex needs of clients.

This story is part of a 30-30 series on strategies to boost your practice.

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