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Powering Your Growth as an Independent Advisor

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An important benefit of having a network community of top independent advisors as clients is that it creates an opportunity to collaborate and share best practices, strategic thinking and discuss what has worked well in the past. Recently, I have seen a lot of discussion among our Network Advisors on the topic of growth.  Growth can mean a number of things: professional development, growing assets, increasing enterprise value of the business, raising revenue or expanding profits. I'll highlight a few lessons learned from the Dynasty Network on what are advisors doing to raise revenues and widen margins in their practices.

At Dynasty, we pride ourselves on being "Growth Partners" to our Network Advisors.  Part of that means selecting advisors who want to own their own business and are truly committed and focused on growing it.  We have had several firms double their assets over the past couple of years since we started working with them.  But this growth started with a business plan, a focus, a team based sign off that said, “This is what we are going to do and how we plan to do it.”  Each firm is different, so not one of the below is a silver bullet on growth.  Rather, each can be part of a focused, overall plan that is consistently worked on over time.

Growing revenue is sometimes about adding clients, adding services and, other times, simply about pricing discipline.  When we are doing our business reviews and planning meetings with advisors and we examine their fee schedules and then compare those to what clients actually pay, almost half of the time we find a discrepancy.   We coach advisors to be confident and consistent with fee schedules.  Be clear with clients about all the services they are getting and the costs associated with delivering those services.  This is why we encourage our advisors to look at pricing at least every 24 months.  We also like to suggest pricing committees as they prevent one person from mispricing a relationship and allow partners in the firm to hold each other accountable for pricing decisions. 

On the addition of services front, we have advisors adding services such as financial planning, liability management services, cash management, insurance services and family office related services for larger clients.  Whatever the service addition may be, it is important to be clear to the client on the different tiers of service. If you are delivering more than one service level to clients,  let them know what is included in each service level agreement and how fees differ for each.  We see too many advisors attempting to deliver holistic wealth management services for asset management pricing.  Those additional services may be cutting into margins more than you think.

On the subject of adding clients, we are seeing a host of creative approaches.  A number of our advisors partner with each other to leverage complementary skill sets in order to win business as a team.  Think about your peer set and your own community: is there opportunity to do the same?  Often, we work to develop high quality advisory networks in our advisors’ local communities.  Top CPAs, attorneys, commercial bankers, insurance professionals, portfolio managers, etc. are all potential members.  It’s a great way to also get cross trained on a local level with a variety of professionals presenting what's new in their respective space together.  We often support these groups by bringing in out of town experts too.  Naturally, over time, referrals flow into the groups. 

We also like to think creatively about other brands that our clients respect and how we might be able to partner with them as well.  Partnerships with auction houses, watch companies, celebrity chefs, art dealers or local charitable causes can all be ways to get people together with brands they trust and want to spend time with.  Having more than one perspective and touch point with clients is a very good thing. 

In addition, we are seeing tremendous growth coming from tucking in other advisors to the RIAs we service.  We stress the importance of being clear here on culture and what you are looking for in terms of a new partner or employee. There are many firms looking for a succession solution and also many advisors at wire houses that want the added benefits that come from independence without having to actually run their own business.  Think about inorganic growth and what it means for your firm.  There has likely never been a better time for this type of growth in the RIA space than right now.

On the margin front, we are seeing a number of things being done successfully that are worth considering.  The outsource movement is in full swing and accelerating.  Technology, reporting, turn key asset management services, compliance support, investment research, trading tools and marketing support are just a few of the services we are now seeing advisors outsource more.  We have ten firms in our network currently that have been independent for years and, in the case of two of them, for over 30 years.  The world is changing faster every day around us and what was built to be cutting edge even 5 years ago more than likely is not today.  Also, years ago there were a number of areas where there was no alternative but to build the solution internally.  Now, there may now be better, cheaper, and faster capabilities available on an outsourced basis.

We also encourage and help lead reviews of our core platform with advisor clients frequently to ensure we are as current as possible with our advisor firms’ operational chassis.  Often, when advisors go independent, one of the biggest mistakes we see is the over purchasing of services.  They may be unsure of what they need so they select a number of things in the beginning with hopes of figuring it out later.  This often creates unneeded expenses and a lack of operational efficiency when the systems don’t effectively interact. In general, we find it better to start more conservatively until you know exactly what your needs will be over a longer period of time. 

It’s also tough to grow if you don’t have the time to grow your people.  This may mean allowing them time for professional development so they can do more with clients.  It also may mean it is the time to change or upgrade talent.  This can be difficult but, at the end of the day, you are only as good as your team; your growth is tied directly to them. 

Another tool we see being used in a very helpful way is advisor peer analysis that shows industry data on average costs of goods and services, salaries, pricing etc.  Whether you conduct self audits or use a consultant these can be very helpful as a starting point.  Ask your current service providers, such as your custodians, if they have these tools. 

Lastly, as I stated on the outset, the common denominator in firms that grow the fastest is they have a plan for growth.  Most of them have a written plan.  What gets written down gets tracked, and what gets tracked, more often actually happens.  The best plans have a mission statement, clear and defined goals, along with understood steps and activities that will result in a successful achievement of goals highlighted in the plan.  They are built with complete involvement of team, and are then executed by the team in a systematic fashion.  Growing your firm takes focus, commitment, leadership, dedication and of course, work.  Continued success on your growth path!

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