9 steps to adding $20.5 million in AUM

For financial advisers, growth planning can come in several different flavors and, as long as you set specific goals, all of these strategies can be successful.
Many financial advisers select a top-down growth target, e.g., $100,000 in new production or $10,000,000 in net new assets or even 15% growth year-over-year. Another way of estimating your growth for the year is a bottom-up approach that focuses on how you plan to build your business. In this approach, you calculate where your business is going to come from by category.
Start with the categories for organic business growth, for example, let’s say that there are four ways to increase a client’s value to the business and develop plans for each of these:
1. Fee-based planning
2. Portfolio improvements for low-ROA clients
3. Assets held elsewhere from current clients
4. Income and asset protection plans
There are 15 to 20 ways to increase business externally from client introductions to cold calling and cold walking. All approaches for new client acquisition work for some advisers to some degree. Let’s select what we view as the five primary methods that are most productive and develop plans for each of these primary client acquisition approaches:
1. Introductions from centers of influences
2. Introductions from clients
3. Networking (personal and corporate)
4. Seminars
5. Intimate client events
Let’s also convert all growth opportunities in production as some opportunities generate revenue and some asset growth tha converts to revenue, so revenue is a common base.
ORGANIC GROWTH OPPORTUNITIES
Fee-based planning:
Let’s say your firm allows you to charge for financial plans or you are in fact a planner. Fees for plans vary widely but let’s assume a modest fee of $1,500 for a plan and you have a goal to sell 10 plans per year. Resultant revenue = $15,000, which by the way equates to $2,000,000 in new assets at 75 basis points.
Portfolio improvements for low-return-on-assets clients
You select perhaps 40 clients whose return on assets are less that 35 basis points. Review their portfolios and as part of your next proactive contact, you suggest various portfolio improvements. Let’s assume 20 clients agree to change and you yield $1,000 per client. The resultant revenue is $20,000, which equates to $2.67 million in new assets at 75 basis points.
Assets held elsewhere from current clients
While most advisers believe they have 100% of client assets, firms believe that number is perhaps only 50%. Many high-net-worth clients maintain more than one financial adviser. Let’s assume you set a goal of increasing assets from existing clients of $6 million. At 75 basis points, this equates to $45,000 in revenue.
Income and asset protection plans
Of course there are many types of insurance and annuities you can offer to clients. For sake of simplicity for this example, let’s say we just focus on long-term care. Let’s target five policies of $100,000 each. Each policy yields $5,000 in revenues or $25,000 in total. This equates to $3,330,000 in new assets at 75 basis points.
Total revenue from organic growth equals:
• $15,000 from fee-based planning
• $20,000 from portfolio improvements for low-return on asset clients
• $45,000 from assets held elsewhere from current clients
• $25,000 from Income and asset protection plans
That is a total of $105,000 in revenue or an equivalent of about $14,000,000 in new assets under management.
NEW CLIENT OPPORTUNITIES
Introductions from centers of influence
Naturally you have built relationships with a few centers of influence, you invite them to your events, and share ideas over meals and eventually receive introductions. Let’s assume you get four introductions over the year and convert two of them into $1 million clients. This converts to $2 million at 75 basis points or $15,000 in revenues.
Introductions from clients
You have put the proper plans in place to be referable. Clients know you are in business-building mode and throughout the year, you get six introductions and convert three to $500,000 clients. This converts to $1.5 million at 75 basis points or $11,250 in revenues.
Networking (personal and corporate)
You participate in two groups and have a raft of friends and relatives to market to carefully. Let’s assume four individuals are willing to meet with you over the year and you convert two of them into $250,000 clients. This converts to $500,000 at 75 basis points or $3,750 in revenues.
Seminars
You conduct one seminar per quarter. Let’s assume four individuals are willing to meet with you over the year from each event and you convert only four into $250,000 clients. This converts to $1 million at 75 basis points or $7,500 in revenues.
Intimate client events
You conduct one family dinner a quarter for a family of clients who bring several relatives to each dinner. You convert only three $500,000 clients. This converts to $1.5 million at 75 basis points or $11,250 in revenues.
Total revenue from new client acquisition equals:
• $15,000 from introductions from centers of influence
• $11,250 from introductions from clients
• $3,750 from networking
• $7,500 from seminars
• $11,250 from intimate client events
That is a total of $48,750 in revenue or an equivalent of about $6.5 million in new assets under management.
That means, from your nine marketing programs over the course of a year you could develop $20.5 million in new assets under management or $153,750 in revenue.
Naturally you can see that the sum of small numbers of organic growth and new client acquisitions from multiple sources adds up to meaningful new business. You choose the paths you wish to follow based on your skills and interests, and yes, ambition. Using a simple methodology you can put plans in place to make your growth objectives come true.
Whether you do a top-to-bottom or a bottom-to-top approach or both, it’s critical to plan your work and work your plan. These are both great plans, which need to be followed by strategies, tactics, and actions to implement your ideas, i.e., working your plan.
Eric Sheikowitz and Michael Silver are the founders and senior managing partners at Focus Partners, a practice management coaching and consulting firm. David Leo, strategic partner and senior coach at Focus Partners, contributed to this article.

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