Secrets Behind Success: Firms that strategically build capacity are elevating their growth trajectory

Aug 30, 2018 @ 12:01 am

If you build it, they will come. This familiar phrase may have been adapted from a 30-year-old sports film (Field of Dreams), but it has become the fierce rallying cry for every forward-thinking business person who has dared to invest in staff and infrastructure before there were enough customers to justify the expense. And, in today's advisory industry, where the pressure to grow the business continues to intensify, many firm leaders might be thinking: “We'd better build it, or we might just lose the game.”

The challenge for firms – is that although they understand that growth is imperative – they feel that their capacity to grow is constrained. The InvestmentNews 2018 Adviser Compensation & Staffing Study Update revealed that about 7 in 10 advisory firms believe they are approaching full capacity, and another 2 in 10 think that they are already at capacity. And with another year of high AUM growth – 17% on median in 2017 – advisors are reaching full capacity more quickly.

But, what do “near capacity” and “at capacity” really mean? Firms range widely in how they respond these questions. Most firms don't measure advisor capacity using metrics such as assets under management, or revenue, or even number of clients. There's a heavy reliance on how busy advisors appear to be, or on high-level “cocktail napkin” calculations. This indicates that our industry needs more rigor when it comes to ensuring that they have both the capacity to attract and serve clients today – and create a platform for growing the firm in the years ahead.

What are the best ways to nail down meaningful goals for expanding capacity and measuring performance? BNY Mellon's Pershing Advisor Solutions works every day with RIAs to answer these questions and help firms take action. To explore this topic further, we brought leaders from top advisory firms to discuss effective strategies and solutions they have successfully implemented, including Mark O'Keefe, Chief Financial Officer for Boston-based Bainco International Investors and Carina Diamond, Director and Managing Partner of Akron-based Springside Partners.

The Capacity Secret– our second installment in a three-part miniseries on staffing and compensation strategies, builds upon our popular “Secrets Behind Success” video program. Here are a few important takeaway messages from the video:

  1. Be bullish and take the risk– If you're going to land new clients, you have to be ready to serve them well on day one. This means building capacity – taking the risk and investing in talent and training – before trying to bring them aboard. Carina Diamond credits her firm's proactive investment in capacity with their recent attraction of several high-value clients and confident in the firm's ability to serve these clients well.
  2. Give advisors the bandwidth to grow the firm– You can't expect advisors to execute a growth plan off the sides of their desks. They need both freedom and time to focus effort on business development activities without sacrificing other client-facing work. Mark O'Keefe said that advisors at his firm will work with about half the number of families that might be expected at a typical firm, with the expectation that time is spent both on effectively managing client relationships and on contributing to the growth of the firm as a whole.
  3. Build capacity as if the firm's future depended on it (it does!)– Insufficient capacity throttles the potential for growth, which means that the sooner a firm develops and executes a strategy for meaningfully increasing capacity, the better its chances of thriving in the future. In the videos, I discuss a simple but disciplined approach, focused on productivity and scalability.
  4. Know where you're going – Many firms are eager to build capacity, and might even start soliciting to hire more staff, but fail to ask:What sort of capacity do we really need? Before getting started, it's wise to take the time to agree on the kind of client you're trying to attract (it might not necessarily be exactly the type you have today) and the capabilities you must possess to serve those clients effectively. Mark O'Keefe advises firms to understand their core business first, then begin attracting people to work with – and grow with – in the years ahead.

As noted in the video, you don't have to reinvent the wheel when it comes to developing and executing a plan to expand capacity. BNY Mellon's Pershing recently partnered with the technology firm Actifi to create a diagnostic tool that takes profitability and productivity metrics from an RIA and compares that against industry benchmarks, so that the firm can see where its opportunities are – and can effectively act to maximize capacity and returns.

If you build it (capacity), they (great clients) will come. I truly believe it – and the keys to success are to plan carefully and execute with resolve.

BNY Mellon's Pershing Advisor Solutions provides a comprehensive array of practice management resources, programs and personalized support to help advisory firms manage and grow their business. You can engage with our consultants in multiple ways—receive guidance for implementing one of our programs, attend a Pershing event or practice management forum, or take part online through our webcasts. You can learn more at

About the Author

Gabriel Garcia is a Managing Director for BNY Mellon's Pershing Advisor Solutions in the Relationship Management group. Mr. Garcia works with registered investment advisers (RIAs) interested in developing and growing their practices, helping them to manage business issues they face. He engages advisers to help them make informed decisions around maximizing Pershing's resources and evolving their firms to become more scalable, profitable and productive. Mr. Garcia spent his previous 15 years with Charles Schwab & Co., where he held several leadership positions in sales, training and consulting. His last six years were spent working directly with RIAs. Overall, Mr. Garcia has 20 years of experience in financial services and has consulted with more than 100 firms ranging in AUM from $50M to $3B. He also is a frequent speaker at industry and national conferences. Mr. Garcia earned a Bachelor of Science degree in Finance and Business Administration from Radford University. When he's not in the office, he enjoys CrossFit and spending time with his family at the Jersey Shore. You can follow Gabriel on Linkedin at


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