What RIAs should try to achieve in their first year

A little more than a month left remains in 2024 and many are likely reflecting on what they achieved this year and what comes next.

For new RIAs, setting goals are top of mind as they think what they want to achieve in their first year.

Seth Thompson reflected on the launch of his RIA three years ago, when he took a unique approach by prioritizing operations over client acquisition in the first year.

"I was trying to solve for a need from the industry side first, instead of the client," the founder and CEO of Forward Financial Planning said.

"I was doing it so that I could quickly scale and not have to worry about what my cohort was stressing about."

Rather than aggressively pursuing new clients, Thompson focused on building efficient, automated systems and processes.

"I used my first two clients as a test," he said. "I discovered my value prop in tax planning and tax preparation and got all my certifications. I really love taxes."

This allowed him to ensure the business was self-sustaining before ramping up client acquisition.

"The short-term goals of setting up a business where it wasn't draining the budget and wasn't keeping me up at night, that was achieved. I'm very proud of that."

Despite not succeeding in his initial goals, three years later, he's finally ready to "hit the gas pedal" on growth.

“Be as specific as you can for your first five clients and say 'no,'” he advised new RIAs. “If it doesn't feel right, don't just be that person who accepts a client because you want to earn money."

Jon Ekoniak, partner at Bordeaux Wealth Advisors said new RIAs should be focused on what their value proposition is, as the tendency is to try to get business wherever they can.

“They will take any new client regardless of whether they are a good fit, just so they can pay the bills and keep the lights on,” he said. “However, with over 15,000 RIAs in the United States, one needs to stand out from the crowd.”

One way to do this, he said, is like Thompson’s discovery: find the right niche.

“Their first goal should be to identify the types of clients they want to attract,” he said. “The narrower the target, the more likely they are to find them.”

This niche could be to focus on a certain profession such as doctors or airline pilots or a focus on a particular company and knowing that company, their benefits, and retirement plans better than anyone else.

He also suggested creating a written value proposition as well as an ideal client persona.

“This will allow them to measure up marketing plans, their website and new clients, to their originally stated goals,” he said.

All advisors want to know if their clients' financial houses are in order and where the gaps are, said Peggy McGillin, principal and wealth advisor at Sax Wealth Advisors.

“They need knowledge, processes, checklists, and automated reminders or workflow controls. Meeting with any many people as possible and helping them clarify their goals will lead to new business,” she said in an email.

For example, McGillin said she strove for one new great client every month.

“The key is taking great care of the clients you have, and at the same time put the time in to engage with others in your professional and personal life,” she said.

“Being curious, professional, and helpful is how you can build your network. Focus on your process and activities.”

Andrew Evans, CEO and founder of Rossby Financial, points to having a “visionary” and an “integrator,” referring to a book called "Rocket Fuel."

“Anybody who's starting their own RIA, even if they're a one-person shop, they're the visionary,” he said. “They need to find that partner or partner firm that can be their integrator. Figure out who that person is who can take the vision, sees it, but then can put the pieces together for you.”

“That will save you so much pain and time,” he said.