The advisory sector is a different world than just a few years ago. And the fact is, that if you are not growing your AUM organically, you may be slowly dying.
Flashing back 20-plus years or so ago, when many of us were just starting out, if you looked at the typical practice or firm, you would have seen an advisor in the early part of their career energetically growing a client base, eventually seeing that growth slow to a trickle, and then watching as it quickly plateaued entirely.
That’s because when an advisor first began, virtually all their time was spent in search of new clients. But as the client base grew, more of the advisor’s time was spent servicing existing clients, which left little time for finding new ones.
Lots of advisors that I know reached a certain income level and were fine with it. And let us be honest, not every advisor enjoys marketing. But those advisors who wanted to continue to grow had to find a way to structure their firm and their time so they could find new clients.
I started in the business like most of you: no clients, a desk, a desktop and a phone. I spent time cold-calling, following up on warm leads and trying to convince just about anyone to hire me as their advisor. Once I procured a decent number of clients, I began to see that my flow of new clients began to slow. Granted, my referrals rose and that helped, but there was attrition, and the number of new clients that I had once generated from my marketing efforts had slowed dramatically.
Marketing is proactive, while servicing clients tends to be reactive. Simply, it is always easier to respond to a friendly client’s call, or even put out a fire, than it is to make a cold call.
Understanding this, I did something that was a little scary, but which paid off handsomely over time: I set aside the hours from 10 a.m. to 1 p.m. on Monday and Tuesday, plus all day Wednesday, entirely for business development. If someone reached out during those time slots and needed something, unless it was an emergency, I simply was not available.
By doing this, and with all the experience I had by then as an advisor, my business began growing even faster than it had when I was hungry and just starting out.
The growth was so good, in fact, that as the demand for servicing existing clients became unmanageable, rather than slow my marketing efforts, I instead hired more people, and the growth subsequently accelerated even more.
You may cringe at the idea of setting aside time for business development, but when you consider the volatility of the markets, how the larger firms are offering more services than you can, and even how this new era of clients is more prone to business relationship transience than previous generations, I encourage you to get back to your roots and market. The advisory world has changed and so should you.
Scott Hanson is co-founder of Allworth Financial, formerly Hanson McClain Advisors, a fee-based RIA with $15 billion in AUM.
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