If you want to truly grow your wealth management firm, quit talking to your existing clients and spend the majority of your time on business development (a modern phrase for marketing, prospecting and selling).
I’m not suggesting everyone in your organization should ignore your clients, but I am proposing that you would add the greatest value to your organization by having other employees, rather than you, serve the clients that you onboarded during your career. Far too often financial advice practices stagnate because the principal of the firm no longer has the bandwidth, or the desire, to do the work necessary to find new clients.
It's completely understandable why most advisors quit growing. They may have good intentions about taking the time to market and prospect, but they are too busy with the demands of their existing clients as well as running a business. Plus, meeting with existing clients is relatively easy and often quite enjoyable.
Hunting down leads, on the other hand, is time-consuming and it can be downright painful. I realize that there are a small percentage of advisers that love the hunt, but for most of us, it’s hard work.
One of the advantages of generating revenue based off assets under management, as most advisers do, is that most years revenues grow simply as a result of the increased value of assets that are managed. So, even without adding clients many clients, it’s easy to get complacent with a slowly expanding revenue stream due to market growth. But this isn’t real growth and, without adding new revenue sources (i.e., new clients), your business will not fetch top-tier value.
Like most advisors, I started in this business with no clients and I had to learn how to find clients in order to survive. After several years, I had a few hundred clients for which I was responsible and I spent the vast majority of my time with these clients. I was a good financial advisor and my clients really enjoyed working with me.
The problem was that our firm was not growing as fast as it once did. When we were small, we were growing by 30 to 40 percent per year. But now that we had hundreds of clients to service, we went from high growth to very little growth.
I chose to make a pivot and brought in a high-quality financial adviser to take over these relationships. Were the clients excited about this change? Of course not. Most people are resistant to any sort of change. But did they stick around and come to love their new adviser? You bet they did.
By having another adviser be the primary point of contact with these clients, it freed my time up to market, prospect and assist in the onboarding of many new clients. Our firm went from the mediocre growth that we were experiencing to the high growth we once had.
Focusing the majority of your energy on business development may not be easy, and may not be the thing you love the most, but it is the key to adding value to your firm.
Scott Hanson is the co-founder of Allworth Financial, a nationally recognized, fee-based RIA managing approximately $25 billion in AUM.
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