Independent financial advisors are facing a pivotal moment as they seek to balance growth ambitions with the realities of a shifting market, according to a new study from Wells Fargo Advisors Financial Network and Deloitte.
The research, titled “Harvesting Success: Cultivating Growth for Independent Financial Advisors,” outlines both the opportunities and challenges for RIAs aiming to expand their businesses in the US.
The study by Wells Fargo FiNet and Deloitte finds that while 70% of advisors see organic growth as essential, many struggle to achieve it. Generating leads and referrals remains the primary obstacle for roughly four-fifths (78%) of those surveyed.
The research suggests that reducing administrative burdens – by centralizing functions like client service, supervision, marketing, and portfolio management – can help unlock growth. Firms that have centralized portfolio management reported a 16% increase in advisor productivity, according to the research.
Inorganic growth is also high on the agenda, with two-thirds (67%) of advisors planning acquisitions in the next two years. That includes 83% of large firms, 58% of medium-sized firms, and 61% of small firms included in the resarch.
The report emphasizes that a dual focus on organic and inorganic strategies is critical for practices looking to broaden their client base and market presence. However, only three-fifths (58%) of practices currently have a strategic plan in place, and just under two-thirds of those (63%) update their plan annually.
“Growth is a key priority for most, if not all, independent practices,” said Jeff Levi, principal at Deloitte Consulting. He added that while many firms are searching for a “silver bullet,” sustainable growth requires a strong business model and an environment that allows advisors to focus on expanding and deepening client relationships .
The study also highlights the importance of long-term strategic planning, including succession planning and clear growth priorities. Defining these ambitions not only helps ensure continuity but can also make a firm more attractive to potential buyers and partners.
John Tyers, president of Wells Fargo Advisors Financial Network, noted that organic growth is a “health indicator of a successful wealth management business, and it only happens with intention.”
According to Tyers, sound organic growth it begins with a vision for the client experience, followed by an execution plan that can be scaled.
“Once in place, a firm then has the necessary foundation to be acquisitive,” Tyers said .
To drive foundational organic growth, the report encourages advisors to bring on support staff to enhance advisor productivity, and lessen the emphasis on advisor-driven investment management. Marketing capabilities to boost the entire practice's profile should also be explored, according to the authors.
"Many practice owners are initially reluctant to hire support staff because these roles do not directly contribute to revenue generation and represent a fixed cost in a capital-light business," the report noted. "Additionally, because these owners built their businesses themselves, often wearing many hats along the way, there can be cultural inertia to delegating tasks."
When it comes to inorganic growth, the report says firms should develop the affiliation models they aim to employ, and match those with offers of competitive benefits to lure advisors. The practice should also have sufficient financial transparency to support the necessary investments for inorganic expansion, while establishing the role of the practice owner, according to the report.
"Practice owners should carefully determine the level of influence and support they intend to exert over their acquirees, recognizing that this is not a binary choice between two extremes but rather a spectrum of possibilities," the report noted. "The level of influence from the center can vary significantly, and practice owners should make a deliberate decision about how much influence they want to imbue on their acquirees."
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