What does it take to grow organically in the wealth arena?

Study conducted by Janus Henderson Investors and the Financial Planning Association suggests six keys to practice success.

While no one formula rules them all when it comes to achieving organic growth in the wealth game, new research from Janus Henderson Investors sheds light on the essential practices that may distinguish successful advisory firms from their peers.

Drawing from a recent joint study with the Financial Planning Association, Ben Rizzuto, wealth strategist at Janus Henderson, and Bryan Powell, its senior director of practice management, highlighted six common threads they found among advisory practices that have achieved consistent organic growth.

“As we approach NCAA college basketball’s March Madness tournament, a common refrain is ‘survive and advance,’” the two wrote in a recent note. “This idea may work for one year’s title run, but it may not be sustainable for the long term, and it certainly doesn’t work if you are trying to run a successful advisory business.”

Referring to the 2024 Wealth Planning Trends report, which focused on practices that have added 10 or more new clients in the past year, Rizzuto and Powell said a well-structured business plan is essential. While many advisors have a comprehensive plan in place, it often lacks a strategic approach to growth, focusing mainly on assets under management, new clients, and new revenue.

“These metrics only partially answer the question of how to continually grow because they focus on lagging indicators,” they said, emphasizing how leading metrics such as client satisfaction and prospect meetings have spelled greater growth for successful practices.

The study also revealed a gaping gap between knowledge and action. Although two-thirds (64 percent) of advisors recognized the need for a clear growth plan, only 30 percent had one in place. Among common barriers to implementing these plans, Rizzuto and Powell cited external distractions and a reluctance to appear overly aggressive in sales tactics.

“In the end, success and growth come down to taking the time to implement a growth plan, but also focusing on what you’re good at and the services that will truly drive growth,” they said.

The research also confirmed the value of advisory teams, as firms that operated with multiple advisor partners grew faster than lone-wolf practitioners. The joint research suggests growing from a solo practice to a modest two- to three-person team leads to a near-doubling of the odds a practice can bring on 10 or more clients in a year. Practices where team members understand their role and how it contributes to the business’s growth goals are also significantly more likely to grow that fast, according to the report.

Moreover, the study underscored the necessity of robust systems and processes, with an overwhelming nine-tenths (89 percent) of advisors agreeing that the right processes and systems are vital to growth. However, just three-fifths (59 percent) said they’ve put those pieces in place, with a number of advisors saying they have an informal process.

While many practices have focused on their ideal client, Rizzuto and Powell said the most successful growers also actively engage their target clientele with marketing materials, strategically wording their value proposition, and outreach and education, among other efforts.

Lastly, they cited the value of having the right mindset. The research found many respondents saw themselves as having some combination of being resilient, optimistic, gritty, or curious.

“What is interesting is that the advisors that achieved the greatest growth described themselves as optimistic and/or resilient,” they said. “This finding speaks to an opportunity to review how you communicate to prospective clients through your marketing materials, website, or other modes.”