The wealth management market is thriving, as older baby boomers are retiring and the 50-something late boomers are hitting the last big earning years of their careers — all at a time when younger investors are grappling with the difficulties of a very slow-growing economy. It all means there is ample need for financial advice.
Indeed, an
independent survey commissioned last year by Maximizer Services showed that 92% of North American financial advisers increased their AUM in 2013 and 96% projected positive growth in 2014. The study revealed that 62% of firms saw double digit AUM growth in 2013 and a similar proportion estimating the same level of growth last year.
This growing demand is providing small advisory firms a great opportunity to grow into medium-sized operations — as long as they can successfully bring in more assets while curtailing attrition. The big question that needs answering is: Does your practice really have the setup it needs to get to the next level?
The big problem for many small, independent advisory firms is that, not only do they have to win new business, but they need to have the structure in place to scale up and expand their operations when they bring on more clients and AUM. Yet most are not in a position to cope with rapid and substantial growth.
If growing your firm is a primary aim, it is imperative that you gear the business to handle more AUM, take on extra staff, attract new partners with additional expertise and deploy the technical infrastructure necessary to support this growth — all while managing to add a personal touch that makes small firms stand out from their bigger, more anonymous rivals. Being able to manage all of this takes an outstanding level of organization.
(Related read: 3 ways top-performing advisory firms stand out)
The key to developing your business into a larger-scale venture that not only keeps pace with industry growth but can exceed it is systemizing all client knowledge, tracking each interaction and automating processes. This enables you to improve efficiencies, be more proactive, better understand clients, easily integrate new staff and attract good partners to support continuing expansion into new areas of business.
When taking on a much larger client base, all your records and processes need to be comprehensively systemized. The Maximizer research revealed, shockingly, that 31% of the 900-plus North American financial advisers surveyed named “Paper Notes/ Rolodex/ Sticky Notes” as one of their three leading tools for managing customer relationships and 12% said, “I keep it all in my head.”
This is simply not good enough for a company that wants to ramp up its operations. There is far too much information to track — especially if you want to gain an edge over competitors.
(More insight: How billion-dollar advisory firms got so successful)
Embedding organization and procedures across your firm ensures that no client information is lost or overlooked. Ensuring repeated and automated processes not only improves efficiency but mitigates risk of client disappointment and, more catastrophically, compliance failure. Therefore, investing the time and money in notching up your level of organization will substantially increase your efficiency and ability to hold onto existing clients.
Implementing the right technical infrastructure is crucial to achieving the level of systemization necessary to support sustained growth. Investment in customer relationship management software, particularly a solution configured specifically for a wealth management firm, can be essential to generating and absorbing growth.
In today's marketplace, industry-specific functionality is increasingly crucial for financial advisers when it comes to CRM software, and finding an out-of-the-box wealth management solution that fits your firm's particular needs can be critical.
For small and independent firms to maintain growth that outstrips the marketplace, they must continuously leverage their major advantage over much larger, less nimble competitors, making the most of the detailed client information at their fingertips so they can take a more tailored and personalized approach.
John Easton is the director of product management at Maximizer Services.
