Have you been in the investment advisory business for five years or more? Do you have at least $50 million in assets under management? Do you offer services and financial products that go beyond investing? Are you committed to working with wealthier clients?
If so, it’s entirely possible you could increase your revenue by 21% in 2021.
The reason those with $50 million are in such a good spot is that it’s harder to increase revenue by that much if you’ve got $200 million in assets, when the base is much bigger.
1. It means delivering added value to clients: There is often so much more advisors can do for their clients, especially wealthy clients and business owners. Clients with complex money situations and many nuances give you traction to do more for them. When you offer more solutions, especially non-investment products, you can garner more assets, and you also find yourself getting referred to other clients more often.
2. It means offering your value to other professionals: Most financial advisors are not getting many new wealthy investor referrals from other professionals like attorneys and accountants. But those who work on their relationships with influential professionals in other spheres will be able to create a pipeline of wealthier clients.
There is nothing magical about the approach. You have to help other people build their own practices. When you do, they’ll usually help you do the same. It doesn’t mean you have to bring new clients to their doors—many advisors have the wrongheaded notion of reciprocity, that clients can be traded like currency. Instead, what they should be focusing on is helping other professionals build their own careers.
In both these cases, you can supercharge your practice by understanding the needs and wants, the hopes and dreams, the concerns and anxieties of other people, whether it’s clients or the third parties working for them.
Here are the steps to supercharging your practice:
Step 1: Calculate the new business required to reach your revenue goal. First, specify your revenue goal for 2021. Let’s say you want to generate $2 million in revenue in 2021. Take your current recurring revenues. Then determine how much more you can generate with your current clientele, as well as how many new clients—doing what kind of business—would allow you to get to $2 million.
Your calculation for the year is likely going to be wrong when you look back at it in December. Precision is not the point. But you will get a “feel” for what it’s going to take, and that’s often enough to motivate you. You’re also going to realize that you probably don’t need that much more business from either current clients or new ones to reach the goal. That’s motivating too.
Step 2: Identify potential clients and other professionals who can help your cause. Time is one of your most valuable resources. So you have to focus on those clients and other professionals most likely to help you grow. Create a short list. Narrow down the field to people based on their potential—both the clients and the professionals who have wealthy clients you’re interested in.
Step 3: Conduct assessments. For every client and professional on your list, evaluate the opportunities. Use your empathy here. Think about what these clients on your list are feeling. What do they really want? What is in their self-interest? Ask open-ended questions, things that can’t be answered “yes” or “no” but that lead to other questions.
After that, you can decide if there are opportunities for you to help them, offer them valuable help and seriously increase the potential for your own practice.
Step 4: Add value. Once you’ve identified the clients you can help, you will find certain legal strategies and financial products helpful. For example, you might have business owners who are doing well and want to decrease their income taxes. You can show them sophisticated defined benefit plans that may be able to lower their income taxes by many hundreds of thousands of dollars. And if they choose to implement, you benefit as well.
Other professionals, meanwhile, are often looking for ways to generate more revenue, and there are a number of ways you can help them, not only by finding new strategies but also explaining them.
Consider trust and estates lawyers who want to grow their practices. One easy way for them to get new business is to look at the files of clients who have previously worked with them on wills. Very few trust and estates lawyers are doing anything with these previous clients, and don’t entertain the idea of looking to them for marketing opportunities. But there are some highly effective approaches you can share with these lawyers to garner new business from dormant law firm files.
Comparing The Two Tracks
You’ll usually need the help of both clients and other professionals to grow 21% or more in a year, especially if your practice concentrates on high-net-worth clients.
Exhibit 2 highlights some of the key differences between these two sources.
If you’re working with existing clients you have easy access to, you can quickly move the process forward—you’re familiar with them, so it can be easy to discern the gaps in their planning and ways you can add value. That means you’ll be able to do more for them sooner and generate revenues fairly quickly.
It takes much more time to develop the necessary insights into other professionals and find out how you can help them. You have to commit at least a year to the approach before you end up with a steady flow of new, wealthy clients from the accountants and attorneys you know.
If you already have a large percentage of your current clients’ investable assets, you’re unlikely to pick up much more. But you’ll likely be able to incrementally increase the assets you’re managing for your wealthier clients, who tend to diversify among money managers. When you’re introduced by other professionals to new, wealthier clients, you’re in a good position to be entrusted with substantial assets to manage.
Many of your current clients might benefit from non-investment financial products. Depending on what you’ve been focusing on, there can be many such opportunities for you to add value. On the other hand, when other professionals bring you in—especially to their wealthy clients—there are likely to be major opportunities for various types of financial solutions.
Generally speaking, your current clients are more likely to refer you to clients of equal or possibly less wealth. They’re also likely to have only a relative handful of good prospects. Other professionals, on the other hand, because you have assessed their needs and judged your ability to help them, will likely be able to refer you to much wealthier clients for a range of financial products.
When it comes to getting more help to clients, most financial advisors can fairly quickly refine their approach to get results. It’s somewhat harder to get more value to other professionals.
The bottom line: This is not about selling. You’re helping people pursue their own interests. And yet in many ways, you’ll be the one to benefit.
