How can advisory firms grow their business in an era of new technologies, new competitive threats and older client bases? The answers, of course, are varied, but two firms shared their insights during a panel discussion at the Financial Services Institute’s OneVoice conference Tuesday in Orlando.

Joseph Himelick, president of Himelick Financial Group in Austin, Texas, explained that his firm has grown by focusing on basic, non-sexy client needs that ingratiate it with their clients.

“When I think of profitability, I think in terms of the household,” he explained. “What has evolved is that the average household we do business with has more than five product relationships with us. That took constant, methodical efforts.”

Himelick said his firm has added value to clients in such areas as annuity-related products for retirement income, handling long-term care planning issues and emphasizing the importance of tax diversification with investments.

“These rudimentary things—the monotonous execution of the obvious—aren’t really edgy or sometimes not even pleasant to talk about but they’re necessary to be aware of to successfully diagnose a client’s situation,” Himelick said. “I actually believe that advisors literally walk away from more business than we walk into because the time we spend in generating new client relationships, if we could spend that same amount of time on existing clients, we would deepen the relationship not only by extending relationships, but by deepening the number of product and risk coverage elements we could do with existing clients.

“Basic fundamental planning and needs assessment generally hasn’t changed, and probably won’t much in the future,” he continued. “The issue is whether one has the discipline to implement that in their practice and the patience to do so with their clients.”

Matthew Reeves, senior vice president of advisory products and services at Waddell & Reed, offered a different take on successes with his company's financial advisors.

Founded in 1937 and based in Overland Park, Kansas, Waddell & Reed is one of the nation’s oldest mutual fund providers. Its product lineup includes the Waddell & Reed Advisors Funds and Ivy Funds, which combined have more than $100 billion in assets under management.

The company also has an advisor channel with roughly 1,900 financial advisors.

From the 1960s through 1998, financial planning conducted through Waddell & Reed’s advisors was done mostly as a value-added service, Reeves explained. In 1998, the firm transitioned from the value-added model to fee-based, comprehensive financial planning, which today encompasses a fair amount of the planning work done by Waddell & Reed advisors.

In 2007, the firm started bundling comprehensive financial planning services with some of its investment advisory programs.

“Instead of planning being a single event where clients are taken through the process and charged a fee, it began incorporating comprehensive planning into the investment advisory relationship,” Reeves explained. 

“Advisors have adopted this in different ways,” he added. “But the idea is that planning is part of the ongoing client conversation. It’s a change of conversation, so instead of focusing on investment returns relative to an index or benchmark, it’s a conversation relative to clients’ goals and objectives.”

As a result of this shift, Reeves said, the company has seen the number of financial planning engagements with clients more than double since 2010: from a little less than 15,000 engagements that year to more than 30,000 in 2015.

During that time, there has been a high degree of correlation between planning activity and advisor productivity. Collectively, Waddell & Reed advisors slightly trailed the industry in 2010 in terms of average productivity, Reeves said, but by last year the projected average revenue per advisor was $266,000.

“I don’t have the industry average, but I expect we will be at or exceeding the industry average,” he said. “That’s attributable to a couple of things. One is the transition to a fee-based approach to working with clients. Most importantly, it’s the adoption of this different business model of working with clients in a comprehensive capacity.”

Another benefit from the increased emphasis on planning is better client relationships. “One of the ways we measure that is by looking at the redemption rates of our investments across our three distribution channels [wholesale, institutional and advisory],” Reeves explained. “When you look at the redemption rate of our investments—the Waddell & Reed Advisors Funds and the Ivy Funds—sold by our advisors relative to those same funds sold by other advisors across the country, there’s a redemption rate of about a third of what we see in the wholesale distribution market. Those assets to us as a firm are three times more valuable because we retain them three times longer.”

The upshot, Reeves said, is that Waddell & Reed advisors who engage in comprehensive planning consistently have greater AUM and revenue with those clients.”

“What’s working at Waddell & Reed is financial planning,” he said.

Reeves noted the firm takes two approaches to its fee structure. One is a separate planning fee plus the advisory fee that handles investment management and ongoing monitoring of a portfolio. For advisors taking a bundled approach, one fee covers all.