Learning how to say "no" to bad prospects and
structuring your firm around a focused strategy are among the traits of
some of today's most successful advisory firms, according to a new
The study by Schwab Institutional, a division of Charles Schwab, looked at the characteristics of what it described as the 28 Best Managed Firms. The firms were judged by a number of factors, including profitability, productivity and the revenue generated per client.
The annual revenue per professional at the best managed firms is about $467,311, compared to an average of $200,360 for fee-based firms, according to the study.
The study cited four key traits shared by the firms:
They pursue ideal opportunities only. "The most successful advisors have instituted disciplined methods for identifying and pursuing select types of new business that fit extremely well with their overall strategy," write the study's authors.
They structure their firms around a cohesive strategy.
They institutionalize their business processes, deriving consistent performance from "systems and processes that work reliably and predictably every time."
They delegate to maximize effectiveness.
Successful firms, according to the study, know how to say "no" to bad prospects, as well as existing clients. It cited as an example an advisor who fired two of his biggest clients seven years ago and quickly bounced back with the "realization that survival didn't depend on any one client."