Advisors that have determination to succeed naturally grow their businesses.  However, even if they have passion, they often lose momentum and their growth flatlines. 

To address this common industry issue, Adam Verchinski, relationship management vice president at Pershing Advisor Solutions, has been presenting in several cities on the topic of “Chemistry of Success: Powerful New Catalysts For Organic and Inorganic Growth.”

Recently in Boston, he explained there are four pillars of success, and growth is one of them. The other pillars are operations, risk management and human capital.

A Drive To Grow

Verchinski uses football fundamentals as an analogy. Most advisors are in defense mode. That means their focus is on keeping clients happy and possibly reacting to their feedback and opinions.

“You need an offense,” he told attendees. “This is how you plan for your growth. It’s the proactive process you are going to take for your firm. Advisors need a process for organic and inorganic growth. There is a tendency for firms to hit the revenue wall. The largest firms are the ones that grow the fastest, but even with them the law of numbers takes over.”

“The advisor hits the $1 million in revenue mark and then stalls out,” he said.  He asked the attendees why they thought that happened. One person believed it is because an advisor gets so big that the management of the organization pulls him or her away from growth activities. Another attendee said, “[At $1 million revenues], some are content where they are.”

“Advisors tend to be over confident at the peak,” agreed Verchinski. “They count on rising markets to protect AUM and growth.” 

The reality is that client attrition and outflows can adversely impact revenues. “Every year you have to start with a four percent head wind in your revenue,” said Verchinski.

That means their needs to be a focus on revenue generators: referrals, new clients from marketing, share of wallet increases, investment returns and inorganic growth, such as M&A and recruiting.

The Need For A Growth Plan

Proactive planning for growth was highlighted as a major step most firms can take to improve their focus. Yet Verchinski said, “A lot of firms do not have the aptitude to plan year after year for growth.”