Making money is why businesses exist, but as they grow they can hit revenue levels that represent forks in the road where the wrong decision can alter the company’s growth trajectory. 

Kaleido, a self-described practice growth agency focused on independent financial advisors, says it has identified specific growth barriers for advisor firms. To address this, the San Diego-based company last month launched its Practice Management University (PMU) program aimed at helping advisors make the right choices to push through those barriers and lay the foundation for future growth. 

The company was formed in July 2014 when Angie Herbers merged her namesake consulting firm for advisors with Wealth Management Marketing, a sales and marketing consulting outfit for advisors led by Kristen Luke. Kaleido derives from “kaleidoscope,” and is meant to play off the notion that just as a kaleidoscope can create brilliant images with a slight movement of the device, so too can advisors create brilliant businesses by making slight shifts in their practices. 

“We see in the research we’ve done with our Kaleido Scope business assessment tool, as well as from working in the industry during the past 15 years, that there are very specific growth barriers an advisor firm goes through, and we can pinpoint those by number,” Herbers says. 

Those barriers are $350,000 in revenue, $750,000, $1.2 million, $3.3 million, $8.5 million and $15 million. “Beyond $15 million, we don’t know [what the barriers are],” she says.

A growth barrier, Herbers explains, is when an organization’s expenses start rising faster than revenue. At those barriers, the firm’s managers will start making investments in the business or the firm to help grow to the next level. But the wrong decisions can be detrimental. 

“At $350,000 in revenue, we know that’s the time where advisory firms start to add staff,” she says. “That investment in staff propels their expenses, and revenues aren’t rising as fast as those expenses, which decreases the profit margin and becomes a growth barrier. So you have to grow your way out of those expenses. 

“To grow out of the $350,000 growth barrier means you shouldn’t hire administrative staff, which is what most advisory firms will do,” she continues. “Instead, you should hire professional staff and implement a really good marketing plan. The rules change at $750,000, so to grow past that barrier you’ll probably need to add technology and/or continuity planning or partnership programs to maintain the staff you hired at the $350,000 level. You basically have to rewrite the rules at each growth point. What’s required to grow at the previous revenue point can often hurt you at the next revenue point.”

With the PMU program, each advisory firm fills out the online Kaleido Scope business assessment tool. Then Kaleido creates a syllabus of classes and tools for firms to overcome whatever barrier they’re in, or will teach them one or several essential elements of building that practice wherever they are in the revenue cycle. 

Kaleido creates a game plan that outlines the vision for each firm. Advisors work with a trainer twice a month during 45-minute phone calls to help overcome whatever issue they have, and ideally follow the syllabus to help realize their firms’ ultimate vision.