Even if there is a recession, it might still be a great time to grow a wealth management business, industry consultants say.

Yet almost paradoxically, many advisors have seen negative growth over the past year, in revenue terms, due to a bear market in equities and the poor performance of bonds, and the industry’s reliance on an assets-under-management fee model.

Growth doesn’t have to mean an immediate jump in revenue, said Shauna Mace, head of practice management at SEI, an Oaks, Pa.-based TAMP and advisor services provider.

“Growth means different things to different people. It can be traditional growth in the sense of AUM and revenue, but what we really mean no matter what metric we’re using is progressing the business,” she said. “It’s always a good time to grow organically. If we look back to 2008 and 2009, firms that put in the effort reaped the rewards. The people who were communicating with clients, the firms that put them out there to clients or externally to the market and provided value, they grew.”

Is It Easier To Grow Now?
A lot of money is in motion, said Mace, not the least of which is tens of trillions of dollars of intergenerational wealth moving to Generation X and millennials over the next few decades. Money in motion is an instant opportunity for growth.

But there’s also the benefit of adding clients and assets in a down market and guiding them during a recovery phase, said Derek Bruton, senior managing director at Gladstone Group, a Plymouth Meeting, Pa.-based mergers and acquisitions advisor.

“Our experience has shown that good advisors, smart advisors, tend to grow their businesses very well during a bear market,” said Bruton. “They add new clients and assets, and  then, when the market turns around and we see a bull run, which has followed every bear market in history, it’s a whipsaw effect that produces a lot more AUM because of that organic growth that the firm succeeded in achieving because of the bear market.”

Recessions are an opportunity for client acquisition, said Bruton. In a bull market, everything seems to work well and people are more confident in their abilities as self-directed investors, but during drawdowns, they’re more likely to seek help and holistic financial advice.

Gladstone’s research has shown that during market downturns, investors with an advisor tend to be happier than those who do not have an advisor, said Bruton.

M&A Environment
“It’s still a good environment for acquisitions and consolidation,” said Bruton. “Really for two reasons. One is the demographics in our industry. There’s advisors that are at the later stages in their careers who don’t have succession plans in place. They need to find an option to sell internally or sell to an external firm. The demographics are in favor of high consolidation.”

Advisors are also looking to provide more services to their clients like tax planning, estate planning and insurance, said Bruton, leading them to a crossroads decision—radically grow their practice to add new capabilities and resources or partner with a larger firm already capable of offering holistic financial services?

Both Bruton and Mace are leading initiatives to help growth-minded advisors achieve their goals in a challenging market environment.

Growth Lab
In Mace’s case, SEI has built an online growth lab that offers a suite of practice management toolkits focused on the products that arise when advisors are working on developing their business.

“The growth lab specifically is our take, from SEI, on scalable and actionable practice management, recognizing that traditional practice management often comes in the form of white papers and presentations and one-on-one consulting,” said Mace. “We still think there’s value in all of those things, but we also recognize that we can’t reach and serve 7,500 advisors and beyond by just doing that. This is a way, as an advisor, to ask how to scale your impact. We asked ourselves that same question—how can we serve more advisors and their teams better—and that’s where we came up with the growth lab.”

The growth lab is freely accessible to any advisor with no gating and includes toolkits on technology, lead generation and conversion.

Bear Market Bootcamps
Bruton and Gladstone are partnering with fintech Skience and mega-RIA Lido Advisors to host in-person "Bear Market Bootcamps" this fall oriented around advisor growth, with dates to be determined soon.

The bootcamps will focus on both organic and inorganic  growth, said Bruton, and largely take shape around group case studies of firms that are highly effective at growing, examining how they grow, what technology they use, how they access different service capabilities, how they market and how they close prospects.

Skience, a tech expert in change management for advisors, will offer technology guidance in the bootcamp, while Lido, a serial acquirer with a high rate of organic growth, will also consult with attendees, said Bruton.

“These are in-person presentations delivered over a two-hour period over lunch, very interactive discussions and small-group interactions,” said Bruton. “It’s less about talking to people and more of a discussion.”

Be Prepared
Even if an advisor isn’t ready to progress along their growth journey, they should be thinking about and preparing for the next steps for their business, said Mace.

“I would want advisors to know that as business owners they should be thinking about working on their business, not just in their business,” she said.