Capital Group today launched a new benchmarking service for advisors that provides insights into firm weaknesses and guidance for improvement, the Los Angeles-headquartered investment firm announced.
Called “Your Growth Plan,” the free service fits within Capital Group’s Practice Labs initiative, which is a practice management platform designed to help registered investment advisors build their businesses. Practice Labs offers webinars, podcasts and growth strategies to the RIA community.
“We only have a healthy business when our RIA partners also have a healthy business,” said Mike Van Wyk, director of customer research and insights.
The launch of Your Growth Plan coincided with the release of the firm’s “Pathways to Growth: 2023 Advisor Benchmark Study,” which surveyed more than 1,500 advisors and found that while the average practice is growing at a steady 7% annually, the highest growth practices are growing 2.5 times more quickly.
The study found that these practices had 40% more growth from new clients than average practices, three times the number of referrals, and more than 70% of them used model portfolios to deliver returns while they invested their time in client acquisition and cementing their relationship with their current clients. These firms also offered more than the “table stakes” of investment management, financial planning and retirement planning, by including educational planning, charitable planning and family wealth transfer, the study said.
And the highest growth practices scored higher in their confidence in their pricing and value proposition to their clients, their distinctive brand identity, their client targeting and acquisition strategy, and their marketing and digital presence.
“We’ve been through some difficult markets in the last few years, and we wanted to take a good look at how the highest growth firms adapted, compared to average firms,” Van Wyk said. “It was remarkable how intentional high-growth advisors are regardless of what’s going on around them. They’re constantly taking in perspectives from outside sources and consistently remaining focused.”
For example, in 2020 and 2021, they adapted to the pandemic by quickly bringing in docu-sign technology and mastering video calls. In 2022 and 2023, they continued to have a value proposition to offer clients even as economic uncertainty took hold.
“They continued to bring in clients with the way they worked and offered their services,” Van Wyk said. “Those behaviors were intentional and adaptable. And those skills are universal to the kinds of market conditions we’ve faced.”
To benchmark a firm against this data, an advisor needs to invest 25 to 30 minutes providing quality information to the Your Growth Plan questionnaire, he said.
“In order to get robust insights, they have to give us quality information,” he said. “They get a customized report for participating, and a score so they can see how they stack up against other advisors. They also get a personalized plan on how to improve, which they can act on through Practice Lab. That is something quite unique and powerful.”
Beyond the overall score, participants can also see how they’re performing within specific areas of their business, like branding and marketing, Van Wyk said.
“Your Growth Plan and the Pathways to Growth study are integrated together this way,” he said. “The study research has been collected over four years, and that gives us the ability to see how advisor behaviors correlate to growth. Now financial advisors can see how they compare to the highest growth firms and where they need to improve.”