3. Have tough conversations, said Penney. That means tough conversations with clients on what you charge them and why, and honest talk with employees who are in the wrong roles. When Dynasty does pricing exercises with its clients, Penney said, the firm often finds that RIAs are giving discounts to their top clients. That’s bad for margins when, meanwhile, the cost of servicing accounts is going up. And when it comes to employees, the biggest challenge Dynasty sees with margins is over-hiring, Penney says.

4. An advisor should work on the business, not just in the business. That means advisors must work on their own professional development and get mentoring outside their industry. “Are we thinking about succession and using it as a way to get fresh ideas into the business?” That means firms should not only be getting better but getting better at getting better, Penney said.

5. Firms should be getting their business ready for both organic and inorganic growth. “Two-thirds of the firms that we serve say they want to grow inorganically,” Penney said. “The reality is most of us oftentimes are not ready for that growth. …  If all of a sudden your organic growth picked up to 20 percent to 25 percent, could you deal with it? … Do you have the onboarding capability set? Do you have the right servicing infrastructure? The right incentives in place? On the inorganic growth, do I have the right operating documents in place? Have I thought through the equity component? Do I have compensation plans in place for these advisors? Do I have the right cultural assessment and criteria?” A lot of firms talk about how they want to drive inorganic growth but don’t have a plan, he said.

6. Firms have to “establish their brand DNA,” creating a consistent client experience and using digital marketing. “When you think about the economic model, what’s your brand architecture? Where is your brand now and where do you want it to be in five years? Then dissect it into years. What should happen in year one, two, three, four and five? If you want to be the premier wealth management brand in Maine, what are the steps you need to do to get there?” He says that a firm can bubble up to the front page of Google after starting a firm in a new city by writing a very simple search optimization code. “If you’re not thinking about those types of things for your business, you should, because your best competitors are.”