Wealth management advisors aren’t really growing. But there is a way forward.RIP, organic growth.

Most of today’s wealth management offerings are built for a business that no longer exists and for clients that are moving on (not moving in). Why is that so?

Let’s look at wealth management following that train of thought (and anticipating the ultimate derailment):

1. For one thing, the products are free. Investment beta and trading commissions are now free at leading direct providers. So if you aren’t free, what is the value you’re offering for what you charge? If you say, “It’s for advice,” then what’s your advice about?

2. That’s important to ask, because a lot of clients say they don’t want advice, or at least they don’t want to pay for it. During a consumer panel at a recent national industry event, I heard three consumers on the panel say they don’t have an advisor. They said things like “You can do everything at Fidelity,” or “Advisors always sound like they are selling me something.” Forty-six percent of retirement plan participants in a survey said they don’t have financial advisors and aren’t looking for one.

3. Now let’s look at the clients we do have. Most of them are unengaged, and that’s because they have multiple financial services providers, and distant relationships with them at that. Look at the national stats. If you blend all the coverage models, from the small RIAs to the private banks up to the largest direct providers, you get an average ratio of 150 households per advisor. Most “clients” (outside small, intimate firms) are really just fractional clients. You’ll see them as whole clients only until they leave you—when they’ve started consolidating accounts.

4. “Retirement” will eventually replace “accumulation” as the reason people are turning to you for advice, and that will determine whether your advice is profitable. Twelve thousand Americans are retiring every day. They have very different needs and require much more attention and complex solutions than they did when they were just saving. This cohort will provide more than 75% of advice industry profits through 2030.

So if we have all these things throwing us off, how do we get this growth train back on the tracks? And what is your definition of “growth”?

If your objective is to sell your organization, you can achieve impressive growth by acquisition, ride rising markets and buy more scale on the dips. Yours is a market share play with a revenue bogey and it’s more of a trade than a business. And when it works, it works—if you can sell at the right time.

But for the rest of the industry, especially those companies responsible to shareholders (as well as clients and employees), the solution is organic growth. And organic growth is measured by net new assets and client share of wallet. It’s also not measured by how well the top 10% are doing, but what the median advisor is doing and what his or her median relationship is. If you are consistent, that will make you a winner in enterprise value.

An executive at Next Chapter, our leadership community, says it very well: “Net new assets indicate the health of the business, and household share of wallet indicates the value the clients place on their relationship with their advisor and the firm.”

Accept The Consumer And Act Your Scale
Wealth management firms seeking a recipe for success will achieve organic growth by providing the clients with what they want now and what they want in the near future. If you are one of the advisors following the 75% of assets under management riding off into retirement, here’s what you need to know about clients and what they want:

• They have declared that “planning” and “relationships” are their evaluation standards.

• They are afraid of inflation, they’re worried about being able to fund healthcare, and they don’t want to exhaust their assets.

• They need a certain amount of liquidity to achieve not just their large expenses in retirement but their peace of mind.

There is no way to solve for these issues if you’ve got 150 clients per advisor—and if you plan on using only human beings in those advisory roles. You would need to employ a lot of humans.

The path forward is to first design for your scale—and be clear-eyed about what you are and what you are not. And then you must make sure you declare your value proposition to your associates and clients. The days of being a “financial advisor” are over. It is time to be crystal clear about what you do since most clients seem not to know what we do or why they need us.

Every advisor and practice is different, so there is less value in providing “the answer” than in asking the right questions to help determine your appropriate scale:

• What do you really do? Maybe you can manage a book of 150 clients with investments, but, again, you can’t do it with retirement planning. Our research of top planning advisors reveals a coverage ratio closer to 25 households to every one professional. And virtually all successful retirement planning practices are teams with multiple professionals with different specialties.

• Who are our clients? The more variety in your clientele, the less efficient you are. And what percentage of a client’s assets under administration do you need for what you do well? Scale favors bits of clients and single decision-makers per household. Planning benefits from having the entire family involved.

• What are we solving for? Our assets under administration may have driven profits, but the aging clients now want you to shift from investing to protecting these assets. Have you? Liquidity, credit, liability management, long-term care, premature death protection, longevity protection—these are the new benchmarks, not the S&P.

The Inertia Of Success Is The Enemy Of Growth
Now is a good time to remember the old saw: “The primary obstacle to future success is your current success.” The U.S. stock market has rocketed to 37 times its value during the reign of the baby boomer, starting in 1982. The unprecedented lift from markets will not carry the industry forward from here. It’s time to reinvest some of those gains into a market offering incredible opportunities—and we’re overdue for change to meet the new demands of our current clients, who are now expecting more.

The opportunity is even bigger for first movers, because the inertia of success will trap many current industry leaders. We’ve seen this movie before—in the movie business, as it happens: when consumers left theaters, first for Blockbuster, then for Netflix. Wealth management might be a similar victim, but only if we try to hold on to a business fundamentally changed by the consumer and if we invite the innovations and competition that will defeat us.

Of course wealth management is not dead. But it is being dramatically transformed by the consumers who need it to be different from the way it works today. And not every provider is assured a spot in that new, multifaceted consumer world.

It's a choice.

Steve Gresham is the managing principal of Next Chapter, a leadership community dedicated to achieving better retirement outcomes for everyone. He also serves as senior education advisor to the Alliance for Lifetime Income. He was previously the head of Fidelity’s Private Client Group. Steve is the author of The New Advisor for Life (Wiley).