To be sure, it has not always gone well for firms who have tried different versions of this business model. That’s partly because good salespeople often have—to put it generously—very “different” personalities. And they can create a fair amount of culture shock within any organization.
Equally problematic, shifting to this business model can be threatening to certain individuals. It is not hard for many current stars to see that just being able to recruit and retain clients is about to become far less important than the ability to manage bigger teams and serve as a thought leader within a specialty segment.
Regardless, a small group of firms have found a way to make the model work. More importantly, anyone looking from the outside in can see that such a shift in business models in this industry is ultimately inevitable. It is just a far more efficient way of operating and has happened to nearly every other mature service industry, like accounting and law firms and the banking industry.
Despite all of this, there currently isn’t much urgency for change of any sort. Wealth managers are awash in new client opportunities and profits are rapidly climbing.
But as one owner who has successfully implemented this model and grown “organically” (i.e., not including the market) by about 20% per year for the last five years pointed out, when one is in the middle of a land grab—and each of those clients that they grab has an immense present value—why would any rational person not try to create as much capacity as possible?
Mark Hurley is the founder of Undiscovered Managers and the co-founder of Fiduciary Network.