Growth. We talk about it in leadership meetings, at conferences, in our teams and in the context of our future goals. We talk about growth so much that, sometimes, the concept becomes vague and distorted.
How much growth is enough? It’s a question that doesn’t require a basic answer. In fact, we would argue that growth shouldn’t solely be evaluated by the standard industry measurement that we’re all used to: assets under management (AUM).
Rather, we believe the question that really matters is: What does growth mean to you?
The majority of advisory firms start the same way, with a single founder who has an entrepreneurial spirit and a passion for building client relationships.
And this is how it usually works: Through organic growth and a lot of hand-shaking (with just about anyone who shows interest in their mission and expertise), the founder’s client base grows—until it doesn’t. The founder is single-handedly juggling multiple types of clients that require personalized client experiences and investment strategies. The practice has suddenly become unsustainable; the client base plateaus.
At this point, the founder has reached a fork in the road, standing in front of two paths forward:
1. The founder continues to be overwhelmed, and the client experience suffers. She loses any semblance of work-life balance and lives in everyday chaos.
2. The founder either scales down to a lifestyle practice or scales up to a full-fledged advisory business versus a solo practice.
The path that we are primarily concerned with is the latter: the advisory business. It’s the path that requires a completely different mindset—and it’s the one with the most promising growth potential.
Scaling up requires the founder to transform from a service professional to a business management professional. Everything that exists beyond the AUM number becomes increasingly more important—the go-to-market strategy, the right talent, the most efficient tools and technology. What worked for the founder in the past will not work in the future—not if she wants to grow at a healthy rate (around 15 percent).