Current Organic Growth Trends Focus On Training To Close On Leads And Providing Services Faster
Wealth management M&A rightly deserves a spotlight as a major trend shaping our industry, but the spotlight often obscures the slower yet more fundamental process of organic growth. After all, M&A only produces inorganic growth because the acquired firms developed through years of successful organic growth.
Organic growth strategies are more art than science, and advisors can never learn enough about them. As the wealth management landscape changes in the wake of the pandemic and market volatility, advisors must adjust and learn new strategies to onboard clients and grow their business.
To learn how organic growth strategies have evolved, we spoke with Angie Herbers, Managing Partner of Herbers & Company, a management, strategy and innovation consultancy for independent advisory firms that she founded in 2003.
We asked Herbers about the latest trends and current landscape for organic growth and advice on the best low-hanging fruit for firms with limited resources.
WSR: What trends are you seeing with firms regarding organic growth this year? What is driving those trends? Is there something unique about conditions in 2022 that focuses firms on organic growth?
Herbers: In the past 20 years that Herbers & Company tracked financial advisory firms’ organic growth trends we observed patterns in lead ratios (the number of prospects exploring services). In past bear markets, advisory firms trended higher in lead rates. However, currently, we are seeing flat lead rates.
In other words, the bear market isn’t benefiting advisory firms with an increased number of dissatisfied clients looking for advisors or wanting to change advisors. This trend has led many firms to double down on advisor training, specifically training on their advisors’ ability to close the leads they are producing. For many firms that traditionally focused on marketing and producing more leads during down markets, focusing primarily on advisor training is a big shift!
WSR: What steps do you see firms taking to produce organic growth? What steps are firms taking to grow through talent retention, efficiencies and new services?
Herbers: The most important organic growth key performance indicator is the client referral rate. How many referrals are clients sending? Not unlike the past, advisory firms are focusing on expanding and increasing services to existing clients to increase client referrals. What is different today than the past is that “service” doesn’t necessarily mean more “services.”
In prior bear markets, firms would add additional services, such as more meetings, deeper financial planning, tax, estate and retirement administration. Today, firms are primarily focused on how they can provide existing services faster. In other words, firms may not be adding “services” but the service to the client and how fast a firm responds to the client request or need is paramount.
To facilitate quicker response times, firms are adding new technology and redesigning their cultures and training programs to allow space for advisors to immediately respond to clients.
WSR: For firms with budget and resource restrictions, what are some ways to harvest low-hanging fruit for organic growth that they may have missed?
Herbers: The quickest way to harvest low-hanging fruit is ensuring the firm has 100% of the assets of all clients. For years, Herbers & Company has worked with financial advisors who say: “We have all the assets of our clients.” It has never failed to be untrue when advisors actually ask the clients.
Advisory firms need to ask clients repeatedly if they have other accounts. This “ask” is increasingly important in today’s world, where investment accounts can be opened quickly via a mobile device. During the pandemic, an unprecedented number of people opened investment accounts, crypto accounts and savings accounts in their spare time. Ask.
Michael Madden, Contributing Editor & Research Analyst, can be reached at email@example.com