Driving Advisor Growth in Today’s Environment

Chances are that productivity at the best advisory firms never lagged throughout the pandemic and, due to zero commuting time, some even may have seen an improvement. Yet wealth advisors face volatile capital markets, as well as national, corporate and personal debt rising to unprecedented levels. Also, many sectors have suffered productivity slowdowns. Those sectors are those in which advisory firms have long invested – and they’re sectors in which long-time clients are employed—or were employed until recently.

However, we’ve all experienced serious headwinds before, whether they’ve been driven by events like the financial crisis, natural disasters, or other events. We’ve seen that the firms that have doubled down on their investments – in people, technology, innovation – have emerged stronger. And those that continued to pursue M&A through the storms were able to leap ahead of their competitors.

Despite the many unknowns of the continuing pandemic, it’s likely that firms that adapt and push forward will also come out ahead. Here are a few ideas for positioning your firm for growth – and keeping clients at the center of your business – as we make our way through this difficult time:

Maintain momentum in adapting to a virtual world.
The pandemic has presented our industry with a rare opportunity to accelerate adoption of digital technology across every relationship. I have been very impressed with how well Pershing team members and clients have adapted to working remotely, collaborating and providing excellent service. We know a lot more about the capabilities at our fingertips, and the learning curves necessary to fully harness those capabilities.

Now is the time to invest in both relevant technology and training. In a recent Pershing webcast, Pathstone President Matt Fleissig told how his firm took steps to ensure that the team was healthy and safe, and the firm invested significantly to give them the tools to grow. In fact, his firm doubled its tech budget for the year, and told its developers to create a second work stream to accelerate projects that had been slated for next year. Our times call for this kind of transformational leadership.

Adapting to a virtual world will unlock many advantages. Firms can adjust their real estate footprints based on the number of people working virtually and the reduction in paper storage due to digital documents. There also are opportunities to offer more flexible work arrangements, which can reduce turnover. Of course, the determining factor should be which approach serves the client needs best.
Re-think your traditional policies and procedure across the entire business.
The policies and procedure that worked in the past may not work in the future. This is the time to reimagine how you operate. Take a close look at your product suites, pricing strategies and human resources policies. Is what worked five years ago (or even five months ago) going to be optimal in a post-COVID world? Traditional policies and strategies could very well be on the road to irrelevance. Using times of business stress to revisit business strategy isn’t a luxury; it’s an imperative.

Let’s take onboarding processes for an example. We all know how critically important it is to provide new employees and clients with a positive experience. In-person interactions have always been the standard for these scenarios. But the physical distancing that this pandemic demands should not diminish your ability to deliver a warm and effective welcome to these individuals. We’ve seen firms using video technology to create truly memorable onboarding experiences, drawing on the talents of their team members , adjusting their typical processes and taking full advantage of technologies (such as eSignature) to keep things brisk and efficient.Do M&A negotiations have to stall due to physical distancing? Not at all. We’re beginning to see the first M&A deals consummated mainly by using the Zoom video platform. In similar fashion we’re seeing virtual transitions of advisory businesses – from wirehouses onto the Pershing custody platform.
Adopt a growth mindset.
This might not feel like the right time to double down on growing your firm. But taking the prudent approaches outlined above will help all stakeholders to put renewed emphasis on both people and processes, which can result in organic growth. There’s no doubt that every firm has demonstrated its resiliency by serving existing clients well, but the firms that are growing have intentional marketing strategies in place. How are firms prospecting for new clients when traditional methods have been disrupted? As a start, they often harness prospecting tools at LinkedIn or host virtual networking happy hours. They embrace multiple digital marketing channels such as email, social media, advertising, video and phone.

Before the pandemic, more than half of firms were using social media networks for marketing and business development, according to the 2019 InvestmentNews Compensation and Staffing study. Importantly, a third of firms that used online paid search advertising, or provided digital content or digital tools (e.g. online risk assessments) said that lead generation was the most direct benefit of those activities.

Most advisory firms devote little to marketing. The study found that average firm spent 2% of revenues on marketing and business development – compared with 11.2% across other industries. The study noted that a segment of firms (Mindful Marketers), which on average spent 3.12% of revenues on marketing and business development, saw 4.3% of AUM growth coming from new clients, versus 2.7% for all firms, and had a slightly higher growth rate in new clients (14% vs. 11.9%) as well.

It’s important to note that marketing alone isn’t enough: firms need a systematic process to convert leads into business. This is an all-hands effort, drawing on the full power of technology.

Firms should also be positioning for inorganic growth, regardless of which side of the M&A table they might be on. I recently took part in a Pershing Ready, Set, Zoom In podcast with Liz Nesvold, a Managing Director with Raymond James. Liz noted that firms are confident that M&A will recover from the year’s early slump, and said there will never a better time to pivot to a more technology-enhanced business model, to gain leverage – or be more saleable – in an M&A scenario.

It’s important to emphasize that the strategies firms are employing to respond to the pandemic are likely to become a permanent part of the way they work. In recent months, advisors and staff have been innovating, collaborating, embracing technology and adding value for clients and other stakeholders in entirely new ways. A crisis might have sparked these changes, but we have a historic opportunity to make our sense of creativity and resilience a permanent part of how we run our businesses over the long term.

Business Management