Karen Novak, of Pershing Advisor Solutions, outlines a few key reasons why advisory firms consider opening an office in a new market—along with some of the qualities and characteristics of firms that successfully navigate these waters . The benefits of this type of expansion—in addition to other decisions that can promote a firm’s scalability and profitability—are outlined in greater detail in Crossroads: Critical Decisions That Advance the Evolution of an Advisory Firm.
Firms typically start thinking about opening a second office once they’ve reached a saturation point in their existing market, or if they have aspirations to be a major regional—or even national—player.
The primary consideration in choosing where to expand is access to clients. Of course, you want to be near the clients you want to attract. And proximity also makes it easier to open up referral networks and build trust as part of the community.
A secondary driver—but crucial nonetheless—can be better access to employee talent in the region. This holds particularly true for firms based in rural and suburban areas who are considering opening an office in a nearby or distant city. Of course, being located in an urban area offers easier access to a broader range of talent, particularly young professionals.
At the outset, firms should get very clear on why they’re attracted to a specific regional market and what they expect to gain by making this kind of investment.
We’ve found that firms opening a second office to gain better access to clients and talent are able to achieve repeatable increases in both their client base and the overall value of the firm.
By way of contrast, when firms focus primarily on cost savings, they aren’t able to drive the same kind of long-term growth and value.
Firms that successfully open a second office have a few things in common.
When you open a new office with a clear mission and an energized staff, it’s on the fast track to being a successful contributor to the firm as well as being a valuable asset to a new universe of clients.