This article was generously provided by Mélanie Turcotte, Business Development Manager, Financial Horizons Group, Quebec Region.
Advisors have a lot to think about. Of course, there’s growth, which can be variable throughout the year. There’s prospecting and development, which come together to support the goals of the practice. On top of this, advisors are required to juggle various other factors:
- Volatility of financial markets;
- Client psychology;
- Heavy administrative workload;
- Acquiring new knowledge that is increasingly more detailed and in-depth in order to stand out from the competition;
- Lack of succession.
It’s easy to get lost within all of these elements and for your growth to suffer. With so many focuses, the initial motivation for development and prospecting can wane. It is not uncommon to feel that workloads are increasing, and to shift focus toward administrative tasks as opposed to financial planning. In this case, inevitably, numbers will go down.
What’s the Solution? You need to restart the “mechanism” right now!
Two types of growth with distinct characteristics and benefits
Generally speaking, there are two ways you can proceed. You could decide to generate internal growth, also known as organic growth. This involves determining the strengths within your practice in order to improve your service offering.
Here are a few internal growth strategies:
- Launch an advertising campaign to generate activity;
- Segment within your practice (read the article by my colleague, Denis Dionne, “Segmenting Your Client Base: A Must for Maximizing Success”);
- Develop client loyalty (read the article by my colleague, Véronique Caty, “How Properly Protecting Clients Helps You Win Their Loyalty”;
- Maintain regular contact with your clients;
- Decide to specialize and acquire the necessary knowledge;
- Review your assistant’s workload; increase his or her knowledge and delegate certain tasks to her.
If you decide to increase organic growth, you could also plan to hire another assistant. The assistant could take over your administrative workload, allowing you to focus on your service offering.
Additionally, “working” on your existing client base will increase the value of your practice, making it more appealing to a potential successor and investors when the time comes to sell your client base (read the article by my colleague, Lise Benoît, “Succession planning: An essential step in an advisor’s career”). Internal growth has lower risk, costs less and is more controllable. The downside is that it is a relatively slow process. The growth is long-term, as opposed to external growth, which is more aggressive and short-term, meaning the impact and financial benefits are seen more quickly.
You could also opt to generate external growth instead. This involves making acquisitions in order to increase your business volume. For example:
- Business acquisition;
- Reference agreement;
- Partnership between advisors.
External growth is a good option to quickly increase your growth and negotiating power, generating activity and movement. In short, to expand. However, to do this, you must have a good structure and a solid foundation already in place. This option is more aggressive, has a higher cost as a result of financing, and is riskier, but you will be able to see measurable short-term growth more quickly.
Before going ahead with an external growth strategy, it is also important that you assess your financial and operational capacity in terms of number of clients. You wouldn’t want a newly acquired portfolio to become stagnant due to a lack of resources.
A combination of both types of growth could be a good option for your practice. External growth can help you build good base, quickly increase your revenue, and inspire new business partnerships. As for internal growth, it is essential for developing client loyalty and increasing your value, but most importantly, it is necessary to maintain your solid foundation, so that you can focus on your clients.