This is the first in a five-part series defining success for retirement plan advisors by Liz Davidson, who as president of Financial Finesse has a unique vision of who the most successful retirement plan advisors are, and what they have in common.–Ed.
This past year, I've had the pleasure of working with quite a few top advisors in the country, independent wealth management and retirement plan advisory firms, most of whom manage billions of dollars in assets. I've also spoken to a lot of plan advisors who aspire to reach that level of success, but haven't been able to do so despite doing all the things they were taught to do when it comes to networking, prospecting and trying to close new business.
Many have vocalized how hard it is to stay independent and keep the lights on, and they are right. The market is very tough and it may become tougher, particularly for plan advisors. Fee disclosures have put pressure on the entire industry to do more for less, and many of the practices that were innovative just a few years ago have become commoditized. With plan advisors having the same—or at least similar—approaches to investment reviews, vendor searches and fiduciary best practices—it comes down far too often to price. The big players can afford to "buy" the business as a strategy for forcing small players out of the marketplace.
So why then are most of the advisors we work with thriving? All have grown their practices fairly significantly in this tough environment, and a good percentage have actually increased pricing.
Here's my perspective on the three core reasons why they are able to achieve what has eluded so many others:
1. They have a 10-year vision and very clear one-, three- and five-year plans.
The vision is typically the driving force and changes very little—it's the roadmap for where they want to go, who they want to be and what areas of the industry they want to play in. The plans provide the structure for how to achieve the vision, but are built with the perspective of understanding that markets change in ways that none of us can anticipate, and that the plans need to evolve accordingly.
They train their people to be both proactive planners and nimble executors, with very clear objectives but freedom as to how those objectives are achieved. All have processes, but a very clear understanding that the process is the means to the end, and should be continually refined and improved based on client feedback and ever-changing market conditions to achieve the best results.
Two CEOs I know at very rapidly growing rival firms are both fastidious about their planning. While not done in a bureaucratic or formal way, all decisions they make stem from their long-term vision. Moreover, every single team member in their firms can articulate the vision with clarity, and understands how their job connects to the plans and goals of the organization. Sounds simple, but it's actually very rare. Interestingly, each of these CEOs considers the market positioning of the other's firm in their planning. Rather than regularly competing head to head, they've each come to independent conclusions about where they are stronger than each other and where they are weaker relative to the other, and have crafted their market positioning accordingly.
One pursues a volume strategy, dependent on cross selling and economies of scale. This firm has developed a suite of services with tremendous infrastructure and processes to scale cost-effectively, in a way that meets the needs of clients that prefer to implement a proven, standardized process.
The other has specifically built a brand that appeals to very large companies that want a customized, boutique level of service and are willing to pay for it. He has fewer clients, but makes more money per client, at fees far beyond the industry average, because of the reputation he has built and the value he is able to bring in terms of addressing client's strategic objective. Both are profitable, both are growing and there is room in the market for both.
2. They are ahead of their clients.
They actively listen to clients' challenges, but instead of reactively responding to client requests, they identify the common themes and patterns in what their client's concerns are and come up with ideas, strategies and, most important, new products and services that address client issues. In some cases, they even spot issues their clients hadn't identified and develop products and services to address these issue, knowing that when they do bring these to market, their clients will respond.
I could share a lot of stories of advisors who have taken this approach and used it to differentiate themselves and significantly increase their market share, but the one that stands out most in my mind is Jason Chepenik's story.
