"Only 14% of advisors have a plan for the future structure of their firm."
The stark comment from Eliza De Pardo kicked of an afternoon workshop on human capital management at TDAI's 2013 Elite Advisor Summit in Palm Beach, Fla., on Wednesday afternoon.
De Pardo (left), who presented with Dan Inveen, her partner at research and consulting firm FA Insight, relied heavily on statistics from the "2012 FA Insight Study of Advisory Firms: Growth by Design."
"Why is growth important, and why do advisors want to grow their business?" De Pardo rhetorically asked. "They have some pretty personal reasons for doing so."
The study found that motivation for growth industrywide is high at the moment, with advisors citing the desire to fully serve client needs as the top reason.
"We found it surprising that it came before 'increasing the returns to shareholders,'" she noted. "Cost savings and efficiency gains were then mentioned. The ability to attract and retain top talent was next, and solutions for succession planning rounded out the answers."
The actual advantages of solid growth are widespread, and often center on the aforementioned human capital advantages, De Pardo added. They include:
- Providing a career path for individuals at the firm
- Reducing dependency on key individuals
- Firms can justify charging a premium for their services versus their competitors
However, unmanaged growth can be detrimental for many of the same reasons.
"It can actually make providing a career path more difficult, and it can make relying on a key individual more pronounced," she argued. "Why? You're adding more complexity to the firm, and you have to now think about how each employee fits in."
