Some financial advisory firms are enjoying robust growth while others are struggling to increase assets under management, attract and retain top talent, build scalable processes and deliver personalized client experiences, according to a new report from Nitrogen, a growth platform for wealth management firms known until recently as Riskalyze.
1. Fast-growing firms are more worried about the global economy.
The biggest challenge by far for both slow-growth and hyper-growth firms is increasing regulation and compliance, trailed by changes in investors behavior and demographics, according to the study. But hypergrowth firms were far more likely to cite global economic uncertainty as the biggest challenge facing advisors over the next five years.
This may be due to demographics, Nitrogen suggests: Hypergrowth firm respondents tended to be younger, and thus less experienced with economic challenges.
2. They aren’t as worried about the competition.
Both hypergrowth and slow-growth firms identify increasing regulation and compliance as the biggest threat to growth across the profession. Faster-growing firms were less likely than their slow-growth counterparts to name competition from other firms or generational wealth transfer as the biggest threat.
3. When it comes to turning prospects to clients, they have different struggles.
Approximately 39% of slow-growth firms say their biggest obstacle to client conversion is lack of a scalable process, compared with about 27% of hypergrowth firms. Hypergrowth respondents were more likely to cite "mismatch of client needs and advisor expertise" as their biggest obstacle. This may be due to their younger age or the fact that many fast-growing firms are niche practices, Nitrogen suggests.
