Page 41 - Investment Advisor June 2021

THE FAST TRACK

By Angie Herbers

What Are the 4 Key Drivers of Advisory

Firm Growth?

Most owners think in terms of improving valuation, revenue and profits.

But underlying actions must be taken first.

ike most advisory firm owners, tion problem), leadership is to blame. The
you likely want to increase at problem is usually that an owner feels they
L least one of three numbers in do not have enough time to focus on the
your firm: valuation, revenue or profits. drivers powering their potential growth.
You may even have more than one that How do you find the time to focus on
you are trying to improve now, and if your business without sacrificing client
you are doing well, you are improving all relationships? There is no magical for-
three at the same time. mula to time, but it can be as simple as
The problem is that you can’t just set reallocating one extra hour a day, or as
goals on growing revenue, profits and complex as hiring. Nevertheless, it starts
valuation. After all, how much control with the simple decision to do some-
do you really have over your company’s thing about it. This is the first decision
performance? You can’t make profits you must make before you delve deeper
rise merely by thinking more about into enhancing your growth.
them. You cannot set a goal that says, At the core, you must decide to make
You have to focus on “We are going to increase revenue” and time for growth, strategic planning and
implementation. Once that decision is
then have it happen simply by talking
the drivers behind about it. Action must be taken. made, the work can begin.
Over the years, I have found that inde-
Instead, you have to focus on the driv-
revenue, profits and ers behind revenue, profits and valua- cision comes down to two behaviors: (1)
valuation. It’s no tion. It’s no different than in financial owners spending too much time compar-
planning; you can’t change a client’s
ing their firms to others, and (2) owners
different than in performance by focusing on it alone. It is continually making excuses. This wastes
financial planning; the financial planning that enhances the time. You must make time for what is
important, regardless of what everyone
whole picture. With your firm, strategic
you can’t change a business planning and implementation else is doing. As I say to advisory firm
client’s performance drive the performance upward. clients I work with: “Make the decision.
So the big question is, what do you
Without the decision, you will never learn.”
by focusing on focus your strategic planning on to move 4 KEY DRIVERS OF GROWTH
the performance of your firm? The sim-
it alone. It is the ple answer is something other than rev- Our firm focuses on the four key drivers
financial planning enue, profits and valuation. The goal is in a particular order — from easiest to
to know the four key drivers of growth
hardest. Unfortunately, most advisory
that enhances the to increase all three. firms start backward and make their
whole picture. FIRST STEP TO GROWTH work much more difficult than it needs
to be, again wasting time.
Increasing revenue, profits and valuation The four key drivers in order are:
(I know you do not want to hear this) • Increasing the referral rate.
begins with leadership training. Most • Increasing advisor capacity.
often, when there is a revenue or profit • Increasing close rates.
problem in a firm (that leads to a valua- • Increasing lead flow.

JUNE 2021 INVESTMENT ADVISOR 39