Page 35 - Investment Advisor June 2023

THe FAST TRACk

By Angie Herbers

3 steps to Propel your organic Growth

It’s critical to see if you’re spending in ways that are consistent with
your growth goals.

inancial advice firms that want their growth rate or profit margin
to grow have an unflinchingly to be a certain number, their staff
Fhonest mirror: the profit and compensation to be this figure or that
loss statement. My consulting firm has and their spending on marketing —
studied thousands of P&Ls over two according to a benchmarking study
decades of consulting. Today, I can look they’ve just seen — to be at a certain
at one and quickly understand the goals level. In other words, they believe
of the business. they should adjust their P&L to align
At times, the leaders of these firms with industry benchmarks.
tell me something different than what Instead, it’s best to step back and look
the P&L is telling me. In such situa- at the problem differently. What’s the
tions, the first issue we need to resolve return on investment for what you are
is the misalignment between how spending today and is it working?
money is being spent and what the I’ve seen firms spend significantly
firm’s true goal is. In other words, less on marketing than the latest bench-
What’s the return when the leader of a firm wants to set marking standards but grow at lev-
on investment new goals for growth, like client acqui- els that top the average benchmark.
sition or hiring, the P&L is the place
Additionally, I’ve seen firms with both
for what you are to start. lower staffing costs and significantly
higher growth rates than the bench-
This column will address several
spending today and key areas to look at to help determine mark. The point is, the benchmarks
is it working? if what you’re spending the firm’s you set for your firm should reflect the
resources on is consistent with your
unique goals of your individual firm —
growth goals. First, it’s important to not the industry averages.
identify the issues that can be deceptive. When using your P&L as a business
Once they’re identified, they also must guide, the goal should be for the owner
be addressed. For many firms, step one or owners to honestly evaluate how
is cleaning up the P&L so the informa- they’re spending resources to achieve
tion being used is up to date, accurate their goals. If these expenditures are not
and unbiased. producing the desired results, course
corrections need to happen.
1. drIll doWn Into your dAtA.
When firm leaders look at a P&L, they’re 2. survey stAFFInG exPenses.
looking at numbers from the past. If This leads us to the matter of overall
the goal is for future numbers to show staffing costs. Is your business over-
higher revenue growth, greater profits, staffed, understaffed or staffed just
etc., they must first decide what num- right? The majority of advisory firms
bers to look at that will produce the are overstaffed.
desired change. Why is this the case? Because their
Advisory firms often want to leaders make staffing decisions based
improve their future performance on projected growth, or more accu-
and will regularly tell me they want rately, on the growth they aspire to.

June 2023 Investment AdvIsor 33