As an independent financial advisor, why did you choose to go independent in the first place?
Maybe it's because you're an expert in your field. You've honed your skills to the extent that you don’t necessarily need the framework of a larger institution; in fact, you may find that framework limiting.
Or, maybe you want to get closer to the people you're helping. Rather than offload elements of the client relationship to others in your organization or have your assistance mediated through your organization’s philosophy or approach, you may want to have a close, one-to-one relationship with clients.
These are good qualities to have, but they also create a major blind spot. Being an expert, seeing the value of helping others, wanting to be the person that others go to when they’re in need of aid—when you possess these admirable qualities, it makes it more difficult to recognize when you need support yourself.
Help for financial advisors is readily available; the question is, can financial advisors seek it out when they need it?
Most financial advisors are passionate people. They thrive off of helping others secure financial wellbeing, planning for the future, and executing a well-thought-out strategy.
Yet after many years in the course of their career, they find that they’re operating on autopilot. More of their work is taken up by tasks that aren’t engaging or challenging.
Many might conclude that losing passion for their work means it's time to change their careers. Sometimes that’s the case, but more frequently, it’s because they’re feeling overwhelmed and distracted from the aspects of their work that are most engaging.
Unless you’ve settled into a lifestyle practice, then this might seem like a no-brainer; of course, you should seek expert assistance if your practice isn’t growing. There is, however, some nuance to this.
Even for those advisors in lifestyle practices that aren’t concerned about scaling without end, growth is still important. As much as financial advisors work to minimize it, client churn is inevitable to a certain extent. Periods of market decline are inevitable as well. And there is always the unexpected. Adding high-fit clients to your portfolio is essential to combating these challenges and ensuring that your practice can continue to support your lifestyle.
For those advisors more interested in actively growing their business, it’s important to grow in the right way. During a bull market, it’s easy to mistake the growth of your existing assets under management (AUM) as the kind of sustained growth that will carry your practice through tough times. In reality, however, you need to be adding new clients to your portfolio and adding new assets. When the next bear market or recession comes along, the additional AUM you gained by proactively prospecting for new clients will ensure you’re well-positioned to grow once the markets rebound.
If you’re hearing complaints, then that’s a clear sign that things aren’t going as well as they could be. But complaints are a late-stage symptom of dissatisfaction; it’s best to catch dissatisfaction amongst your client and employee base before it reaches this point.
Are your employees turning over at a higher rate than industry benchmarks? How engaged do your clients seem during your meetings? Try sending out net promoter surveys or other means of measuring satisfaction. Even if you don’t get much feedback, that in and of itself is a form of feedback. If client engagement seems sluggish or feedback seems ambivalent, then you can confirm that it’s time to focus on this area.
Financial advisors are perfectly capable of providing sound financial guidance, building rapport with their clients, and crafting a financial plan that can stand the test of market volatility or unexpected life events. Where financial advisors most commonly need support instead lies in the business of running a financial advisory practice.
You’ll notice that all of the signs described earlier in this article have a direct connection to the business aspects of running a financial advisory practice.
Most education for financial advisors simply doesn’t include business administration as part of its curriculum. Independent financial advisors are expected to be competent at running a business right out of the gate or to self-educate on top of their existing responsibilities. Coupled with a financial advisor’s independent, do-it-yourself attitude, it’s no wonder that this expectation causes friction when an advisor decides to go independent.
Before you build a comprehensive business plan, hire consultants with the expertise you need, or start overhauling perceived inefficiencies, or commission or conduct a business assessment. Forget about making changes for the time being—focus instead on identifying where changes could and should be made.
An excellent place to start is to calculate your practice’s business valuation. Working through this process will help identify which elements of your practice are strongest and which are weakest, dragging your valuation down. Since—as we’ve established—many financial advisors aren’t used to conducting these sorts of business activities, AssetMark has put together a simple calculator to provide help for financial advisors looking to conduct a business valuation.
Once you’ve worked your way through it, you’ll have a better sense of the areas where your business needs the most attention. Equipped with this information, you’ll know who to talk to and what to ask for when seeking out support to help grow your business.
AssetMark is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses.
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AssetMark, Inc. ("AssetMark") is a leading provider of extensive wealth management and technology solutions that help financial advisors meet the ever-changing needs of their clients and businesses. The information on this website is for informational purposes only and is intended as an overview of the services offered to financial advisors, not a solicitation for investment. Information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed and is subject to change.
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