A new study finds 43% of advisors are worried about seeming pushy or overly sales-oriented, and that’s one factor impeding their growth.
This fear often prevents them from proactively expanding their client base and increasing their assets under management, the research says. The Financial Planning Association and Janus Henderson Investors surveyed 158 advisors for the study, “Six Keys to Growth for Today’s Adviser,” in October 2022.
In addition to some advisors not wanting to seem too pushy, others are holding their growth back because they want to. Nearly a third of advisors (30%) say spending the time to grow would take away from their personal life and priorities.
Advisors also named many areas in which they believe they should personally improve to attract business. The top ones were: cultivating relationships with centers of influence, 61%; encouraging clients to make referrals, 60%; generating prospect leads through business development activities, 44%; and articulating the firm’s value proposition, 42%.
Approximately 84% of advisors with AUM over $500 million strongly agreed that having a team contributes to the growth of their business. Firms that onboarded 10 or more clients in the previous 12 months were more likely to have designed a personalized experience for ideal clients based on their specific needs, challenges and preferences.
Although the study found commonalities among faster-growing firms, it acknowledged there is no “foolproof recipe for growth.” Nearly three-quarters (71%) of the advisors surveyed are motivated to grow, although only 46% said they are comfortable with their growth rate. Just 12% strongly agreed with that statement.
But not every advisor surveyed was focused on getting bigger — 29% said it wasn’t a big priority.
Growth last year
From October 2021 through September 2022, 65% of advisors experienced some growth in assets, with 21% claiming AUM increased by more than 20%, the research says. Meanwhile, 19% experienced a decline and 12% had no change.
During the same period, most advisors had less than stellar new client growth — 57% brought in less than 10 new clients, and 71% reported an average client size of less than $1 million in investable assets.
Some advisors said circumstantial issues made it more difficult to increase AUM last year. Many say they had a lack of time and clarity, as well as capacity constraints. Among solo advisors and small teams, 48% said having only one individual focused on business growth was among the factors slowing the firm’s growth. Nearly half of respondents, 49%, said investing in cryptocurrencies got in the way of growing their business. Cryptocurrencies crashed in 2022 from record highs.
Six keys
The study concluded the six keys to growth are:
• The anatomy of a business plan matters.
• Advisors know what they need to do to drive growth but don’t always act on that knowledge.
• Firms with teams grow faster than those without.
• Systems and processes form a strong foundation for growth.
• It’s not enough to define your ideal client; you need to actively engage them.
• Mindset can be a powerful influence on growth prospects.
“As the research suggests, if advisers can shift their mindset and intentionally approach their goals for business growth strategically, they can overcome barriers that may be holding them back,” said 2023 FPA President James Lee, CFP, CRPC, AIF, in a statement.