More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
More than half of advisors expect their revenues to increase by more than 15% in 2013, but just 15% have a formal process to grow and monitor their success, an SEI Quick Poll released Thursday found.
“The survey results support other research that shows advisors want to grow and expect to grow, but many are lacking a systematic plan to achieve, monitor and sustain growth,” John Anderson, head of practice management for the SEI Advisor Network, said in a statement. “The reality is planning is a prerequisite for growth, but we also know that planning doesn’t always come naturally or fit easily into the busy schedules of most advisors.”
SEI identified five strategies for advisors to manage their growth:
- Create a firm culture. Long-term sustainability requires a firm-wide culture rather than one built around the owner, SEI says, suggesting advisors “institutionalize client service” to help clients identify with the firm as a whole rather than with one individual.
- Know your niche. By targeting a specific kind of client, advisors can grow among people who value their approach.
- Institutionalize marketing. Advisors can’t wait to market themselves when they think of it; it has to be a priority. SEI suggested thinking of marketing “as an investment in the business and not just an expense.” Advisors should craft a marketing plan that outlines their objectives and target niche, and includes measurable strategies and tactics; then allocate a budget and resources to act on the plan.
- Strengthen your team. Advisors should consider the quality of their team rather than the number of people on it, focusing on bringing in new talent and building expertise in a particular area like estate planning or philanthropic advising.
- Evolve management and governance. A growth plan isn’t something advisors can build and then forget about. SEI suggests advisors think 10 years ahead instead of three months and build a plan that addresses the limitations in their current practice.
Advisors acknowledge that growth problems are largely on their shoulders. More than half said the biggest obstacle to growth was a lack of focus. Just 18% said a lack of resources was preventing them from growing their firm.
SEI polled 111 advisors in its network for the survey.
The 2012 Growth by Design report by FA Insight found that despite its importance to a firm’s success, when growth is mismanaged, it can threaten profitability. Among the 85% of firms that reported “significant growth” in that study, 76% said they experienced at least one negative as a result, most of which were related to personnel.
FA Insight stressed that advisors who wish to grow their firms must take a “deliberate approach” to reach their goals. “With a thoughtful, strategic approach,” it said, “firms can take advantage of economies of scale, build value and protect profitability.”