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Beyond the Owner: Advisory Firm Paths to Success
By Philip Palaveev
June 2011

Large financial advisory firms are more profitable, grow faster and have higher equity value per dollar of profit. The largest firms also have an advantage in attracting talent and have an easier time establishing referral relationships with CPA firms and banks. Yet, very few firms manage to reach the size and scale where they can reach these advantages. While the entire industry continues to grow and the average size of an advisory firm has more than tripled since the year 2000, by our estimate no more than 300 firms have reached over $1 billion in assets under management (AUM) – an arbitrary mark for what we could consider a large firm.

The biggest obstacle to growth that otherwise successful firms face is the ability to define and deliver a value proposition that goes beyond the skills and expertise of the small group of owners. “Trapped” in the physical limitation of time, energy and knowledge that the three or four principals possess, firms struggle to create a business model that can transcend that limitation and allow them to reach the true advantages of size – most of all market dominance, reputation and ability to add talent.

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The Relationship Manager
By Spenser Segal
July 2011

One of the most powerful business-building technologies introduced into financial advisory practices over the past decade is customer relationship management software, or CRM. While portfolio management, financial planning, document management and other technologies have certainly made being an advisor easier (or more complex, depending on how you look at it), those tools are generally used to improve the service provided to existing clients. CRM, on the other hand, can be an incredibly powerful tool for business and profit growth by increasing a practice’s efficiency, by automating marketing tasks, and by organizing a pipeline of new business.

However, in a spring 2011 survey conducted by ActiFi, a practice management software and solutions firm serving the financial services industry, the majority of advisors report that they are still not maximizing their CRM usage. Even though CRM systems have matured, with many systems built specifically for financial advisors, most firms are only scratching the surface when it comes to taking advantage of key features that are designed to help advisors grow their practices.

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Getting the Right Clients
By Susan Hirshman
September 2011

A “right client” (aka target client) is a client whose wealth, other demographics and investing style fit into your business model and whose psychographics fit within your preferences. Susan Hirschman describes a series of exercises that can help advisors identify what demographic their ideal clients fit in and how to match those clients’ psychographics to their own.

The “right” clients don’t have to be exactly like their advisors, Hirschman warns. That depends on advisors’ abilities to appreciate the differences between them and their clients, and to see their behaviors as a reflection of a personality type and not something to be judged.

Embracing the concept of understanding takes acceptance, adaptability and action—in other words, the advisor must be open and able to recognize, acknowledge and experience other people’s feelings. Understanding versus judging is not necessarily human nature and to embrace this way of thinking will take focus and determination—you must want to do this. If you do, it’s a great opportunity to see life from a new perspective and experience a whole new world that perhaps you didn’t see, service and satisfy before.

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