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3 Keys to Sustainable Growth for Advisory Firms: What FA Insight's Data Reveals

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At its core, our work with advisory firms centers on helping them become more valuable enterprises. Building value is predicated on improving the firm’s ability to profitably sustain growth. In other words, valuable firms don’t simply grow—they grow in a sustained and profitable manner.

One way our firm, FA Insight, provides guidance for advisors is through its industry research. Many of you may be familiar with the annual FA Insight of Advisory Firms, which for five years now has served to benchmark industry performance and identify best practices. In even numbered years the research coverage tilts toward the topic of advisory firm growth. 

Our 2014 Growth by Design study is currently open for fielding, with all advisory firms encouraged to participate. 

Based on the hundreds of participating firms who generously shared their data, some path-breaking insights emerged from our last Growth by Design effort in 2012. In that year 85% reported experiencing significant recent growth. Of those, however, 76% reported that growth stressed their firm in the form of negative impacts such as overworked staff and systems that cannot keep pace.

For the roughly one-quarter of firms who managed significant growth without suffering negative consequences, the rewards were high. These “sustainable growth firms” maintained lower overhead expenses, achieved higher productivity in terms of revenue per team member and were more efficient in converting revenue to owner income. 

3 Proven Keys to Sustainable Growth

Sustainable growth firms were distinct from their peers in a number of ways, but three key areas stood out. They are:

1. Having a Clear Target Client
Sustainable growth firms demonstrated a clear understanding of the type of clients they were best suited to serve and how best to deliver value to these clients.

2. Managing People and Processes Well
Major business-to-client processes are well documented among sustainable growth firms with process improvements ongoing.

3. Taking a Deliberate Approach to Technology
Sustainable growth firms aren’t characterized by their level of technology spending, but they are more deliberate in terms of their management and application of technology. This includes their processes for technology investing and ensuring adequate technology training.

More to Learn

What is left to learn about growth? Plenty, in our opinion. 

Our objective this year is to gain an even deeper understanding of the factors that most effectively fuel a firm’s growth. We aim to guide a firm in tailoring a growth strategy that will be most suitable for its own unique circumstances. Slated questions for consideration includes the following:

  • What constitutes an effective growth strategy?
  • When should firms favor inorganic over organic growth strategies?
  • What are the most important business functions for firms to focus on in order to facilitate the highest quality growth?
  • How should this emphasis shift as firms increase in size or evolve their business objectives?

Benefits of Participation

This fresh insight becomes impossible, however, without the continued cooperation of advisory firms across the country. By taking part in the 2014 Growth by Design study each participating firm will receive a complimentary study report with more than 50 pages of detailed benchmarking data and prescriptive analysis. Additionally, survey participants will receive exclusive and immediate access to the FA Insight People and Pay Benchmarking Tool. The tool provides industry compensation data across advisory positions and allows advisors to compare their firms against their selected peer group.

Advisors have until March 28th to submit survey data for their firms. Firms interested in participating can visit our website at The Growth by Design study is supported by Investment Advisor magazine and, FA Insight’s media partners. We invite you to read our ongoing series of articles in which we detail our prior studies’ findings.