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5 New Year’s Resolutions for Bullish Advisors

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Advisors are broadening their tents, stretching out curtains, lengthening cords and strengthening pegs, to paraphrase the prophecy of Isaiah, who described an ecstatic vision of expansion born of optimism — a feeling not unlike that expressed by advisors in a recent survey.

Of some 500 advisors in a recent SEI Advisor Network survey, 96% reported being optimistic or excited about the new year. This year’s 20%-plus stock performance, following on several years of new market highs, probably has something to do with the euphoria.

In its survey, the provider of separately managed accounts asked advisors about their most cherished objectives for the new year.

SEI Advisor Network exec John Anderson, who regularly posts on practice management topics for the firm’s blog, shared some brief thoughts clarifying these goals with ThinkAdvisor.

Advisors’ fifth most pressing priority for 2015 is…

New Year’s Resolution No. 5:

Alleviate Succession Stress

Alleviate Succession Stress:

At a time when the majority of advisors are over age 50, succession planning has never been more important. There are three general approaches to succession — selling the practice, acquiring another practice or transitioning firm leadership. All send a vital signal to clients that the business will be around for the long haul, Anderson says.

“You have aging advisors who want to slow down or retire,” Anderson says. “They have worked for years and may need to monetize their businesses. I think this is one of the biggest challenges in our business today, but most advisors will let their business wither away. Putting a [succession] plan in place, or just as important a continuity plan, shows clients the advisor is serious about a multigenerational business.”

New Year’s Resolution No. 4:

Rejuvenate Your Practice

Rejuvenate Your Practice

With the millennial generation now at about a quarter of the U.S. population, Anderson says an aging advisory practice needs younger staffers and younger clients to ensure its long-term viability.

“Advisors are aging and — just as important — so is their book of business,” he says. “Sooner or later businesses will see assets declining as aging clients begin to draw down. Advisors that want to run a multigenerational business are going to have to find ways to grow the book over the outflow. By recruiting younger advisors, you are building your succession plan and can develop services, and a brand, that services the younger clients.”

New Year’s Resolution No. 3:

Create a Niche Business

Create a Niche Business

Advisors often employ segmentation strategies, such as dividing their book based on assets under management or revenue — criteria that are meaningful to the advisor but fail to address client interests and goals. Anderson therefore calls for smarter segmentation that, properly executed, will attract clients.

“By segmenting by what is important to the client you can create segmented services, streamline operations around a type of client, build niches, and find new products and services that the segment may need,” he says. “It will also build a referral network for people who identify within that niche. In a nutshell, the advisor [makes] a fragmented business [into] a niche business.”

New Year’s Resolution No. 2:

Latch on to the Right Technology Trend

Latch on to the Right Technology Trend

The rapid pace of technological change has impacted a broad range of advisor needs — from fully integrated platforms to back-office automation to eliminating manual trading and rebalancing and beyond. But when choosing what technology to invest in, Anderson says the key is finding the right fit with your business.

“All too often, advisors buy technology that they think will fix a problem or issue,” he says. “They don’t take the time to look at their own processes instead. By adding technology and changing their processes they can create a more efficient office. I also think many buy technology without thinking of the ramifications of how it integrates with other technology they use. After they purchase, they find the new systems ‘don’t really talk’ to the other system or you need new upgrades of your existing technology.”

Advisors’ highest priority for the new year, embraced by 84% of those surveyed, is an oldie but a goodie:

New Year’s Resolution No. 1:

Meet Your Friends’ Friends

Meet Your Friends’ Friends

Attracting referrals from current client is the ultimate path to organic growth, but the coveted referral remains elusive. To Anderson, the key to meeting your friends’ friends lies not in pushy importuning of clients but in establishing a clear value proposition.

“Most referrals don’t come from asking clients ‘who do you know?’ Clients are more apt to hear a friend or family member express a need and respond with the referral. (Work by Julie Littlechild and Steve Wershing back that up). Having a clear value proposition that the client knows, understands and can even articulate will facilitate the referral and can motivate the prospect. They have to know how you can help them and their friends and family,” Anderson says.

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