RIA owners are known for being fiercely independent, sometimes with a sense of duty that makes them believe they can handle anything that comes their way.
But this industry is too complex and nuanced for any one person — or even group of persons — to manage an entire business on their own, and the fallout could be the practice not realizing its full enterprise value.
That’s something any RIA owner should guard against because the math is simple: The more a practice is worth, the more the owner can sell it for upon retiring.
Unlocking enterprise value demands making prudent financial decisions. Many RIAs could use stronger versions of the firm’s financial statements, cash flow analysis, budgets and forecasts. But that usually requires more time, better software and an objective expert’s guidance.
That’s why RIA owners cannot be afraid to ask for outside help on how best to optimize the value of their businesses. If you have accepted that it’s time to seek assistance, a good way of going about it is to first share your inner workings with a trusted consultant, then define and refine your goals, and finally acquire the proper software to help make it happen.
Much like the goals of your advisory clients, your initial goals may be too vague, unrealistic or even financially dangerous. And when it comes to financial technology, advisors often gravitate toward the big name even though it may not be the best choice. Beginning with a trusted consultant is a smart way to establish clear goals and adopt the right software.
Many RIA owners badly need an external sounding board to bounce ideas off of before committing to a strategy that often requires a significant investment in both time and money. Consultants come in many forms and from an array of possible sources, including business coaches, M&A strategists, dedicated CFOs, peer networks and national organizations.