Angie Herbers

The COVID-19 crisis has created great challenges for advisory firms, such as forcing remote cultures, falling profit margins and, for some, slowing revenues. But in the middle of adversity and unprecedented change also come opportunities.

As some states start to reopen, advisory firm leaders can renew their focus on growth opportunities. But how can advisors grow through changing times?

Begin with a growth strategy. This strategy is more than a marketing plan and/or programs, and I hate to break it to you, but marketing is often not the first step.

Here’s how to start:

1.  Audit Your Organization

Before growth, you need to know where you are and have a clear idea of where you want to be. In many years of consulting, I’ve found firm leaders intuitively know where they want to go but have little idea of where they are.

Auditing your organization begins with data and logic. You may “feel” like your lead rate, client referral rate and close rate of new clients are slowing down and/or speeding up, but are they?

The only way to know is to analyze what is/has been happening.

2. Define the Problem

Once an audit of the numbers is done, nine times out of 10, firm leaders come up with how to solve the problem, and those solutions usually mean “more” of something: low lead flow, let’s add more marketing; low close rates, let’s hire business developers, etc.

But they don’t know the problem yet. Throwing solutions at problems and hoping one will stick is no way to grow. In fact, it does the opposite.

It wastes a lot of time and energy, leading to additional management, hiring, broken systems and many ineffective people and programs that further erode profit margins.

3.  Plan Your Investment Strategy

This step is the most important and often skipped step in growing a business. To grow, you must determine your investment strategy.

Think about investment management. Your business is an investment.

If you are going to invest in its future growth, under what strategy are you going to do it? And, how are you going to allocate the time you and your team have to that strategy, because time and money are finite.

In business, there are two major growth strategies — organic and inorganic. Organic is growing from within: You expand your client referral rate, you hiring and you brand at the same time. Inorganic growth is tied to buying other firms.

Generally, a good growth strategy will have a clear focus that guides how you spend your time. Are you focusing on 100% organic growth and/or 100% inorganic growth? Are you a hybrid approach focused on some allocation of both?

Determining this strategy then will guide you on how to allocate your time to effectively achieve the growth goal. In other words, asset allocation — both financial and human — to maximize the growth rates and returns.

Most growth goals and problems can be solved by first looking at human capital, not marketing. The biggest opportunity in front of most firm leaders, in COVID-19 and beyond, is how are you allocating your time? How is your team allocating their time?

No different than during market highs and lows, growth today is found in human behavior. This means the best growth path is almost always figuring out your priorities, especially in times of change.