Most advisory firm owners want to grow their firm, and many firm owners also want to achieve organic growth — expanding their business through client referrals, inbound leads via marketing programs and hiring business development minded advisors.
But as desirable as it is, organic growth can be hard. When firms experience trouble with growing organically, they often turn to mergers and acquisitions with the idea that buying smaller firms and integrating them into their business will give them the growth boost they need.
However, a full-time focus on M&A strategies can be detrimental to organic growth, because your focus may become more about finding firms to purchase rather than improving your existing practice.
Instead of training your current team on how to attract, close and bring in new business, your focus turns to finding other firms to add. And rather than developing and refining your existing client service and marketing programs, your emphasis is on the development of marketing programs to attract firms to acquire.
A growth strategy based on M&A (i.e., inorganic growth), while not bad, comes with the same challenges as an organic growth strategy to attract new clients.
It’s generally better to master the fundamentals of organic growth. And, to do that, the best place to start is expanding client referrals.
Here are three ways to expand client referral rates:
1. Maximize advisor training
Few advisory firm owners enjoy training others. But when adding new advisors to a team, they come with preconceived ideas and biases about how to work with your clients.
Instead of retraining them, many owners simply throw those new advisors into client relationships and let them “sink or swim.”
Expanding client referral rates begins with everyone in your organization delivering client service consistently.
When you have a specific service model, current clients can articulate your value to their friends. When you don’t, clients aren’t talking about you — and thus you’re not maximizing your client referral rate.
2. Expand client service through operational processing
When it comes to maximizing growth of new clients, many leaders think about marketing programs first. Rarely, if ever, do they think about workflows, processes and enhancing technology.
Due to the recurring nature of revenue structures of advisory firms (i.e., assets under management and retainer-based models), the greatest asset to growing your firm organically is existing clients.
In other words, if you focus on expanding client service to your existing client base through processes and technology that solve their problems faster, your existing clients will be happier and talk about you more.
3. Focus on a growth mindset.
There is no doubt that your growth should gain momentum when you put a team together and utilize multiple ideas and talents. The problem is that while searching for new clients, advisory firm leaders often forget about the power of the advisors on their team.
Taking any organization to the next level requires having a team of people full of ideas and strategies on how to enhance growth. Regularly asking your employees for their ideas and incorporating them into your business will help them develop a growth mindset.
Also, as you embark on your growth journey, be sure to ask your team members for their creative input.