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What Is the State of Your Practice?

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In a digitally driven world, clients are no longer limited to doing business with a local advisor. Consumers can now choose from a wide array of services delivered by advisors thousands of miles away.

While this trend started a few years before COVID-19 came on the scene, the pandemic has accelerated the push to automate and digitize many tasks currently performed by advisors.

The 21st century may be unkind to financial professionals who are unaware and unprepared.

Financial Professionals Face Tough Challenges

1. Smaller firms will find it harder to compete. While we are just beginning to see the aftermath of the economic downturn, it’s easy to predict that small businesses will continue to face an uphill climb. Smaller businesses affected also include insurance and advisory firms with fewer than ten employees. With the money and workforce to take advantage of digital trends, established corporations have a definite edge going into the 21st Century.

2. Practice growth could be painstakingly slow. In addition to pressure from corporations, a weakened economy means independent agents and advisors will find growing their practices to be slower, more costly, and time-consuming. Effective marketing and advertising must become more than an afterthought or a “necessary evil.”

3. Fee-based and fee-only advisors may find it more difficult to justify their fees. While large corporate practices have the means to create full suites of valuable client services, smaller advisory firms will have a tougher time proving they bring more value to the table. High-net-worth clients know they have choices and want to ensure they are getting the attention and services for which they are willing to pay.

4. Those advisors who focus only on the older crowd are missing opportunities. You may recall the story of the thief who, when asked why he chose to rob banks, responded, “Because that’s where the money is!” Many advisors focus on the “retired or within five years of retirement” niche because they believe that’s where they’ll find the most low-hanging fruit and make the most money. Retirees have certainly made for lucrative clientele in the past. Now, though, we see a demographic shift in play that makes it necessary for advisors to re-envision their profile of the ideal client. You must investigate new niches and add other demographics to your current ideal client mix.

5. Advisors aren’t planning for their futures. Very few independent agents, brokers, or advisors have done an excellent job preparing for their retirements and business successions. According to some sources, nearly half of all advisors do not have any exit plans in place. Such shortsightedness is astonishing because creating continuity and preparing for an intentional transition is highly valuable to both clients and advisors. Why would any client enter into a relationship with an advisor who doesn’t follow their own money advice and has no plans for life after retirement?

What Can Advisors Who Want to Thrive Do?

If you are an agent or advisor, you need to take some time off and create a “state of the practice” checklist. This document provides an accurate snapshot of the current state of your business. It will include, of course, things such as current and projected revenues, the number of clients, AUM, and all the financial aspects of your business.

Beyond that, you need to outline your plan for finding new niches and adding improved services, automating and digitizing as many mundane, tedious tasks as possible, implementing fresher, more effective marketing, and preparing a blueprint for the continuity of your business.

It may not be easy for you to look ahead to a life without your business. But, it is necessary if you want to succeed in challenging times. Agents and advisors who fail to move forward could see themselves mired in mediocrity and unable to sustain their businesses in the coming decade. Those financial services professionals with realistic plans and goals stand a much higher chance of rising above economic and social turmoil.


Len Strickler Len Strickler is the co-founder of LS Financial Group, a planner with SRC Financial Group LLC, and the president of Break Through Coaching and Consulting.