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Penny Phillips, Journey Strategic Wealth

Practice Management > Building Your Business

Penny Phillips: 4 'Expert' Business Tips Advisors Can Ignore

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Advisors are likely already getting “inundated” with advice from experts about how to build a successful practice in 2023, according to Penny Phillips, president and co-founder of RIA Journey Strategic Wealth and founder of Thrivos Consulting.

But, in a video posted on YouTube, she warned: “The disclaimer that doesn’t usually come with the webinar you attend or the blog you read is that what works for one advisor or even the strategy that’s working for hundreds of advisors may not be appropriate for your individual practice.”

Therefore, Phillips said, she “always cautions advisors at the beginning of the year to really stay focused on their mission, what they’re trying to accomplish, month over month, their vision, what they’re trying to do within their client base and community, and their value proposition.”

It is fine to attend a webinar or read a blog, she said. But she cautions advisors to “take all of the information … about what’s working with a grain of salt.”

Here are the four big “advisory business myths” that she suggested advisors “either ignore or take with a grain of salt” this year:

1. Advisors must be popular on social media to succeed.

The first myth Phillips cited was the “notion that advisors need to build a robust social media following in order to be successful” and that, if you’re not on Instagram, TikTok or YouTube, looking for prospective new clients, then “your business is just going to collapse and you’re not going to survive the next 10 years.”

That is a concept Phillips said she “vehemently” disagrees with. The vast majority of advisors will say they generated new business last year through introductions or referrals from current clients, she noted.

And most advisors “don’t even really ask for referrals,” she said, “which indicates that the good, old-fashioned” practice of “being referrable, treating clients with exceptional care, being really present in your client’s life, those are still your number one prospecting tools.”

2. You must become a CEO.

The second myth Phillips cited was this industry “obsession” that “you, as the advisor, needs to transition out of the advisor role and become a CEO” at your firm.

“What I found working with literally thousands of advisors is that most advisors become ‘CEOs’ by accident,” she said. “They’re so good at being advisors that the business grows before they really know what to do about it. And, by default, they become the head of an organization.”

But “most advisors don’t want the responsibility of running human resources and operations, etc.,” she said.

“What most advisors want is to continue to be advisors and grow their business,” have “control over their destiny,” to own their book of business and not have a home office “breathing down their necks,” she said. But that “doesn’t necessarily mean they want the responsibilities of being a CEO,” she noted.

She urged advisors to “recognize that you don’t have to do that [and] you can hire somebody to run the business for you — for salary, of course — or you can join an organization.”

There are many advisory firms, “mine included, that enable advisors to simply be advisors and have somebody else running the business behind the scenes without having to give up equity or ownership,” she explained.

3. Advisors must take any deal they can get because multiples are dropping.

The third myth Phillips cited was the “notion that practice multiples are coming down drastically and you should take whatever deal is being offered to you right now while it’s still hot in the space,” she said. Some experts claim the deal that’s being put in front of you now is the best deal you’re ever going to get, she said.

“My advice to you all advisors is you should never take a deal based on market predictions from a salesperson at a firm trying to acquire you, number one.”

Also, “industry experts have no way of knowing what is going to happen in the business over the next couple years or even ever,” she argued.

Multiples have maybe indeed cooled a bit, she conceded. But she asked: “Is there still an appetite to acquire wealth management practices?…. Absolutely.”

However, any “decision to sell a minority stake in your business, a portion of your business or all of your business should not be based on market conditions,” she stressed.

That decision, she said, should “solely be based on what you need, what is right for you, your clients, your team and your family.”

4. Advisors must specialize.

The last myth she cited was the one claiming “advisors need to specialize within a certain client niche to be successful.”

“The reality is you don’t need to do anything. You don’t need to be a specialist,” she said, if you’re running a “generalist practice where you work with three or four different client niches in your community and genuinely love running that business, you have success with your clients, your clients are happy, you’re happy doing that” and the business is “sustainably growing.”

If all those factors are true, “why change it?” she asked. Over time, however, “you may decide that you want to work only within one vertical or you really want to put more resources around one type of” client, but you don’t have to follow that road if you don’t want to, she said.


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