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6 Variables Determining Financial Advisor Success

by | Aug 14, 2017 | HIDDEN

When you have served in financial services for decades, you appreciate what it takes not just to become successful, but to maintain success. You get to witness first-hand significant industry shifts, the decisions made in response, and their outcomes…for better or worse. We all know success is fleeting, and it’s not change that makes or breaks you, but rather our response and how much or how little we prepare. The success of an advisory practice is a dependent variable. In my opinion, your future success will likely depend on how you respond to these six emerging independent variables:

Commission-Based to Fee-Based

With regulators including the DOL accelerating industry change, new avenues and opportunities are opening up for advisors. As more advisors see the benefit of adopting a fiduciary business model they are also questioning their need for a Series 7 and FINRA. In response, investment firms are introducing new fee-based products to replace existing commission-based products. Advisors are evaluating whether they need a Broker-Dealer or Custodian. In response, Broker-Dealers are redefining themselves as Custodians – which is not an easy task. Custodians are less proprietary, more open regarding forming strategic partnerships, and with adopting new technology. Your decision regarding this shift will significantly impact your practice over the next 5 – 10 years.

From Me to We

Do clients prefer your expertise alone, or if given a choice, would they opt for you plus a team of experienced financial specialists ready to serve them? The financial services industry is evolving similarly to what occurred in the health care industry. Then, as more information became available online, we began to recognize the importance of working directly with specialists who could accurately diagnose and treat what ailed us. As a result, larger practices formed with teams of experienced medical professionals working together to offer a wider array of expertise, increased convenience, more resources, and less hassle. The same applies to the financial services industry. We see more partnerships and ensembles emerge. Not just to share an office and administrative resources, but to truly perform as a unified firm and provide more value and convenience to their clients. What is the breadth and depth of your practice? Is it built solely around you or a solid team of leading professionals?

Tech Tolerant to Tech Obsessed

The numbers are in, and they tell us that advisors who deploy technology well have assets under management 40% higher than advisors who don’t.1 Would you consider your practice to be technologically illiterate, tech tolerant or tech obsessed? This isn’t a call to suddenly go from zero to total-tech overnight. It’s more a matter of developing a solid base or platform, where you own the data and add more data and services over time. The tough part is that all the parts require ongoing attention. But then, that’s the way of life. Fintech is exploring nearly endless opportunities to innovate the industry. Ignore the revolution, and your practice will eventually pay the price.

In-Person to Digital Engagement

We don’t socialize like we used to. When the doorbell rings nowadays, you are probably more skeptical than welcoming. Gone are the days of dropping in on neighbors and friends to have a lengthy discussion at the kitchen table accompanied by coffee, cake or a cold beer. Our interactions now occur from one home to another via text, from the comfort of our couch to theirs. Professionally, the same is true. We value brevity and prefer to get to know someone online before even meeting them in-person. These days engagement begins digitally. Are you competing and engaging digitally with your clients? Is your website mobile-friendly? Does it include video to help tell your story? If you aren’t taking advantage of these and other avenues for digital engagement, you can bet your success will be fleeting.

Multi-tasking to Outsourcing

The more services you offer, the more time you need. Outsourcing tasks like compliance, operations, asset management, marketing, and even financial planning can increase your time and ability to be more strategic. Some advisors are hesitant to outsource, but the reality is that much of what they hold on to is only for comfort and not for the benefit of their clients or their practice. Stay open to outsourcing anything that can quickly and affordably be outsourced, including compliance and investment management. An examination of 8,000 advisers, over a decade, showed outsourcing investment management produced $1 million more in revenue. 2  Here’s another statistic of interest…More than half of RIAs with $50 million to $100 million in assets under management use at least one compliance outsourced solution.3 Focus on what you do best and for successful advisors this means not doing anything that costs less than $250 an hour to do.

Performance and Portfolio Management to New Value Props

We just discussed the importance of outsourcing to stay competitive, which leads us to explore this next question…What is your value to clients? Do your clients know what you do or is your value exclusively in portfolio management and performance? If your value is tied to performance, an element often out of your control, your future success is also out of your control.

As Duncan MacPherson, CEO of Pareto Systems, stated recently at our annual conference, “Sales people ask you to buy something. Consultants ask you to buy into something.” What are your clients buying into? Do you endlessly discuss returns or a process to help them save and invest more, make better financial decisions, retire with confidence, and increase their probability of financial success? The market is at an all-time high, providing you an opportune time to redefine your value props and ensure you are consistent with how you are communicating them to your clients.

As many of you know, Financial Advocates is committed to helping independent advisors move their practices forward. It is the responsibility of our team to navigate the landscape, explore new avenues and opportunities, and consult with our advisors regarding the best decisions to help them experience long-lasting success. Hopefully, you have already made a move to independence. If you haven’t yet made this one change, in my opinion, it is the most important decision you need to make this year. Without being independent, you may not be able to differentiate your practice and respond to these six new variables and the significant structural changes to come.


  1. CNBS, To attract younger clients, advisors step up tech game, at
  2. Investment News, Advisers who outsource investment management make more money than those that don’t: study, at
  3. Think Advisor, The Outsourcing Boom: Compliance, at