Trends Impacting Your Ability to Grow

by | Oct 7, 2019 | Blog

Do you feel like you’re in a rut? Is it getting harder and harder to bring new clients aboard? There are hundreds of potential causes for slow practice growth. Some culprits may be unique to your firm, while others may be the result of industry shifts. While it’s hard to pinpoint the exact cause, we can speak to a few industry trends that may have left you veering off course.

From “Me” to “We”

As clients become more investment savvy, they are looking for more breadth and depth in the services financial advisors offer. If you are still working as a solo practitioner, your ability to satisfy a multitude of needs is greatly diminished. Clients crave convenience and don’t want to experience service dead ends.

Team structures are equipped to provide more specialized services. Advisors can specialize and bring expanded knowledge in a variety of areas such as financial planning, risk management, estate planning, tax planning, and more. Teams are ready or well equipped to win more business!

Consider bringing on a partner with strengths that differ from your own or joining another firm where your expertise is a compliment to them.

The Move to Independence

More and more advisors are making a move to increased independence. As they leave the larger insurance companies, wirehouses and banks seldom are they regret their decision. In fact, in a study released by Schwab in March 2018, more than 90% of independent advisors polled said they had no regrets about making their transition. So, what could be the problem if you are independent and experiencing slow growth? It just might be that your spending too much time on your business and not enough time prospecting.

Owning your own business has many advantages, including the value of your business is all yours! However, many advisors are not prepared to wear the “business owner” hat and may have difficulty balancing the responsibilities that come with being an entrepreneur. You may be spending hours each day managing staff, exploring new advisor solutions, implementing marketing, and other business functions. There’s no doubt all of these are important, but your expertise is also needed elsewhere to keep your practice growing.

There’s no need to hire additional staff. Find a silent partner who you can easily delegate administrative duties, technology, financial planning, marketing, and even investment management too. You’ll have more time to meet new clients, prospect and spur more growth.

The Rise of Behavioral Finance

The study of behavioral finance is not new. Behavioral finance made its debut in 1979 when Daniel Kahneman and Amos Tversky released their study, Prospect Theory: A Study of Decision Making Under Risk. However, it was the Great Recession that brought behavioral finance to the forefront of the advice industry. Steve Wendel’s post for Morningstar’s Blog, The Promise of Behavioral Finance: A practitioner’s view of the history of behavioral finance, offers more insight into how behavioral finance moved into the mainstream.

Prior to 2007, incorporating behavioral finance into one’s conversations wasn’t the norm. However, financial advisors who survived the Great Recession can speak to the value of educating your clients managing their emotions and reactions to volatile markets better.

When the next bear market comes, those who have not spent the time educating their clients on behavioral finance theories will be at a higher risk of losing their clients. Then more clients will be on the move. If you have done your part to incorporate behavioral finance into your conversations, you are better positioned to keep your clients and obtain new ones.

The Automation of Wealth Management

Each day new artificial intelligence (AI) is being developed to do more tasks that we are currently doing. The good news, money comes with emotions, and technology has yet to master being human. If your value lies solely in investment management, this may be why your practice is currently slow-growing.

People need so much more than investments and product solutions. They need a trusted advocate; someone they can discuss family dynamics with, personal financial obstacles, and sabotaging thoughts. While AI can determine risk tolerance, create diversified portfolios, and invest tax efficiently, it cannot help a person navigate unexpected life events, life decisions and other factors impacting someone’s potential for financial success. You can.

How do you communicate this to prospective clients? You tell stories. You let them know more about who you are as a person and as a financial coach. You become more focused on helping them achieve their goals than on investment returns. You shift the conversation.

Hopefully, we’ve provided some insight into how best to maximize current industry trends. If you’ve mastered the above and are still at a loss for why you aren’t winning more business, contact us. The best way to identify what may be the issue is to work with one of our business development consultants. They can conduct a thorough analysis of your business and help you better pinpoint the culprit or culprits.