Building a successful advisory practice requires more than just capital or compensating advisors. Advisors must decide how to structure their office, where to get support, which niches they will focus on, how much autonomy they want and whether they are ready for the burdens of ownership.
To explore how those pieces fit together, WSR spoke with Kate Quinn, Director of Business Strategy at Great Valley Advisor Group, about building an effective growth strategy, why operational frustrations cause advisors to change firms, why there is no single path to autonomy and how advisors can determine whether they are ready for ownership.
Her responses follow.
WSR: What makes an effective growth path for advisors, besides the obvious access to capital or compensation?
Quinn: Great advisors need a great front office, middle office and back office.
By front office, I mean how you find and service clients. Once you get past the initial friends and family clients, it’s critical to carve out a niche in your community or market so that the right clients find you.
How do you want to be known so that centers of influence refer you business? We have seen successful advisors focus on retiring small business owners, divorced or widowed women, former military officers, professional athletes, nonprofits, special needs planning, etc. The key is not which niche but to have a niche.
By back office, I mean selecting a broker/custodian that executes consistently.
By middle office, I mean a firm that can provide you with the infrastructure to support your client activities and manage your back office.
WSR: What is the most common reason you’ve seen advisors leave firms?
Quinn: Frustration with their back and middle office support. We hear it every day: calls not returned, trades not executed in a timely manner, inaccurate reporting, repeating instructions, explaining the business and turnover. These problems result in spending far too much time fixing administrative problems, rather than finding and servicing clients. Your middle and back office should make your life easier, not harder, and solve problems, not create them. Every advisor can move today for a bigger payout. The ones that do move are fed up with their operational headaches.
Your middle and back office should make your life easier, not harder, and solve problems, not create them.
WSR: Why doesn’t a one-size-fits-all path to ownership work for advisors anymore and how do you figure out how much autonomy someone’s actually ready for?
Quinn: Advisory firms are ever-changing organic entities because their assets are people, and every person and every group of people are different, even idiosyncratic. Opportunities and problems are common but not the same.
We have never seen the exact same advisor. Some only want to speak with clients. Some love investments. Some view themselves as entrepreneurs looking to grow a business.
Everybody wants autonomy and independence with available support, but the mix changes with every firm.
There are young and old advisors, solo and group practices, large and small, mild and wild advisors, etc. Everybody wants autonomy and independence with available support, but the mix changes with every firm.
WSR: How do you help an advisor honestly assess whether they’re ready for more ownership, versus just wanting the title?
Quinn: We don’t try to force anything. We don’t require a specific model or require a specific tech adoption. We listen to every advisor and try to understand where they are and where they’re going.
For example, if you don’t enjoy hiring and managing people, evaluating technology or handling billing and financials, you probably aren’t ready to own a business without having a partner to handle those responsibilities.
If client relationships and business development are where you thrive, you want to make sure you have the support and infrastructure to spend more of your time there.
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
