Throughout 2011, my blog posts have focused on increasing production, especially for advisers who are just starting out. But what about well-established advisers who are producing at the $500K, $1M, or $5M levels? They want to boost their revenue too.
Like their early-career counterparts, veteran advisers must embrace the philosophy that activity yields revenue—and practice it! But beyond that, established advisers have some options that junior advisers don’t. Because they have a reliable cash flow—often with a high percentage of recurring revenue—they’re in a position to think more strategically about long-term ways to grow their businesses.
Let’s talk about a few of the most popular approaches.
Forging Strategic Alliances
Although it may seem like a short-term strategy, building a solid professional alliance usually takes at least a couple of years. In my experience, there’s a real correlation between the time you devote to establishing and nurturing a relationship and how fruitful that relationship is in terms of referral quantity and quality. Many alliances developed on a short-term basis wither with time or turn out to be more talk than action.
Hiring Additional Advisers
The trend toward ensemble firms that we’ve seen over the last decade shows no signs of letting up. After spending years establishing a solid staff, an effective marketing plan, and processes to maximize efficiency, many solo practitioners decide to capitalize on those resources by making them available to other advisers. In return, they get a slice of the revenue of each adviser who joins the firm.
But beware: finding the right advisers to join your practice can take years. Turnover is a reality, and many advisers have been burned by taking on a junior who never gets the hang of closing business. But, as long as you’re not expecting immediate ROI, bringing additional advisers on board can be a solid strategy.
Buying a Practice
Many established advisers think about buying a practice. They can afford the down payment, and most sellers would prefer to transition their business to an established firm as opposed to a junior adviser, especially if the deal includes an earn-out arrangement. Unfortunately, advisers often invest a significant amount of time seeking to buy a practice only to find that the deal never materializes. Depending on the circumstances, it might make more sense to devote that time and energy to your existing business.
How Well Do You Multitask?
At the end of the day, the success of any of these tactics depends on your ability to multitask. As you pursue long-term growth strategies, don’t lose sight of your core revenue-generating activities: asking for introductions, providing exemplary service to existing clients, and maintaining a crystal-clear brand identity. Pinning all your revenue-generation hopes on a single long-term strategy is risky business—for novice and veteran advisers alike.
Managing Principal of Practice Management
Commonwealth Financial Network