One of the key themes we discuss with advisors is the re-emergence of economies of scale as a driver of RIA business success. To date, we have discussed this theme in terms of an advisors inability to find the time and resources they need to “keep up” with day-to-day business demands or to focus on new business development to grow the business. Today, we want to explore what economies of scale look like to client prospects and what that means to the competitiveness of firms without it. In most industries, firms that achieve economies of scale are in a position of competitive advantage. Why? Because, by definition, a larger revenue base affords these firms a greater resource base with which to support front and back office efforts. These firms can afford to dedicate personnel and resources to specific efforts like marketing, technology, customer service and product (planning, investing, insurance, etc.). Smaller firms simply do not have the revenue base to do so. Principals must therefore operate as “jack of all trades” taxing their time and risking the perception that they are “master of none”. The table below illustrates how much additional resources are afforded by scale...Read More »

As market data volumes continue to grow exponentially, so too does the burden on wealth managers and financial advisors to identify ways to harness the power of market data and transform it into a meaningful competitive advantage. What’s required is a cohesive market data management strategy that not only simplifies internal operations, but also lays the groundwork for tools that enhance engagement with customers...Read More »

Understanding your “technology personality” will help streamline the decision process when it’s time to make changes to your office systems. From time to time people ask me which technology vendors they should consider when upgrading their portfolio accounting capabilities: Advent, Black Diamond, Asset Book, Morningstar, someone else? I often wonder what process was used to develop this short list because often times it appears to me that they are comparing apples and oranges. In trying to answer this question, I like to take a step back and look at the advisor’s real preferences...Read More »

It’s a fact. Investors rely on referrals to find the financial advisor they want to work with. According to a recent survey conducted by ByAllAccounts in conjunction with PaladinRegistry.com, almost 46% of the individuals who responded say they found their current advisor through a referral from a friend, respected associate, CPA or attorney. Yet, surprisingly, even though a sizable percentage of investors have relied on a referral, over 50% of them state that they have never provided a referral to their own advisor. There are a variety of factors behind this statistic. As the chart illustrates, over 27% of clients simply feel uncomfortable making a referral. But over 25% of clients report that their advisor has not asked for a referral—an indicator to me that new business prospecting opportunities are being missed every day...Read More »

How many of your clients pay attention to their 401(k) investments? I mean, really pay attention? Zero, right? So, how do you deal with your clients’ 401(k) investments? I’ll bet that every year or two, when meeting with a client, you might look at a recent 401(k) statement. You’ll tell the client how to adjust the allocations and that’ll be it for another year or two. If this describes your practice, you’re leaving money on the table!..Read More »

Let’s face it: the Super Bowl hype is not just about the big game itself. Many of us tune in to the Super Bowl to watch the commercials. This might be especially true for marketers. Whether you have $3.5 million to spend on a 30-second spot during the Super Bowl or simply want to acquire more clients for your book of business in 2012, you can glean a few marketing tips from watching the Super Bowl ads...Read More »

One of the up-and-coming advisor service organizations told me a few days back that one of their brokerage clients is using the relationship as a recruiting tool. Or more to the point, advisors who want to provide this service are actually calling the brokerage firm to see what it would take to get it for themselves. They’re lining up as qualified leads for this firm’s recruiters to prospect at their leisure. What’s pulling all these advisors into the net? Expertise that they don’t have...Read More »

RIAs and financial planners often provide a broad range of services and receive compensation in a number of different ways. Certain aspects of these services and compensation arrangements will dictate whether or not assets are counted as “regulatory assets under management” in an advisor’s regulatory filings. The SEC now defines “regulatory assets under management” as assets where the advisor provides “continuous and regular supervisory or management services.” Here are some guidelines to help advisors determine which of their clients’ assets should be counted towards AUM under this new definition...Read More »

Taking on a new client is a decision that may change your business dramatically. Being desperate and signing up someone just because they happen to have that magic number of assets can cause problems. Having a process for making the decision of taking on a new client will help you filter out your ideal client from one that only makes your numbers look good. Five tips to choose your ideal client are:..Read More »