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The Four Greatest Opportunities for Financial Advisors

Four Opportunities for Financial Advisors

Today’s Independent financial advisors face an endless array of challenges and opportunities. Identifying challenges before they arise is key for finding solutions and developing strategies for tackling the issues that present the greatest opportunities for improvement and growth.

The four biggest opportunities are:

  • Balancing Growth and Profitability
  • Recruiting and Retaining Talent
  • Creating Business Sustainability
  • Growth Through Mergers and Acquisitions

Balancing Growth and Profitability

Growth and profitability are inextricably linked and balancing the two within a single practice is the difference between building a one-generational practice and a multi-generational, sustainable enterprise.

It is not enough to focus on top-line cash flow and lofty production goals; sustainable businesses must focus on both the top-line revenue and bottom-line profitability. Structuring cash flow that produces profits creates an investable enterprise capable of taking on equity partners who will be there to service your growing client base as well as share in the leadership responsibilities.

This balance is important for all owners—founding, new, and future. It ensures that the team is focused on the success of the business as a whole and not just on individual production.

>>WATCH: Advanced Strategies to Balance Growth and Profitability <<

Recruiting and Retaining Talent

Your business’s growth and longevity depends your ability to recruit, retain, and reward next-generation talent. Recognizing the value of younger advisors impacts everything from growth rates to profitability to the success of your desired exit plan.

The need for next-generation talent is quickly becoming crucial for the aging financial services industry. New talent and fresh ideas keep businesses sustainable and thriving, but the supply of new advisors coming into the profession is less than the number of advisors who are slowing down and retiring.

Winning the battle for talent requires a careful plan to harness next generation of advisors. The first challenge is to identify your ideal candidates and determine where to find them. Then, you must retain them with a sophisticated compensation system that not only recognizes commitment and hard work but offers career growth and ownership potential.

It’s important to remember that incentivizing new talent is about more than just a salary. To stay competitive, your business should offer desirable compensation and benefits, a vibrant workplace culture, thoughtful mentorship, and opportunities for equity ownership.

>> WATCH: Cultivating Talent Through Culture <<

Creating Business Sustainability

Succession planning—or the process of gradually transitioning ownership and leadership within your business to the next generation of advisors—creates long-term, sustainable business growth. Through internal succession of ownership, your business gains longevity, increased value and profitability, and protection for years to come.

Creating sustainability takes time and a trusted team. Potential successors don’t necessarily need to be another “you.” They simply need to have the drive, potential, and ingenuity to build upon what you’ve already created. 

Declaring sustainability for your business comes when you’ve recognized that the strength and lifetime of the firm isn’t tied to any one owner’s career. It comes when you’ve initiated your plans to transfer equity ownership to the next generation and when all owners—including you­—have shifted focus to the long-term success of the business as a whole.

>>WATCH: The Sustainability Challenge<<

Growth Through Mergers and Acquisitions

Mergers and acquisitions provide powerful growth opportunities. Understanding the strengths and structure of your business before you buy, sell, or merge helps to ensure a smooth transaction with maximum client retention.

In less than a year, a single merger or acquisition has the potential to double the size of a financial services practice and lead to new markets, more staff, increased revenue streams, and an expanded client base. The rewards are remarkable, but only when the acquiring or merging businesses have the proper foundation to support the transaction and the quick growth that comes with it.

Preparing your business for growth through acquisition means understanding what makes your business strong now as well as how to improve it going forward. Strong, valuable businesses with a clear vision of future growth—through acquisition and otherwise—are more successful in the M&A arena.

>> WATCH: Acquisition Case Studies 2020 <<

The opportunities for creating a sustainable and growing business are interconnected. Developing a growth strategy is not a linear process and while you solve for one challenge you may soon discover a new and reliant opportunity in its wake.

A successful acquisition is supported by a strong enterprise that is capable of handling exponential growth, and building a strong enterprise requires the incorporation of next-generation talent. Retaining and nurturing next-generation talent is made possible with the proper compensation systems maintained through business profitability. Bottom-line profitability increases when it is properly balanced with top-line growth. And, long-term growth is supported by building a strong, sustainable enterprise.

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