Learning from Advisers with Fast-Growing Practices

In years past, AssetMark has held informal strategy discussion meetings with fast-growing advisers; but starting in 2015, the firm decided to schedule official meetings with top-performing advisers, to enable them to share their ideas on how best to drive practice growth. 

According to Matt Matrisian, senior vice president, practice management and strategic initiatives, a wealth of ideas came out of 16 regional meetings with advisers whose practices enjoy annual asset under management (AUM) growth of 20% or more, culminating with a larger group session at the end of the year-long study.

The resulting report, “Leading Firms Leverage Each Other to Accelerate Growth,” outlines a number of procedures leading advisers use, such as documented, consistent approaches to their business and better use of staff and technology. They also have clearly defined value propositions.

Other advisers can learn from these philosophies, particularly at a time when advisers are facing “a number of new and unique challenges today,” Matrisian tells PLANADVISER. “For instance, technological advances, including robo-advising solutions, are putting competitive pressures on advisers. The recent Department of Labor rule, which implements a rigorous fiduciary standard for advisers making recommendations on retirement accounts, is another challenge.”

The advisers said their top three concerns are, first, a lack of focus on driving firm value, cited by 52%. That was followed by the inability to grow clients, AUM and revenue (49%) and the inability to change client demographics (32%).

The study revealed that the most successful advisers have documented procedures that are performed consistently, a formal fee schedule that is rationally aligned with services rendered, and better use of staff and technology. As the report puts it, “Across the board, every adviser in this group was a strong advocate of simple steps such as going paperless or for the implementation of comprehensive customer relationship management (CRM), risk analysis, portfolio management, marketing and client-communication tools. They were more likely to have staff to leverage in managing greater workloads and clearly defined value propositions.

“Although the benefits of building a strategic plan to document an overall business strategy might be obvious,” AssetMark continues, “the reality is that a lot of firms do not have a well-thought-out strategic plan. Although the study series advisers all defined themselves as forward thinkers, they more often than not relied on organic planning, meaning taking on new opportunities as they came.”

AssetMark recommends that advisory practices have a five-year plan and revisit, and revise, their goals every quarter.

NEXT: The “DISC” approach to human capital management

AssetMark has developed an assessment tool to help management determine the strengths of each team member. Called “DISC,” it stands for: Dominence (how a person responds to problems and challenges), Influence (how a person influences others to his or her point of view), Steadiness (how a person responds to the pace of the environment) and Compliance (how a person responds to rules and procedures set by others).

Depending on which one of these four behavioral styles matches an individual worker, this will determine which of eight management styles they may best respond to. A Conductor, for instance, is described as “a change agent who is direct, results-oriented, competitive, confrontational, with a sense of urgency.” An Analyzer, on the other hand, is “critical listener who is precise, detailed, accurate, concerned with quality and an attention to detail.” As AssetMark's report says, “Professionals often use DISC to decrease conflict and promote harmony within their team through effective communication. When team members understand how to adapt communication styles to properly address the individuals around them, things run much more smoothly. By applying knowledge of DISC characteristics to their staff, an advisers can leverage their team’s individual strengths.” It can also help an adviser to improve relations with their clients.

AssetMark said that by communicating with each other, advisers in the study experienced 23% higher AUM than the study’s control group, along with 13% higher fees and 7% higher operating profit.

“Given the success of the 2015 adviser growth study group and expanded interest by our advisers, our plan is to develop regionally based study groups throughout the country in 2016 and beyond,” Matrisian says.

AssetMark’s full report can be viewed here.