Why do so many advisory firms stop growing? Because they don’t have a vision of what they’d look like if they ever got bigger.
Sure, they’d like to grow. More assets, more money. They may even spend some time trying to come up with new ways to grow. But each year, by the time Dec. 31 rolls around, their firm isn’t much different than it was on New Year’s.
Our consistent year-over-year growth has occurred in large part because each January, we ask ourselves, “What people do we need in place to grow from X to 2X in the next three years?” Each year, we go through this same exercise.
My business partner and I both started out working for a large national firm. After working there for a few years, we realized that if we wanted to have a practice where our interests were more aligned with those of our clients, we would have to start our own shop. So in 1993, we launched our firm with one administrative assistant and a few rented desks.
The first year went well as we initially found a steady stream of new clients from a large local employer. It was in the second year that things began to get more complicated.
The challenge we faced was that the two of us were doing too many things. We were responsible for negotiating leases, making payroll, marketing, calling prospects, presenting workshops, building financial plans, designing portfolios, and trading and selling. We were spending a bunch of time on things we weren’t good at and that we didn’t like doing.
We quickly realized that we were never going to grow from a practice to a firm unless we made some serious changes.
So we asked ourselves, what would our firm look like if we were 10 times our size? We envisioned all the tasks that would need to be completed and we built out an org chart with four departments and 13 distinct job titles.
The problem was, there weren’t 13 people in our firm. So my partner and I had to list our names in most of the boxes in the chart.
But that little exercise did wonders for our business.
As we got busier, we would look at that chart and it would guide us to which position we should fill next. Most importantly, the key to it all was that we prioritized the hires that freed us up to do what we did best, which was advise clients and market our firm.
Today, with more than 200 employees, our chart looks a lot different, but we still go through that process every year. We build out a plan and then focus on what people we need for us to be able to reach our goals.
When you subtract the market expansion of the last decade, most advisory firms haven’t grown. (But many principals don’t realize it.) No matter what size you are right now, to get bigger, you’ve got to have a clear vision of what your firm will need. Create an org chart and use it to strategically guide each new hire so you can realize real organic growth.
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Scott Hanson is co-founder of Allworth Financial, formerly Hanson McClain Advisors, a fee-based RIA with $8 billion in AUM.
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