dtaylor group organic growth report · dtaylor group organic growth report step 1: create an...

DTAYLORGROUPORGANICGROWTHREPORTOrganicgrowthinsights,issues,andactionsforwealthadvisorsandinvestmentmanagementfirms.

DTaylorGroup,LLCCopyrightDrewTaylor2017.Allrightsreserved. 2

DTAYLORGROUPORGANICGROWTHREPORT

ExecutiveSummary

• Organicgrowthisthelifebloodoflong-termsuccessofwealthadvisoryandinvestment

managementfirms–itisthesustainerrocketforfirmgrowth.

• Sales,Marketing,andClientServiceallplayimportantrolesindrivinggrowth.

• ClientRetention–throughtop-notchclientservice–isthemostcrucialfactorinlong-termorganicgrowth.

• Fourofthetop5reasonsclientsfiretheiradvisorareclientservicerelated.Keeping

whatyoualreadyhaveisvitallyimportant.

• Lackofaclientreferralprocess,alongwithnottrackingleadsthroughtheentiresalesprocess,arekeyfactorsinlagginggrowthformanyfirms.

• Oneofthemostunderappreciatedcomponentsoforganicgrowthsuccessishavinga

repeatablesalesprocesscombinedwithacoordinatedsalesreportingeffort.

• DTaylorGroupisconductingunique,focusedresearchandprovidingsolutionsaroundthedriversandimpedimentstoorganicgrowthwithinwealthadvisoryandinvestmentmanagementfirms.



“Ifyouaren’tgrowing,you’redying.”–LouHoltz,TonyRobbins,andmanyothersources“Withoutcontinualgrowthandprogress,suchwordsasimprovement,achievement,andsuccesshavenomeaning.”–BenjaminFranklin

OrganicGrowth

Organicgrowthisthelifebloodoflong-termwealthadvisoryandinvestmentmanagementfirmsuccess.Withoutorganicgrowth,yourfirm’sstrategicplansandkeyinitiativesarenotmuchmorethanhopesanddreams.Ofthetwotypesofbusinessgrowth–organicandinorganic–organicistheonlyonethatissustainableoverlongperiodsoftime.Bothformsofgrowthcan,andoftendo,playanimportantroleinyouroverallbusinessstrategy.Theirrolesarecomplimentary,yetonlyonecanfunctionasastandalonestrategyforthedurationofyourbusiness.Manyfirmleaderswespeakwithsaythatprovidinggrowthopportunitiesfortheirexistingemployeesisoneoftheirtopprioritiesandconcerns.Itisorganicgrowththatwillgeneratetheseopportunities.Ifyourbasebusinessisnotgrowing,youremployeeswillnothavethechancetogrow.Additionally,strongandconsistentorganicgrowthmakesyourfirmmoreattractivewhenconsideringmergersandacquisitions(inorganicgrowth),nomatterwhichside–buyerorseller–youhappentobeon.Generatingmeaningfulorganicgrowthmaximizesthevalueasellercanreceiveforhis/herfirm,whileitmakesbuyersamoreattractivesuccessortotheacquiredbusinessandmakesgettingacquisitionfinancingeasier.Todemonstratetherolesorganicandinorganicgrowthplay,let’suseanexampleoflaunchingarocketintospace.Allrocketpropulsionsystems(growthengines)aremadeupofboosterrocketsandsustainerrockets.Boosterrocketsareshorter-burningrockets,generallyusedattakeoff,toprovideashort,powerfulburstofvelocity(growth).Thesustainerrockets(theirnamealonegivesastrongcluetotheirrole)aretheprimaryenginespropellingtherocketforthedurationofitsflight.Inorganicgrowth(mergersandacquisitions)isakintoaboosterrocket–itprovidesashort,powerfulboosttoassetsandrevenues.Attherighttimeandfortherightreasons,inorganicgrowthcanplayameaningfulroleinafirm’soverallbusinessevolution.Justlikewithboosterrockets,though,inorganicgrowthcannotbeusedasalong-termgrowthstrategybecauseitburnswaytoomuchenergy(time,money,internalresources)andistoocostly(eventuallyyou



runoutoffuel).Itisorganicgrowth(thesustainerrockets)thatwillpropelyourfirmforthelonghaul.

Howdoyougenerateorganicgrowth?

Asshownabove,organicgrowthisdrivenbyyourfirm’ssales,marketing,andclientserviceefforts.Whilethatmightseemsimple,itisanythingbut.TheA#1,absolutegreatestwaytogenerateconsistentorganicgrowthistoprovidethehighestqualitycustomerservicepossibletoyourexistingclients.Mostfirms’departingclientsleavewithmeaningfullyhigherassetsthantheaveragenewclientbringsinthedoor.So,itoftentakes2ormorenewclientstoreplacethelostassetsof1departingclient.Keepingwhatyoualreadyhaveisvitallyimportanttolong-termgrowthand4ofthetop5reasonsclientsfiretheiradvisors,accordingtoaFAmagazinestudy,areclientservicerelated.1Additionally,highlysatisfiedclientsaremorelikelytocontinueaddingassetstotheiraccountsandarealsothebestsourceofreferrals,andtheirreferralstendtobepre-qualifiedandoftenpre-sold.Accordingtothe2016InvestmentNewsFinancialPerformanceStudy,contributionsfromexistingclientsandclientreferralsaccountedforabout40%oftheaverageadvisoryfirm’sAUMgrowthfortheyearended12/31/2015,yetonly1in3firmsintheirstudyhaveaclientreferralprocess.2Howdoyournumberscompare?

ClientService

SalesMarketing



Salesandmarketingeffortsaretheothercriticalaspectsofgeneratingconsistent,sustainableorganicgrowthforyourfirm.Whilemanypeopleseparatethemintotwodistinctfunctions,ourexperienceshowsthatiftheyarenotseamlesslyintegratedwithaunifiedmessagebeingdeliveredbothfunctionswillflounder.Themechanicsofdevelopingadistinct,unifiedmarketingmessageforafirmisoutsidethescopeofthisreport(althoughitiswithinthescopeofservicesthatourfirmprovides).Withinafirm’ssalesefforts,possiblythemostunderappreciatedcomponentsfortheirimpactonorganicgrowtharehavingarepeatablesalesprocessandacoordinatedsalesreportingeffort.Aneffectivesalesprocessisonethatflowsseamlesslyfromthetimeafirmreceivessomeone’scontactinformation(whatwecalla“suspect”)allthewaythroughuntiltheybecomeanewclientoralostsale,andallsignificantstagesinbetween.The2016reportfromInvestmentNewsfoundthat62%ofallfirmsintheirsurveydonottracktheleadstheygenerateoranyothersalesprocessstages.2Thislackofsalesprocesstracking(whichleadstonodataforreporting)causesthemajorityoffirmstoclassifytheirmarketingmethodsas“moderatelysuccessful”atbest.Withtwo-thirdsoffirmsnothavingaclientreferralprocessandnearlythesamenumberfailingtotrackleadswithintheirsalesprocessitshouldnotbeoverlysurprisingthatorganicgrowthratesfortheaverageadvisoryfirmshavedeclinedineachofthepast3years.

ClientReferrals15%

Contributions23%

ProfessionalReferrals10%

BusinessDevelopment

52%

AverageFirm%InflowChangeinAUM



TheFOURPillarsofSalesGrowth:Eachofthefourpillarsabovearecrucially,andequally,importanttolong-termsalesgrowth.Wehighlightedclientretentioninthegraphicabovebecausemanyfirmsdonotincludeitaspartoftheirsalesplan,yetwefirmlybelievethatclientretentionisacriticalpillartoanyfirm’sgrowthsuccess.Asnotedearlierinthereport,keepingwhatyoualreadyhaveisvitallyimportanttolong-termgrowth.Focusingoneachofthefourgrowthpillarswithinyourgrowth,orsales,plan,providesawell-balancedandeffectivepathtostrongorganicgrowthnowandinthefuture.ParaphrasingAristotle,“Wearewhatwerepeatedlydo.Excellence..isahabit.”Formingnewhabitswillbecriticaltorevitalizingorganicgrowthwithintheadvisoryandinvestmentmanagementindustries.

Groundbreakingdatagathering

Therearevirtuallynoindustryreportsfocusedexclusivelyonorganicgrowthofwealthadvisorsorinvestmentmanagementfirms,specifically,whataspectsfirmsaredoingwellandwhatgetsinthewayofmaximizingtheirorganicgrowthefforts.Whyisthat?Wearen’tsure,althoughit’spossiblethatit’sassimpleasabusinessnecessitynotbeingveryexciting.Footsoldiersareanecessityofmilitarysuccess,specialopsareexciting.Sustainerrocketsareanecessityforspace

ClientReferrals

COIReferrals

Prospecting

ClientRetention



flight,boosterrocketsareexciting.Sales,marketing,andstrategy(organicgrowth)areanecessity,mergersandacquisitions(inorganicgrowth)isexciting.DTaylorGroupiscurrentlyconductingtheonlyindustrysurveyspecificallyfocusedonorganicgrowthanditskeydrivers.Earlyresultsfromourresearchshowthatthemajorityoffirmsarenotgeneratingthelevelsoforganicgrowththeywouldlike–70%ofrespondentsreportorganicgrowthoflessthan8%,withanother20%ofrespondingfirmsreportingorganicgrowthbetween8–12%.FourMostCommonChallengesCitedtoGeneratingOrganicGrowth

Whilefirmsaretakingstepstoimprovetheirorganicgrowth,thetwomostfrequentlycitedsteps–more(online)marketingandhavingmoreclientmeetings–seemtofallintothecategoryof“workingharder,notworkingsmarter.”Nearlyallfirmsstatedtheyhaveagoalofgeneratingmorereferralbusiness.However,withmanyfirmslackingastrategic/businessdevelopmentplangettingmorereferralsmaybemoreofahopethananythingelse.Additionaldatagatheredshowthatthemajority(60%)ofrespondingfirmssaytheyhaveadefinedtargetmarket.Thisresultispositivesincethatisoftenoneofthefirststepsafirmmusttakeinfocusingonorganicgrowth.Yet,itseemsthatthepositivityendsattargetmarketdefinition.Whenasked,“Howeffectivelydoesyourfirmdeliveryour‘story’ormessagetoyourtargetaudience?”noneoftherespondingfirmsanswered,“VeryWell.”80%ofrespondentssaid“Fair”withtheother20%saying“NotWell.”Also,whenitcomestoreportingandtrackingbusinessacrossallstagesoftheirsalesprocessonly20%offirmssaidtheydoso“VeryWell.”Leaving80%ofrespondentsasonly“FairlyWell”or“Poor.”

Whatcanyoudo?

Nomatterwhereyoufallinrelationtothesurveyresponsesabove,hereare4keystepsyoucantaketostrengthen,enhance,andboostyourorganicgrowth.Thesearebynomeanstheonlystepsthatcanbetaken.Theyarestepsthatareproventohaveasignificantlypositiveimpactonorganicgrowth.

Creatingsustainablenewclientgrowth

Lackofstrategic/businessdevelopmentplans

Toomanyothercompetinginitiatives

Firmnotstructuredorstaffedtosupportgrowthinitiatives



Step1:CreateanOrganicGrowthPlan–Yourplanshouldbebothatthefirmandindividuallevels.Usethe3-segmentbubblechart(ClientService–Marketing–Sales)andthe4PillarsofSalesGrowth(ClientReferrals–COIReferrals–Prospecting–ClientRetention)asguidepostsforyourplan.Metricsandreportingshouldbetiedintotheseplans.Step2:EnsureyourMessagingisClient-Focused–Readyourwebsite,materials,andproposalsfromtheclient’sperspective.Areyoumostlydescribingwhatyoudo,howyoudoit,andwhatmakesyoudifferentfromotherfirms?Doyourverbalcommentsfocussimilarlyonfirmattributes?Ifso,yourmessageisallaboutyou.Totrulybeeffectiveitneedstobeequally,ormore,aboutyourclient.Howdoyourclientsfeelafteryouhavedonesomethingforthem?Whatemotionsdoyourclientsexperienceastheyprogresstowardorreachtheirfinancialgoals?Step3:AssessyourclientandprospectengagementprocessestoseehowEmotionallyIntelligenttheyare–Clientsareemotionalbehavers.Whilesomeclientsmayengagewithtechnicaldetailsandperformancenumbers,thedecisionstheyaremostcommittedtoarethosewhichsatisfytheiremotions.Iftheiremotionsarenotbeingmetintheirrelationshipwithyoutheyarepronetoemotional“hijacks”whenturbulence(personalormarket-driven)strikes.AnEmotionallyIntelligentengagementprocesswillallowyoutosatisfyandkeepyourclients’emotionscalminallenvironments.Step4:Establishstrongclientserviceandresponsivenessmetrics,alongwitharegular,targetedclientreferralprogram–Threeofthetop5(andonecouldargue4outofthetop5)reasonsthatclientsfiretheiradvisorsorinvestmentfirmsarerelatedtolackofcommunicationand/ortimelyresponsiveness.Settingstrictresponsivenessandserviceguidelinesandmetricsforallclient-facingemployeesisnotjustagoodthingtodo,itisanabsolutelycriticalthingtodo.Youworkextremelyhardtogettherightclientsintoyourfirm,communicatingwiththemandrespondingtotheminatimelymanneraresimplestepstotaketokeepfromhavingclientsneedlesslywalkaway.Combinetheseserviceexpectationswitharegular,targetedclientreferralprogram–whereyouareaskingclientsforspecificintroductionsattheexactrighttime–andyouwillnotonlymaximizeyourclientretentionnumbers,youwilladdaboosterrockettothebestreferralsourceyourbusinesshas.Wearecontinuingtosurveyfirms,bothelectronicallyandviaphone,onorganicgrowthanditsunderlyingvariables.Contactusatdtaylor@dtaylorgroup.comifyouwouldliketoparticipate.Additionally,donothesitatetocontactusifyouwouldlikeanoobligationneedsassessmentofyourfirm’sorganicgrowthefforts.1FAStaff,FAMagazine;“Top5ReasonsWhyClientsFireAdvisors”;http://www.fa-mag.com/news/top-5-reasons-why-clients-fire-advisors-16238.html,August15,20172InvestmentNewsResearch;InvestmentNews:“2016InvestmentNewsFinancialPerformanceStudyofAdvisoryFirms”;http://www.investmentnews.com/dcce/20160913/4/4/WP_SPONSORED/3422061,August15,2017

dtaylor group organic growth report · dtaylor group organic growth report step 1: create an...

Documents