As an advisor, it’s easy to get distracted by noise in our industry. Every day you are inundated by hundreds of articles, blogs and webinars telling you what you have to do in order to build a successful business. What this advice often fails to include is the disclaimer that what works for one advisor may not necessarily work for you. There are many different ways to build a practice today and just because one strategy seems to be trending right now in our industry, doesn’t mean it requires your focus this year.
As you look to dominate 2023, take the following “advisor must-do’s” with a grain of salt:
1. You Need to Build a Robust Social Media Following to Be Successful
Not everyone will agree with me, but your practice will be just fine this year without a viral TikTok or Instagram account. How do I know? Talk to 1,000 advisors and ask them how they found new clients last year. Most will tell you, “They were referred by existing clients ... and we didn’t even really ask for them.” Treating clients with exceptional care and being a really good advisor is still your best prospecting strategy. However, that’s not to say that you shouldn’t have a social media presence. Building brand awareness and positioning yourself as a thought leader in a crowded marketplace is crucial, and social and digital channels are your main avenues. My advice with social media is to be realistic and have the right expectations. If the thought of posting videos of yourself on YouTube makes you queasy, then stop wasting your time trying to figure out how to become the next advisor-YouTube star. Focus instead on how to deliver information, insight and care to your current clients in a way that is genuine and scalable. Sure, maybe you could use YouTube to do that. But good old-fashioned email and intimate lunches and dinners likely work just fine.
2. At Some Point You Need to Transition Out of the Advisor Role and Into the CEO Role
Our industry is obsessed with telling advisors they need to stop being advisors and instead become CEOs of their businesses. The truth is most advisors love being advisors and take on the “CEO” role only because they’re so good at being advisors that their practices grow before they know what to do about it. I know very few advisors who want to operate a business full time. What most advisors actually want is ownership over the business and book they have built, and freedom from a branch office or OSJ that is no longer adding value to them. If you genuinely enjoy being an advisor and get great fulfillment out of helping others, landing new clients and delivering financial planning advice, then forget what the industry has told you. Continue to hone your craft and either hire someone to run your business or join an organization (like mine) that enables you to advise while still maintaining ownership and control over your business.
3. Practice Multiples Are Going to Come Down Drastically in the Coming Years and You Should ‘Take the Deal’ Being Offered Now, While It’s Still Hot
You should never take a deal based on market predictions from a salesperson at a firm trying to acquire you. Industry experts have no way of knowing definitively what is or isn’t going to happen in the coming years. Have valuations cooled a bit from a few years ago? Yes. Is there still an appetite to acquire wealth management practices? Double yes. The decision to sell a portion or all of your practice should have everything to do with what is best for you, your clients and your family and very little to do with the acquirer trying to help you time the market. When considering whether to sell a portion of your practice to a larger firm, you should be asking yourself only two questions. First, why am I looking to sell right now? You should ponder this question especially if you don’t need capital, don’t need to de-risk and aren’t overly concerned about growth. Second, what benefit would my clients and I receive from being acquired? Be wary of firms that are promising “to help you grow” in exchange for a minority equity stake in your practice. Most firms that are promising to help you grow inorganically by bringing you deals have made that pitch to many other advisors as well. Be sure that you have an iron clad understanding on all the terms of your potential deal, including what will be required of you and the acquirer post-deal.
4. You Need to Specialize Within a Specific Client Niche
Always remember that you do not “need” to do anything. If you are comfortable building more of a generalist practice serving a handful of different niches in your community, more power to you. If you are wondering, “Should I be focusing more in one specific area?” but find that you really love the practice you run, have clients that are happy, and are growing in a healthy and sustainable way, then double down on what you are already doing. You can build just as successful a business with three or four niches as you can with one.
Penny Phillips is the co-founder and president of Journey Strategic Wealth.
