When RIAs see that their fastest growing peers boast more than double their conversion rate of prospects to clients, they naturally start to ask, “What do I have to do to get on their level?”
The 2023 Herbers & Co. Service Market Growth Study found that firms categorized as top organic growers close 7 out of 10 of their prospects, compared to the 30% conversion rate of an “average” advisory firm. These firms were found to offer additional services, such as business, cash flow and education planning, as well as estate, health care, tax, insurance and annuity.
The importance of offering services beyond the typical financial advice was similarly highlighted in a recent AssetMark survey, which found that clients are more likely to leave their advisors when there is no depth of services. Undoubtedly, RIAs succeeding at propelling organic growth offer a wide range of ancillary services such as insurance risk management, tax planning, estate planning, and more.
As firms embark on the race to the top of the expanded services game, the key to success lies in mastering effective collaboration across all offerings to ensure the client receives comprehensive, thoughtful advice. Think of these services as different specialties within a high-end restaurant, where cultivating the diner’s experience is paramount to their success. The individuals in charge of the wine, cheese, dessert, meats and sauces must rely on each other to achieve true synchrony of flavors. Similarly, RIAs must ensure everyone involved in a client’s financial plan is in constant communication, fostering a genuine culture of collaboration.
Our industry is used to working as independent units, but to offer clients the best financial future, we must shift to a partnership mentality that supersedes a traditional vendor relationship. Just like a five-star restaurant can deliver a delectable experience by merging all the correct flavors, a shared understanding between the life insurance, estate planning, and tax experts delivers the collective top-tier services clients crave.
Partnership is synonymous with success
As in every relationship, it takes two to succeed. During my two decades in the industry, I’ve worked with RIAs of all sizes to integrate risk management insurance solutions into their core offerings. I have experienced the most effective relationships with RIA firms that offer us a seat at the planning table and invite us to join their client calls instead of making us shuffle invisibly in the background. To support this, we have a thorough integration process that we replicate across firms, and we have seen our partners jumpstart organic growth by 2% to 4% in the first year of working with us.
Extending this partnership means aligning with the advisors and working as part of their team. All too often, we see advisors unsure of where to start when it comes to effectively integrating risk management into their comprehensive practice. When we work together - and sit on the same side of the table - it makes it significantly easier to make an impact for the end client. As advisors look to add service partners to their work, asking the right questions (How will we work together? What if my client has questions? How will we show the impact of our work?) is essential. It effectively lays the foundation for a strong relationship.
The client experience matters to your partners, too
It’s possible to get so wrapped up in your growth strategy that your business loses sight of the client relationships that actually fuel your growth. Putting the client first means your service partner has to care enough to put in the work. I believe that the most in-demand services, like insurance planning, legacy planning, or tax planning, are too involved for specialists to act like order-takers. Building this kind of relationship takes a high level of commitment and a team willing to step out of the “vendor” box to become an extension of the RIA. It is important to have an unbiased process that gives the advisor the peace of mind that we are truly working in a partnership capacity instead of pushing a product for our own benefit.
To drive meaningful growth, all strategic partners must prioritize client relationships by acting as a dedicated extension of their business. Their teams must be willing to collaborate with you and each other. offering a fiduciary-focused and unbiased approach that truly supports the client’s best interests.
Chad Druvenga is CEO of CBS Brokerage.
