As long as the phones keep ringing, most RIA businesses are perfectly content to stick with tried-and-true tactics—the ones that brought them success in the first place. Do good work. Build relationships with clients. Introduce yourself to local attorneys. Then, watch your business grow.
But now, we’re smack in the middle of massive shifts in market dynamics, technology and consumer behavior across the industry. Traditional growth strategies yield diminishing returns, while new online engagement methods are exploding.
If you’re a fast mover in this environment, you can seize a once-in-a-decade opportunity to build scalable future growth. But if you stand still, you might find it impossible to catch up later. Let’s examine why.
The Shifting Power Balance Among Growth Drivers
RIA growth has consistently come from a handful of sources:
- Capital markets (the primary growth driver for a decade until the Fed rate hikes);
- Mergers and acquisitions;
- Traditional referrals from clients and centers of influence, such as attorneys and mortgage brokers;
- Custodian referral programs (the basket where some firms currently put all their eggs); and
- Business expansion—adding new offerings, like tax planning, or developing niches based on technology or specific service experiences.
The fact is traditional channels are losing effectiveness. Asset growth and M&A activity have cooled. Referrals still supply the most significant stream of new clients, but they no longer look like an inexhaustible source. That’s especially true given firms’ reliance on a few founders and rainmakers despite a looming succession crisis.
At the same time, many new channels aren’t yet living up to their promise. Purchased leads aren’t converting well. Younger demographics are still not generating revenue. And most firms haven’t even dipped their toe into digital channels.
Bright, self-reflective firms have thought hard about this situation. And most have reached the same conclusion.
The engine that brought RIAs here is still puttering along. But it just doesn’t have the steam to make it up the next hill. For that, they’re going to need a whole new growth engine. One that’s repeatable, scalable and sustainable into the future.
What a Sustainable Growth Engine Looks Like
A new, more durable growth engine isn’t combined from random search ads and LinkedIn posts. It’s built with intention from the inside out.
Start at the core of your business, beginning with the fanatical alignment of your vision, values and target markets. Uncover your firm’s true differentiation in your story, your reason why and the essence of what makes you unique. What is it your mission to accomplish, and for whom? Bring that same fanaticism to a hyper-targeted ideal client profile and corresponding client experience.
Creating and demanding alignment of your core is essential to building a growth engine that will get you up and over all the mountains ahead.
Reorient your organization to harness each individual’s unique abilities to drive growth. Whether a team member is a front-of-house advisor, a sales executive, an ops staffer or a potential thought leader, everyone has a role to play—and needs to be held accountable for results.
Then, you’ll need an infrastructure to support your team with built-in coaching, marketing resources and accountability tools.
Only then are you ready to focus on the outward-facing parts of your growth engine. Look at the ways you engage your targets. Are you offering compelling value to your clients, prospects and community? How can you optimize the pathway from the top of the funnel to closing the deal? Can you create digital content that matters to your target market and put it in the right places to improve reach? Are you running paid ads to get more eyes on content that converts?
When inside and outside work together synergistically, you have a robust and resilient engine for growth.
Who Will Pull Out Front?
Some firms will take the lead in engineering a new growth machine. In my experience, there are three distinct groups among RIAs:
- Large national RIAs with sophisticated marketing departments and dedicated digital teams who are very successful at lead generation. These include names like Fisher, Mercer, Edelman and Brighton-Jones (whom I’ve interviewed as part of FiComm’s growth series).
- Smaller local or regional RIAs you might not have heard of are crushing digital lead generation—like Adam Cmejla at Integrated Planning and Wealth Management.
- The other 90% of the industry which includes RIAs who have never dabbled in digital marketing and have no idea where to begin.
The large national RIAs are real pros. Like big companies in most industries today, they may face rising digital cost per lead and lower conversion ratios. But they’re sophisticated enough and have the scale to figure things out.
However, the local and regional RIAs are driving growth at a transformative pace. They’re doing digital right: they are clear on their true differentiators, hyper-focusing on specific target markets, building influence online, creating relationships online, and only then trying to convert online.
As for the remaining 90%, the digital innocents? They may start from the furthest behind, but they also have the greatest opportunity to optimize their engines right from the start. If your business falls into this category, now is your chance to shine.
The End of the Line—and a New Start
I understand RIAs feel reluctant to abandon the methods that got them this far. But it might be the only way forward.
That’s because consumers are in the driver’s seat now. They want to seek out information and develop relationships online. The trend holds across age, income, net worth, and every other demographic you can name. Clients no longer rely on traditional sales channels alone—and neither can the advisors who serve them. The engine that got you here can’t take you where you need to go now.
The good news is your next ride is already here. And it promises to take your business a lot further.
Megan Carpenter is the founder and CEO of FiComm Partners
