Cameron Hamilton planned to become a physician, but after a year of medical school he transitioned to financial services. He found financial planning—attending to a client’s financial health—was a “neat marriage” between what attracted him to a career in medicine and his interest in finance. In 2013, Hamilton joined Lexington, Ken.-based registered investment advisory firm Ballast and is now the almost $500 million AUM firm’s director of financial planning.

The firm includes 11 team members working with about 350 families, mostly attained through client referrals. But referrals are naturally bottlenecked by the number of advisors at the firm capable of providing the service that leads to those client recommendations.

The biggest impediment for growth in the industry going forward, he says, is the lack of a career track that can onramp the right people into the profession.

“I personally think it can take a couple of years or more for someone to do the type of work we need to do,” he said. “The growth challenge is going from one client who really cares, to duplicating that to scale. And that’s about growing people internally.”

To Hamilton, ensuring in-house growth keeps pace with client interest means the job should be viewed as an apprenticeship, with proactive senior professionals touting the benefits of the career to those considering it, and mentoring them as they come into the business. If so, firms can grow ahead of the need, but without supporting nascent advisors early on in a proactive manner, a firm risks running out of capacity to serve clients.

“We’re not there,” he said. “But we never want to be anywhere close.”

Hamilton said he was inspired by burgeoning educational pathways, like the one at Western Kentucky University (the school offers an undergraduate degree in personal financial planning). Hamilton hopes the increasing number of collegiate planning programs pique the interest of more students, some of whom may not even know the career path exists.

“Twenty years ago, you got into the business because you knew someone,” he said. “Hopefully, more and more, that’s not going to be the case.”

Though he formally took the role of chief executive officer at Halbert Hargrove in December, JC Abusaid has been there for nearly every step of the firm’s growth since he joined 25 years ago. In the early years, he said, the model was simple: Pursue as much business as you can.

At one point, the firm was approached by a potential buyer; the principals decided not to go down that path, but it made them realize the potential value of what they were building—if they could grow the firm strategically.

“That triggered a strategic focus of, ‘I’m going to turn down this money, but we’d better build the firm correctly,’” he said.

In addition to its Long Beach, Calif. headquarters, the firm has added offices in San Diego and Denver, as well as Houston and The Woodlands in Texas. They have some 750 clients, with an average of more than $3 million in assets each.

While the firm has been able to hire new advisors to replace those that retire, Abusaid says finding the right talent remains the most difficult part of maintaining the growth trajectory. Hiring is more time consuming for a firm trying to instill a certain culture, as Halbert Hargrove does, he said.

“Everybody knows that developing people takes a lot more time than just hiring,” he said. “It’s not that simple if you’re trying to preserve the culture that we have.”

The firm began an internship program ten years ago, but over time it developed into an initiative where new hires work a minimum of six months to a year with the firm, with rotations to different areas of the business to ensure there are potential hires available to meet the demand in any particular area when it arises.

“We’re getting the hang of it, but that’s where the pressure is,” he said.

The biggest challenge facing Terry Ritchie, a vice president and private wealth manager at Irvine, Calif.-based Cardinal Point Wealth Management Partners, is hiring the right people.

Cardinal Point, with some $642 million in AUM, has a very specific niche: Cross-border planning between the U.S. and Canada. Advisors need to know both environments, including different tax regimes, retirement structures and planning quirks that affect clients with a presence in both countries.

“Part of the difficulty that we've had over the last couple months is that some of the new folks that have come over are having to learn some new things because of our Canadian business,” he explained.

“We’ve hired five different people in the last two months,” said Ritchie. But two of the advisors, with previous experience at Vanguard and Charles Schwab, struggled with being thrust into the fray as tax season hit full swing. They were eventually let go.

“We thought they had the ability,” he said, “but they just weren’t there.”

Technology too is a sore spot. Because the firm helps clients retire in both the U.S. and abroad, retirement planning models need to be customized to account for regulations in other countries, he said. “There’s nothing out there in the marketplace that serves our niche.”

That tech challenge limits the efficiency of his current team. Without suitable candidates, firm principals can’t find the space to focus on more strategic growth initiatives.

“The biggest thing for us is capacity,” he said. “We're just busy. It's busy and it's been that way for a long time. It's just the way it is.”

For Vance Barse, an investment consultant to advisory firms and the founder of Your Dedicated Fiduciary, the pandemic forced a reinvention of the traditional growth model for RIAs.

“Given the nature of the COVID situation, we really haven't had the opportunity to attend things like charity events or host different social functions at which many of us would meet potential clients,” he said. “We're really leveraging the utilization of search engine optimization and custom content in 2022 to drive people to the firm via the internet. We grew 30% over the last year, which was interesting because we couldn’t go out and meet with folks the way that we typically do. We're very thankful for the growth that we've had, but we want to really figure out how to use custom content, so that people find us through the internet.”

The content and skill sets that are pushing his firm forward, he said, are focused around planning strategies for more complex families and high-net-worth clients, the kind of planning that many advisors overlook. 

“Many advisors don't look at tax returns. They don't look at estate planning documents. They don't work alongside of the allied professionals that those families have, really to bring maximum value. So when you acquire another firm inorganically—and the market is very hot for that right now—you have the ability to come in and implement certain planning strategies that the clients likely have not heard of, because many advisors just don't offer them.”

But even as he focuses the business with an intent to grow into those needed areas, “the human resources environment has been very challenging,” he says. He recently had an opening for a certified financial planner and came up dry. “It has been exhausting. I called every single CFP within a 50-mile radius of one of our offices. I had one return call. That's in stark contrast to two years ago when I had almost every single one call me back.”

Competition for talent is cutthroat, said Matthew Saneholtz, a senior wealth advisor and co-owner of Tobias Financial Advisors. The Plantation, Fla.-based firm, which has $650 million in assets per regulatory filings, has found the current macro-economic trends to be a serious obstacle to growth.

“Getting the right people in the right place—especially in this environment—it’s very competitive,” he said. Not only are salary and benefit expectations running hot, but advisors have retired during the pandemic creating a talent shortage, he said. The potential for higher inflation makes it more difficult to predict the future needs of the business. The firm has grown from an employee headcount of 6 to 17 over the past five years, he said.

“Trying to find the right people to fit the right positions in our corporation is a challenge,” he explained. “And I think that's going to continue to be a challenge.”

An additional factor is reconfiguring the firm’s work from home policy, he said. “We learned a lot during the pandemic and we’re trying to make a decision on what roles can really be broader—outsourced to work from home or hybrid settings—versus being in the office seats,” he said.

Tasks with standardized workflows are easier for remote workers, according to Saneholtz. But many older clients are demanding in-person meetings.

“People still want to come in,” he said. “We need our entry level planners and paraplanners to be here in the office.”

“It's a balance of figuring out how to deliver a consistent service model, but also not being a cookie cutter place where you can't think outside the box,” he said.

Like many advisors, Suzanne Abrams, president of Lundeen Abrams Advisors, has a strong referral network from current clients, accountants and friends and family. “And then I try to maintain a marketing presence and just say a prayer that it works,” she says. It has, up to a point.

“What I’m realizing is the referrals that have been coming, they’re really not the right type of clients for me,” she said. “I’ve been serving the folks that come my way, because I believe that I’m here to serve. But I think my growth could be a lot better if I were adding the clients that are my dream clients.”

But how to get her name in front of them? “My business does not show up on Google the way that it should. For example, if you Google ‘financial advisor Minnetonka,’ which is the location of my business, I don't come up.”

“I find it extremely frustrating that Google isn't sharing my information. So for the month of April, I did a promotion with Google. The phone is not ringing off the hook, but I think I need to keep doing things like that and pay more attention to my SEO,” she said.

Like many independent advisors, Abrams is pulled in too many directions to feel she is growing as effectively as she could.

“Running a firm is like juggling 12 balls that you have in the air constantly. And you’re always dropping half of them, it feels like,” she said. “I would say the time I spend on operations is holding me back. If I had enough money to just hire an operations person, I’m certain my business would grow a whole lot faster.”

“I'm doing most of the operations. I'm chief compliance officer. I'm the bookkeeper. Being the one who wears all the hats on leadership within the firm, I think I'm just probably doing too much. It's just got to be really utilizing my team better.”

Managing the headaches and backlogs that come with compliance are the biggest obstacles to growth for Jerry Orosco, vice president and portfolio manager at San Antonio, Texas-based Intercontinental Wealth Advisors. The $1.8 billion firm has clients around the world, with almost half of the assets connected to non-U.S. clientele, per the firm’s Form ADV.

“We have clients in Australia. We have clients in Switzerland, and we have clients in Brazil,” he said. “We have to really adapt and try to accommodate and make sure that we are providing them with the service that they need when they need it.”

New clients face a time-consuming process of background checks, due diligence conversations and scrutiny guided by regulations, he said. “Compliance is something that we take very seriously and of course it takes more resources and time when it comes to our international clientele,” he explained. “You have situations in which some clients might be offended because you’re asking for a lot of information and having conversations that clients take personally, like talking about money laundering.”

“It’s something that slows the pace of our growth,” he added, noting that the due diligence workflows for onboarding new international clients can take weeks or longer, compared to the faster pace of compliance checks for U.S.-based clients.

Better communication between the firm’s compliance department and its advisors has trimmed wait times for onboarding new clients, according to Orosco. Advisors try to anticipate bottlenecks during their client discovery process “to get ahead of the curve.”

Even after they’re onboarded, Orosco’s clients face regulations that come in from all corners of the globe. Last year there was a ruling by the European Union, for example, that required “enhanced due diligence” for clients from several different countries, he said. “We need to be aware of those regulations overseas, because when we invest our clients’ money in mutual funds that are registered in Europe, that’s going to create red flags in those jurisdictions, which will create a problem for us here in the U.S.”

Failure to develop new talent, and trust them with client-facing respsonsibilities, is why many firms are hitting up against capacity constraints, says Alec Rosen, vice president of corporate development for Advisor Investments. He joined the $7.2 billion firm in 2018, and in addition to advising clients, he coaches the firm’s younger advisors.

Some wealth management firms have grown so large and so fast that principals continue advising clients while struggling to manage the business to create a sustainable enterprise.

“Until we can start to truly trust our teammates and our next-gen advisors and our partners, I see that as a tremendous impediment for those seeking to reach new heights,” he said.

Advisors “can’t free up the time to actually build the business because they don’t trust their colleagues,” according to Rosen. “That’s true at our firm of $8 billion and that’s probably true at the $80 million RIA. We’ve got to create a better ecosystem of trust in our advisor ranks.”

Adviser Investments recently announced plans to acquire Polaris Wealth Advisory Group to create a firm with combined assets of $10 billion.

One solution is better coaching, said Rosen.

“If you have a client die, have the next-gen advisor on that phone call, so they can feel what it sounds like for the client’s kids who have to deal with the mess that's left behind,” he suggested. “Exposure can happen a lot of different ways.”

Rosen said many young advisors are well-equipped with the core competencies, but gaining the emotional intelligence needed for the job takes time and experience. He’s found advisors entering the industry from a previous career in hospitality are often well-suited because they understand “how to take great care
of people.”

A “’team’ before ‘me’” attitude within the next generation of advisors makes Rosen optimistic about the future. “I see a much stronger spirit of collaboration [than previous generations of advisors],” he said.

For Spotswood, the president of RFG Advisory, a hybrid RIA with close to $3 billion in AUM, the greatest challenge facing RIAs today boils down to leadership.

“Talent, technology and capacity limitations are at the top of the list, but leadership stands out to me,” she said. Consider the changes sweeping over advisory firms today: a generational wealth transfer, even as the average age of the financial advisor remains close to 60 years old, with limited succession planning.

Meanwhile, she points out, there is a flood of private equity money fueling fintech, RIA aggregation platforms and outside competitors and technology firms that eyeing the industry’s recurring revenue business model.

On top of those challenges, “the war for talent has never been greater,” she said. To attract and retain people, firms need to develop an “intentional culture,” with thoughtful career development pathways, flexible work schedules and mentorship.

All of these concerns, ultimately, are the responsibility of the firm’s leadership, she says.

“The autocratic ‘command and control’ leadership style that has been predominate in our industry is ill-suited for the dynamic state of play,” she says. “Leaders must cultivate new skills that are more collaborative and include vulnerability and emotional intelligence. There is a focus on mindset and fostering positivity.”

 A clear mission, with articulated company values and norms, hiring protocols, a communication cadence and feedback loops are table stakes, she said, but not necessarily the instinctual skill of most advisors and RIA leaders. 

“Intentional, effective leadership demands a level of engagement, thoughtfulness, and attention. You can’t phone it in!”

Staying on top of the markets, meeting compliance requirements and mitigating cybersecurity risks are top of mind growth challenges for Glenn Andrews, president of the Raleigh, N.C.-based Cardinal Capital Management.

“Looking at our critical success objectives and strategies, the first one is to achieve and maintain superior portfolio performance over market cycles with significantly reduced risk vs. the markets. I’m of the opinion that if we’re not doing that, we probably shouldn’t be doing this,” he said.

Cardinal Capital Management manages $640 million in AUM, according to the most recent Form ADV, with six employees, three of whom are financial advisors.

Another big challenge for the firm is regulatory compliance, he said. “That has become tougher and tougher. We’ve managed to do that very well. It seems that the fiduciary RIA is at a little bit of a disadvantage to someone in the brokerage business. So that’s a challenge to overcome. You have to work a little harder.” 

Mitigating the risk of cyberthreats to the firm is another area of importance for Andrews.

“The threat of hacks, security and all that is very worrisome. We work with a firm that tries to penetrate our system from time to time, and then they report to us. I think we’re as good as you can be there, but having said that, I think that’s a legitimate threat—the prospect of breach, either through custodian or vendor, or however. That’s always going to be high on the list.”

Michael Hunsberger launched Next Mission Financial Planning in Nov. 2021 with a focus on assisting people in the military, veterans, and their families. The biggest obstacle to growth so far is getting the word out in the first place.

But as a 25-year veteran of the U.S. Air Force himself, the St. Charles, Missouri-based planner found empathizing with the struggles of service members can help him get to the right clients.

“Some of it boils down to speaking their language, and understanding what their pain points are, and being able to say, ‘I’ve been there and understand that,’” he said.

To grow the business, Hunsberger relies on word-of-mouth and online advertising, though it’s taking some time, and multiple conversations, to convert prospects to clients.

In the years to come, Hunsberger hopes to build a lifestyle practice with 40 to 50 clients. Though he currently focuses on senior military members and retirees, Hunsberger said he was considering ways to grow the business with junior military service members in a way that’s still profitable for the business but beneficial for those individuals navigating how to handle the early stages of their military career.

“What does that look like? Is it some type of course, or group planning?” he asked. “It’s trying to get them started down a good path.”