Addressing Capacity to Combat Stagnated Growth

There comes a point for many wealth management businesses where they find that though they have grown successfully over the years and increased their value leaps and bounds, they are a unable to move the needle in the increments they’re used to. The same strategies just aren’t as effective as they once were.

These businesses have increased value but not the foundations of that value to scale its growth. These businesses are often around $2M in value but have a small staff of three to five people and only one or two owners of a similar age. The challenge here is that though these have clearly shown the means to grow, they have quickly become limited by capacity.

This is the point in a successful business’s journey where scale becomes vastly more important than size. Now, the focus needs to be on the ability to support steady, sustainable, and exponential growth–in all areas of the business. This is where your structures, your systems, and your team become crucial.

The first thing we need to tackle is capacity and your team. The focus now isn’t necessarily about client acquisition, it’s about creating the sustainable capacity that allows you to accommodate a growing client base. And to face this challenge head on, a two-pronged approach is most successful. First, we need to open up individual capacity by widening the client to professional ratio itself; then, we ensure that ratio is protected long-term by addressing business capacity through team growth.

Individual Capacity

As far as improving the capacity of the individuals on your team, there are a few things you can do to make day-to-day activities and client service more efficient. This will free up time for your team members to help more clients without sacrificing quality of service. Three powerful strategies are: building client service teams rather than individual client owners, leveraging specialized support staff, and investing in the right technology and systems.

Client Service Teams

A shift from individually serviced – or “owned” – clients to a collective and collaborative approach leverages individual strengths that allow the team to streamline their work and set up efficient productivity systems. Everyone on the team can focus on what they do best which not only protects quality but saves time. It also creates a shared workload allowing people to work collaboratively and rely on each other to reduce strains on their time and energy.

In addition to improving individual capacity, these efforts offer benefits to the business overall. By employing client service teams, you allow for a continuity of service within the account and connect client trust to the business as a whole rather than an individual advisor. This improves client retention and secures business value.

Non-Producing Support Staff

A key part of your team as whole, as well as those client service teams we talked about above, are your support staff. These folks take on the important work that doesn’t require advisory licensure or designations to complete. With a talented support staff you can free up an advisor’s responsibilities to focus on those specialized advisory tasks and, ultimately, allow them to work with more clients. On a business-wide capacity level, support staff can help to streamline business systems and processes that make it easier to add and maintain client relationships.

Support staff might include administrative staff or interns on their journey to becoming an advisor. Also included are more specialized roles, like marketing, technology, HR, or accounting. Each of these support roles–whether in-house or outsourced–allow a business to better allocate essential business functions and open up capacity.

Technology and Systems

Technology and turn-key systems are the final piece to tie your streamlined teams and specialized roles together. By identifying processes that are repeated, you can focus on making them efficient and repeatable so that they can be performed easily. Documenting these systems will help to keep everyone on the same page and things running smoothly–even when there are changes within the team.

Technology can be powerful in improving those streamlined processes as well as accommodate some of the essential functionality of the business. However, it is easy to get wrapped up in too many shiny new tools and find your technology expenses higher than the value you’re getting. It’s important to be decerning in choosing the tools that will have the greatest impact and least disruption.

Ensuring the success of your individual capacity improvement efforts relies on an understanding of which areas would have the most impact on your advisors’ ability to provide quality service to more clients. An expert assessment of your organizational and operational structures can help you pinpoint these areas and understand how small shifts can have big impact.

As experts in improving capacity and building sustainable business structures, FP Transitions can help you discover these insights as well as find the right strategies to make the most effective enhancements to your business.

Business Capacity

Improving capacity ratios frees up room for growth and creates structures that enable scalability into the future. Increasing capacity ratios within your existing advisory team is just one piece of the puzzle. They are still human, and there are still only 24 hours in a day (not that anyone should be working that many hours!)

The next prong of your efforts to improve your firm’s ability to accommodate more clients and AUM is recruitment. An increase in both professionals and talented support staff (as we talked about above) can have a significant impact on the business’s ability to take on greater number of clients.

You’re not going to be the only one looking to hire though. According to Schwab’s 2024 RIA Benchmarking Study the industry will need to hire over 70,000 new staff over the next five years to keep up with projected growth rates–and that doesn’t account for the offset of exiting advisors due to attrition or retirement over that period.

To be successful in the industry’s ongoing battle for talent you’ll need to leverage appropriate compensation to stay competitive, culture to ensure team-business alignment, and growth opportunities to attract and retain the best professionals.

Competitive Compensation

This one may seem simple: pay well and win the hire. But it’s a bit more complicated than that. First of all, you have to understand what you’re competing with, compensation levels in your market, and what you can offer that meets or exceeds those levels. Next, consider that the how of compensation is more important than how much.

Structuring your compensation to balance salary, bonus, and long-term incentives can be powerful. Salaries that meet or exceed the averages of your market are a strong recruitment tool in and of themselves. But when you pair them with clear bonus structures that define their metrics you demonstrate how much you value your team and can provide a more transparent offer of complete compensation. Furthermore, opportunities for long-term incentive agreements can encourage a focus on the business as a whole and increase the retention of your top talent through a compensation offering unique to your business and its value.

Culture

Business culture can be hard to communicate to prospective talent, but It’s incredibly important in recruiting the best matches for your business. Articulating culture and ensuring alignment on values, expectations, and practices creates a more enjoyable and productive working environment for everyone. Key cultural factors include: business values, investment philosophies, production expectations, communication styles, team relations, office perks, educational opportunities, and prioritization of work-life balance. This alignment of culture is a factor that has increasingly become a top priority for the current workforce.

Your business culture not only serves as a tool to attract new team members, it can help you tailor your recruitment strategy as well. By understanding the culture of your business, you’ll better be able to identify the right people for your team that can help make the leap in size and scale that you’re aiming for.

Opportunities for Growth

Advisory professionals are naturally those with drive, and are uninterested in stagnation. Depending on which types of professionals you’re hoping to recruit, and what stage of their career they’re in, leveraging career growth opportunities within your recruitment strategy can go a long way.

For new professionals, things like clear advancement paths and milestones as well as mentorship and educational support are highly desirable. More seasoned advisors are enticed by leadership tracks and potential for future equity ownership. Clearly communicating these paths during early meetings with prospective new team members can have a huge impact on their employment decisions.

The first step is a complete understanding of what your business has to offer in its efforts to recruit and retain a talented team. FP Transitions can help make the necessary assessments and provide actionable insights for streamlining of your business’s cashflow, operational structure, and culture. Armed with this information, together we can develop a targeted and effective recruitment strategy to win the battle for talent. And along with that victory, an increase in capacity, scale, and long-term sustainable growth.

The best way to overcome a growth plateau is to focus efforts on creating scalability rather than just increasing size. By improving critical business structures and foundations–like your team and their capacity needs–you will find your business capable of achieving the next level of growth and beyond.

The FP Transitions Consulting team specializes in evaluating your business on a deeper level – customizing their analysis and insights to your business and your goals. We can help you figure out what areas your business can shift to free up your ability create efficiencies for capacity. We can also help you identify bottle neck areas preventing your team’s output and offer insights into how to improve those sticking point. Additionally, we can help you restructure compensation offerings and identify paths or advancement and equity within the business to strengthen your overall recruitment strategy. Let’s talk about what we can do together to get over your growth plateau and make an incredible impact on the future of your business.