As a consultant, it’s easy to get distracted by the noise in our industry. Every day you are inundated with hundreds of articles, blogs and webinars telling you what you must do to build a successful business. What this advice often doesn’t 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 in our industry right now, doesn’t mean it requires your focus this year.
As you look to dominate in 2023, take the following “advisory must-do’s” with a grain of salt:
1. To be successful, you need to build a strong social media following
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 recommended by existing clients … and we didn’t really ask for them.” Treating clients with extreme care and being a really good advisor is still your best prospecting strategy. However, that doesn’t mean you shouldn’t have presence on social networks. Building brand awareness and positioning yourself as a thought leader in a crowded market is key, and social and digital channels are your main avenues. My advice on social media is to be realistic and have the right expectations. If the thought of posting a video of yourself on YouTube makes you nauseous, stop wasting your time trying to figure out how to become the next YouTube star consultant. Instead, focus on how to provide information, insight and care to your current customers in a way that is authentic and scalable. Sure, maybe you could use YouTube for that. But good old fashioned email and intimate lunches and dinners will probably work just fine.
2. At some point you need to transition from the role of advisor to the role of CEO
Our industry is obsessed with telling advisors to stop being advisors and instead become CEOs of their companies. The truth is, most advisors love being an advisor and take on the “CEO” role just because they’re so good at advising that their practice grows before they know what to do about it. I know very few advisors who want to run a full-time business. What most advisors really want is ownership of the business and book they’ve built, and freedom from an affiliate or OSJ that no longer adds value to them. If you truly enjoy being an advisor and derive great satisfaction from helping others, finding new clients and providing 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 allows you to provide advice while still retaining ownership and control of your business.
3. Practice multiples will drop drastically in the coming years and you should “take the deal” being offered now while it’s still hot
You should never accept a job based on market predictions from a salesperson at a company that is trying to win you over. Industry experts have no way of knowing definitively what will or will not happen in the coming years. Have valuations cooled a bit compared to a few years ago? That. Is there still a desire to acquire a wealth management practice? Double yes. The decision to sell part or all of your practice should have everything to do with what’s best for you, your clients, and your family, and very little to do with a buyer trying to help you time the market. When considering whether to sell part of your practice to a larger firm, you should ask yourself just two questions. First, why do I want to sell now? You should think about this question, especially if you don’t need capital, don’t need to reduce risk, and aren’t overly concerned about growth. Second, how would my clients and I benefit from the acquisition? Be wary of companies that promise to “help you grow” in exchange for a minority stake in your practice. Most companies that promise to help you grow inorganically by offering you deals have also done so to many other advisors. Be sure you have a solid understanding of all the terms of your potential deal, including what will be required of you and the acquirer after the deal.
4. You need to specialize in a specific client niche
Always remember that you don’t “have” to do anything. If you’re comfortable building a more general practice that serves a handful of different niches in your community, more power to you. If you’re wondering, “Should I focus more on one particular area?” but find that you really love the practice you’re running, have clients that are happy and growing in a healthy and sustainable way, than double down on what you’re 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.