How successful RIAs have scaled and grown their businesses

7 habits — and blunders — of highly successful advisors

June 7, 2019 10:44 AM

Some of the highest-rolling AUM advisors in the industry — 218 of them, to be exact — traveled to the Ritz-Carlton in Laguna Niguel, California, this week for TD Ameritrade Institutional’s Elite LINC conference. These planners, CEOs and presidents represent firms averaging $1.5 billion in client assets.

How did they become so successful? Seven of them sat down with Financial Planning to share the advice they’d give to advisors looking to follow in their footsteps, or learn from their mistakes.

Before you hire — automate

Small advisors are busy.

Between producing a good product, selling it and putting operational support in place, “the hard part for the smaller advisors is they have to wear all those hats,” says Randy Conner, president of Churchill Management Group, a $5.5 billion RIA based in Los Angeles.

His advice? Delegate before you hire — the solution his firm once relied upon in its early years.

“Instead of working the problem, [figuring out] what we wanted to accomplish and how to systemize it and automate it, we were just hiring people,” he says.

Top-notch websites are a must

Websites should be a top priority, especially as you focus on attracting young clients. “That has been one of our biggest draws for new clients,” says David Hailey, president of Paragon Financial Advisors, which manages nearly $243 million in assets in College Station, Texas. Millennials do a lot of research before that initial meeting, so that digital first impression can make a real difference. “A lot of times, they’re two-thirds of the way hooked before coming in,” Hailey says.

Be yourself. Clients will follow

Do the right thing for its own sake, not as a marketing strategy. It’ll end up being good business practice anyway, says Sandra Field, CEO of Asset Planning, a $264 million RIA in Southern California. “Don’t give out your name or firm. Just give advice,” she says. “I think people get it wrong when they promote themselves all the time. I think if you like what you do, give back and the reward will come to you.”

Don’t underestimate your own hobbies. Field is a photographer, swimmer, golfer and avid traveler and has built many client relationships simply by doing what she loves.

“I don’t pursue them, but they know what I do, and they become clients.”

To M&A or not to M&A?

While large firms have the luxury of growing organically and via acquisitions, most RIAs need to choose one strategy over the other, according to Matt Cooper, president of Beacon Pointe, which, along with its various subsidiaries, manages a collective $7.7 billion in assets. “You’re either going to be mediocre at a lot of things, or really good at one thing,” he says.

Cooper warns that while the upside of going the M&A route is enticing, the costs can be huge for RIA principals who turn their attention to M&A and aren’t successful.

What’s more, he says, “you have to be willing to accept the challenges that come along with [M&A]," ones much more difficult than agreeing on economics.

“The emotional part of it is by far the toughest,” Cooper says. “Everyone’s independent for a reason.”

Ultimately, however, If RIAs can generate a successful strategy, it will pay off. “You can’t recruit and retain talent unless you are growing,” he says.

Spend money, spend time

Too many advisors focus on net income, according to Scott Hanson, CEO of Allworth Financial, a $3.5 billion private equity-backed RIA in Sacramento, California.

“If you’re going to grow, you’re going to have to spend some money on that growth,” he says. “If an advisor is willing to let their net income go down for a short period of time, they can create a much greater enterprise value down the road.”

Time, as well as money, must be spent on growth, and neglecting growth after establishing that initial book of business is a mistake. “If [advisors] can get really serious about making sure they’ve got time dedicated each week to business development, I think that’s key.”

Span the AUM spectrum

Most advisors have clients with an income of about $250,000, says Samir Thakkar, CEO of 20/20 Financial Advisers, which manages more than $406 million in assets in Orange County, California. “They don’t have high-net-worth [clients], because that is a different skill set, and they don’t have the low-end [clients] because it’s not profitable,” he says.

To expand a practice, an advisor must focus on moving up and down the market. “The only real way to do that is invest in yourself and invest in technology, but you’ve got to go beyond the demographics you normally market to,” he says.

Love the ones you’re with

At the end of the day, the most important thing may be high-level service to clients you already have, according to Matt Hargreaves of Leonard Rickey Investment Advisors in Akima, Washington, which manages around $445 million in assets.

“I would say the biggest tip is just to take care of your current clients, because for the majority of advisors, the number one resource of new clients is the client referral,” he says.

Since Hargreaves joined the firm about 11 years ago, it has grown steadily the old-fashioned way, without any marketing. While there are upsides and downsides to every strategy, he says, “that’s worked for us.”