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Are You Ready to Grow Your RIA Business?

August 27, 2019

by Adrian Johnstone

While it may seem intuitive, Registered Investment Advisers (RIAs) that want to focus seriously on growth need to look long and hard at real profit margins. If your expenses are higher than your bottom line, then you’re unlikely to keep your head above water for long, nevermind successfully grow your share of business.

But What Does It Mean to Grow Your RIA Business?

Growth means getting bigger, right? Well, not always in financial advising. For firms like yours, growth doesn’t necessarily mean ‘more clients’ or that elusive increase in ‘top-line revenue’. It means driving profitability by providing an excellent client service that is valued appropriately.

And while winning more clients can feel very satisfying, it may not increase your bottom line. Taking on more work can increase your costs without increasing your profits, especially if your firm isn’t prepared for growth.

Getting Ready for Growth

Not every business is ready to grow. One of the most significant steps in expanding is calculating exactly why and how you will move forward as a business. There is a very distinct gap between the right and wrong way to do it. Here are our suggested steps to prepare to grow your RIA business:

  1. Map out your business plan

    A well-researched business plan helps ensure your practice is running sustainably, that your employees are happy and that the whole team is aiming for the same goals. On the client side, it also helps you align your client experience process. A good way to start is to create a list of the services you deliver, where you provide the most value to your clients, and how you can maximize or improve these services. These may be basic, but they are the core of your success. To help organize, you should split your plan into distinctive intervals. A 3-year and 10-year plan can help you determine your short- and long-term business goals and the practical steps you can take to achieve it. Having clearly defined goals and plans is crucial to helping you grow your RIA business.

  2. Review your client experience

    Your clients drive your profits—so it makes sense to ensure their experience with you is nothing short of fantastic. With Google at their fingertips, people can gather a lot of information without ever needing to engage an advisor. This means that in this day and age, creating an authentic relationship that delivers experience and expertise beyond a simple internet search is a key part of an advisory firm’s value. As part of your review process, you should look into the areas where you’re making a true difference to your clients, the systems and processes you use to engage them, and who’s responsible for each aspect of your client’s experience.

  3. Identify and understand your ideal client

    Not all clients are built equally and it can be tricky to identify which ones are your ideal clients, but research shows that planning out the characteristics of your best clients or ‘target clients’ and focusing your marketing efforts on them can help increase your profit margin and client growth. Start by considering characteristics such as non-financial circumstances, pain points and challenges, goals and motivation, and communication style. Most importantly, know that it’s OK to say ‘no’ to clients who don’t meet your ideal requirements. It’s better to have 20 clients that match your firm well, then 200 clients who aren’t a good fit.

If you know that you want to grow your RIA business and that it’s the right path for you and firm, then these three steps can help you get started. To dive deeper into each of these steps, and for more practical tips to start the growing process, download our free guide today.

Built for Growth: A Guide to Growing Your Advice Firm

Download now