Financial advice firms have the same challenges as other businesses when it comes to growing revenues.
These include dealing with increasing complexity in business during periods of growth, strategic challenges and the huge complexity of the finance industry and the added cost of compliance.
But there are ways to keep growing your business despite this, according to Jenny Stilwell, strategy adviser, business mentor and author of The 7% Club.
Her new book, written after she realised that just 7 per cent of Australian businesses make more than $2 million in turnover, aims to give businesses the tools they need to be part of the elite club.
The book helps founders and CEOs break through $2 million in turnover by overcoming any roadblocks and challenges in their way. Stilwell says that there’s no reason why financial advice firms can’t be part of the club.
Know your numbers
While she has no doubt that financial advisers are all about the numbers, they can sometimes overlook aspects such as the ratios of advisers to clients and the ratios of support staff to advisers.
“What happens often is that people have a certain number of clients and the team is pressed for time,” Stilwell says.
“But you should be very careful before putting on new advisers or support staff to really understand if you’re in a financial position to make it work without impacting profit.”
Look at your current processes in place and consider how you can introduce new efficiencies into the business by streamlining with the same amount of people before simply resorting to new hires, she says.
Not all clients are equal
The cost of delivering financial advice is high, which dictates fees to some extent, but not all clients necessarily represent value.
This means not taking on clients that don’t fit your niche just because you want to help them.
“The cost of onboarding clients is high, which means you want to make sure the value of the client is worthwhile, so I’d be very specific about that,” Stilwell says.
“It won’t take long to find the ratio of high margin clients to low margin clients starts to get unmanageable. If that means being smaller and less profitable, that’s going to be better in the long term that focusing on growth for growth’s sake.”
Know where your clients come from
Financial advice firms deliver a personal service, which means there’s likely to be a high referral rate.
In fact, advice firms are often built in referrals and it’s extremely important to focus on those referral relationships.
“Make sure you look at the source of new client referrals and that you don’t forget to thank them for that,” Stilwell says. “Don’t just focus on the clients, also be sure to thank your referral sources.”
Checking your marketing
The website of even bigger financial service firms list the same information, including credentials, services offered and a list of the team.
But by looking at your website from a potential client perspective, you could add different elements to your website that build a stronger sense of trust and rapport.
“Look for ways to showcase a more personal approach on your website,” Stilwell says.
“A short video introducing yourself or teaching yourself gives clients a better sense of who you are and what your personality is like.”
Jenny makes a valid argument and it is actually very concerning that 93% of Australian Businesses turn over less than $7,692 a day based on a 5 day working week for employees and double the hours for the Business owners, the huge drag on their Businesses with the maze of red tape, restrictions of trade, some of the highest Employee wages and Business expenses in the world and an Army of bureaucrats whose sole purpose seems to be to stymie small and Mid-tier Businesses from being able to grow.
Grow at all costs can be a double edged sword, as with growth, comes more head winds and unless there are dramatic improvements in efficiencies and productivity, then all additional revenue can possibly bring, are more headaches.
Growth is crucial to stay afloat.
Growing to pay for a plethora of red tape and rising expenses that creates sleepless nights trying to work through countless Regulatory imposts, is not conducive to “living the dream.”
Small and medium Businesses, employ more Australians than any other entities, yet are treated as a means to allow “hangers on,” to build their own empires at ALL OUR expense, with little regard or care for the bigger picture of what is good for the majority of Australians and their longer-term future.
Thanks Jenny, very true on all points. Another reason that impedes growth is that often good self employed advisers then turn their hand to being the manager when that’s not their best use of time and effort. A constant flow of referrals needs to be worked on and delegating managerial decision to focus on core adviser activities allows for the growth that owners are craving.