How RIA Firm Owners Can Unlock Success • Financially Simple


As firm owners in the financial services industry, success requires more than just being knowledgeable. It also requires the ability to build and manage a thriving business. Yet, so many advisors across the industry fail to truly grasp what that means. That’s why I’m using the next few blog entries to speak directly to independent financial advisors. I want to help you unlock the success in your firm by pointing to some of the blind spots that commonly trip us up. However, even if you’re not a financial advisor, this series is for you. The principles can be applied across multiple industries, or even help you when hiring an advisor.

Follow Along With The Financially Simple Podcast!

This week on The Financially Simple Podcast:

  • (1:46) More questions from financial advisors than any other segment

  • (2:33) Why this information is for everyone

  • (4:15) One thing that surprises me

  • (5:41) Who, specifically, am I speaking to?

  • (9:31) The personality profiles of financial planners

  • (12:11) The hard conversations

  • (19:02) How will you be paid?

Independent Firm Owners: Who Are They?

As I stated in the lede, this entry will serve as an introduction to the larger series. Therefore, I want to begin by examining who financial advisors are, and the growth of independent Registered Investment Advisors (RIAs) in the US. First, let’s look at the firm owners. Who is the average financial advisor?

As of the time of this writing, I find myself right at the average age (44 years old) of financial advisors. In fact, 61% of advisors are above the age of 40. Just 11% of advisors are between 20 and 30 years old. Likewise, the majority of advisors—72.3% to be exact—are men. Additionally, we are an educated lot. 74% of financial advisors have, at least, a Bachelor’s degree.

Now, because of my own experiences going from a homeschool environment to the formal education system, I don’t put a lot of weight in the paper hanging on someone’s wall. But I do have an enormous amount of respect for the CERTIFIED FINANCIAL PLANNER™ designation. As one of roughly 97,137 (as of 2022) CFPs®, I know the rigor of that particular body of knowledge. Now that we’ve got an idea of the demographics we’re dealing with, let’s shift to personalities.

Personality Traits Defining the Highest-Income Financial Advisors

My dear friend and colleague, Michael Kitces, has a blog where he provides what he likes to call a Nerd’s Eye View of the financial industry and related topics. He and his team have used the “Big Five” psychology framework to analyze the personalities of more than 1,000 financial advisors. What they discovered might surprise you.

Contrary to the popular belief that the most successful advisors exhibit extraversion, Kitces’ team found that the longest standing and highest income producing advisors displayed two common personality traits. These advisors were found to be highly conscientious and very agreeable (though not necessarily extraverted). In fact, I, myself, am very introverted. So, what does it mean to be “highly conscientious?”

People exhibiting this personality trait are dutifull, organized, and competent. They are ambitious and self-disciplined, not lazy. Likewise, their agreeable nature makes them sympathetic and warm. However, people with these characteristics are also willing to be forward with clients. Have you ever made a client angry, or offended them because you were honest and direct? I know I have.

Small, Independent RIAs Dominate the Market

Up to now, we’ve outlined the demographics and personality traits of independent financial advisors. But what about the business side? RIAs are an important part of the independent financial advisor landscape. Although we seldom hear about the “little guys,” nearly 90% have fewer than 50 people on staff. In fact, more than half of RIAs employ less than 10 people. Despite their small stature, Independent RIAs have become a formidable share of the market.

In 2021, we saw a 7% increase in SEC-registered RIAs. That increase represented 926 net new advisory firms, adding to a new high of 14,806. As a result of this industry-wide growth, 2021 also saw a 17% increase in AUM, taking the total assets being managed by SEC-registered RIAs to a record $128.4 trillion. So, perhaps you’re one of these newly registered firms, or maybe you’ve been registered with the SEC for decades. The point is, as firm owners, you make up a lucrative part of the market and are in control of an incredibly valuable asset… your business!

Wrapping Up…

As the owner of an independent RIA, understanding that your business is your greatest asset is key to unlocking success. Over the next few weeks, I’m going to dive deep into the 8 key areas that can most directly drive growth and add value to your firm. Through actionable steps to impact business value, growth potential, profitability, and risk reduction, you can create a more successful and valuable firm.

Friends, I know life is hard. It seems like every day we’re faced with a new challenge. But life is good! Trying to grow your independent firm to become a valuable asset that could be sold for a profit can be frustrating. However, it doesn’t have to be. By following the battle-tested principles I’m going to share with you throughout this series, you could make supercharging the value of your firm, at least, financially simple. Let’s go out and make it a great day!

Are you an Independent RIA owner interested in taking the next steps to grow your business and take your client experience to the next level? Reach out to us. We can help! 

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