Six practices of market leading advisory firms
Ileana Sodani, chief relationship officer Pershing Limited, looks at six key management and marketing practices that lead to growth and profitability in advisory firms
Firms that are defining the future of the advisory business and setting the “standard for pace of growth, productivity, client service and best practices” are being termed Super- Ensembles by US commentators. These firms have a national presence and retain a well-known brand. However, more importantly they are paving the way for the rest of the industry, and assisting firms of every size in defining market and growth strategies. As industry consolidators, they are challenging their fellow peers to succeed and meet the challenge.
A recent Pershing Advisor Solutions paper Super – Ensembles: The Firms Who are Shaping the Future of the Industry takes a look at the experiences of the US market and provides valuable lessons for UK advisers seeking to consolidate and grow.
Every firm can learn from its peers and the market. For firms that are looking to become ‘consolidators’ or improve their profitability here are some management and marketing practices of the Super- Ensembles that can easily be adopted
1. Act like a leader, regardless of size – Even small firms can benefit from implementing the management methods of leading firms:
• Dedicating time and resources to management, even if full-time management is not affordable, will keep the firm disciplined
• Carefully articulating a strategy and being diligent in execution will help the firm make progress in a systematic manner
• Establishing a target for business development will allow the firm to measure results and create incentive compensation.
2. Attract talent – The ability to attract new talent is critical for the continued success of any firm. The addition of professionals and managers who have experience working in larger organisations, the most experienced advisers, the best operations staff and recruits from the top universities, can all assist smaller firms in finding a way to grow faster.
3. Develop the right culture – Organisational culture guides the behaviour of all the staff in an advisory firm, and having the right culture will secure the success of the firm as it grows. Culture is slow to evolve and change and creating the “right” culture – even when the firm is smaller – will allow a firm to succeed at later stages in its evolution. For many successful companies the primary attraction of new clients continues to be the firm’s culture and reputation.
4. Prioritise growth – Growing faster starts with making growth a priority of the firm. The single most important marketing resource of a firm is the time of its most experienced professionals. Consequently, in firms where partners prioritise growth and spend a lot of time focused on growth, the rate of progress tends to be much faster. Firms also need to be able to add new partners and retire existing partners. Continuity of ownership and practice has to be an established process rather than ad hoc, otherwise the potential discrepancy of outcomes can create poor results and decelerate the firm’s growth.
5. Merge – There is no faster way to achieve size and reach the right level of resources than a merger. Mergers are difficult, laborious and risky initiatives, but they have created many of today’s largest firms. The actual merger should not be viewed as the path to a larger size as it is the management of the new combined firm that determines the sustained success of the firm. The combination of two very strong firms and two highly talented teams can create a powerful competitor in the marketplace.
6. Acquire – Acquisitions are not the exclusive domain of the largest firms and, in fact, many mid-size firms can find good opportunities to acquire solo practices and add clients and markets to their business.
Success in business is not just a combination of mathematics and growth. The changes required to reach a certain size involve culture, organisational structure and ownership mentality. Organisational and cultural changes tend to be difficult and painful. The process of growing is a process of constantly tearing down and rebuilding bits and pieces of the organisation so that it is ready for the next phase. Focussing on growth results in achieving greater efficiencies, economies of scale, buying power and market share across the targeted segment. The firms who succeed in that mission will be the firms who write the next chapter of the industry.