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Blog Post

November 6, 2020





Clearly 2020 has presented an opportunity for many advisors to adjust / modify their business model primarily through the use of technology. Some advisors have had very good years despite the handcuffs of a lock down and some have had more trouble adjusting. It appears that going forward we will have to do things differently.
I wanted to revisit what firms were doing successfully last year. The following facts are from the Investment News Pricing and Profitability Study and they are worth reviewing in order to have an idea of how to refine your business plan going forward.
Here is what we know:
  • Large partnerships / firms grow their revenue almost twice as fast as smaller solo firms – 6.3% vs 12
  • Large firms attribute this to the hiring of Business Development specialists
  • The breakdown of where the AUM growth came from:
———-Referrals            3.5%
———-Acquisitions       2.2%
———-Business Dev      4.8%
———-Balance on investment growth   8%
———-(Does not add as there is overlap)
  • Acquisitions by Solo firms = .2% compared to largest firms (> $500 million) = 3.5%
  • Business Development and Marketing Methods: Top 4 activities and most successful = Community involvement (58%); Volunteering (54%); Hosting Networking events (52%) and sponsoring community events (47%).
Looking at this data there are a couple of things that jump out. Size matters and business development going forward is likely to be much different. Complimentary information on the above is that the average firm spends between 2 – 2.5% on business development and 3 – 3.5% on technology. Going forward these percentages will increase as your business model has to adjust or even morph as the market changes. AND those advisors looking to acquisitions for growth especially smaller single advisor firms know that it is a difficult growth strategy.
The marketing and/or business development area is very interesting as it is a specific skill set that is difficult to do properly. My experience is that the most successful structure is when a partner is the expert / responsibility or an experienced person is hired. An experienced competent business development / marketer is ……. have their own business. Another argument for partnerships, associates and / or an ensemble business structure.
How can small firms grow? I think the answer is out sourcing. We have an accountant do our taxes. We have a lawyer draw up our contracts. Why? Because we do not have the expertise / time to learn / perception of those involved eg. CRA, banker, etc.; it is much more efficient to hire “experts” than learn it yourself or teach someone.
Queenston can help design your Business Development plan –find prospective acquisitions and help you build a data base of prospects. In addition, with our Marketing firm we can help you design a marketing and social media plan. Give me a call.

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