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The Streamlined Independent Advisor

August 28, 2018

Reclaim time for what matters most — you and your clients.

Being independent can work better when your business is as streamlined as it can be. 

The type of advisor you are can determine what kinds of changes will best help maximize efficiency for your business — so you can spend more time with your clients, and give them the best possible experience. 

Complete our 5-question evaluation and receive complimentary resources that can help you streamline the way to your goals.

Independent Advisor Business Evaluation

1How do you view your role?

Most advisors we surveyed (64%) view themselves as advisors who also happen to be business owners — not business owners who are advisors. While it may seem nuanced, the advisor-first view manifests itself in ways that may limit future opportunity.

More than a quarter of these advisors (26%) report they have no intention of building the next generation. Many may be unrealistic about translating their firm’s hypothetical value into a retirement plan or a legacy for their heirs. Absent a plan, many of these firms will perish with their owners.

While you may be in the minority of financial advisors we surveyed (36%), you just may have the right attitude. Without a business mentality and the goal to be as efficient as possible, you will not have the time to focus on your clients — the reason you went into the business in the first place.

Getting your house in order now, having the right technology and outsourcing the business functions that are most time consuming can help you be more efficient and reclaim your time.

2What is your approach to growing your business?

If you’re planning to expand or optimize your firm’s future value, reinvestment is essential. You may want to choose an enterprise business model if your goal is for your firm to continue to serve clients after your departure from the profession, and you would like to confine your personal contribution to a particular area of interest or expertise.

“Enterprise firms” are slightly larger; one-fifth of these firms have more than $500 million in assets under management and 28% have more than 11 employees. About half serve 250 to 500 clients, but 30% have more than 500 clients. Most (59%) have been operating for more than 20 years.

We believe that as long as your business model serves your goals and your clients’ needs, your firm is likely doing just fine. If you’re not interested in scaling your business or increasing your valuation, reinvesting may not be necessary. This would mean you might be more interested in creating a “lifestyle firm,” typically owned and managed by the founder and often bears that person’s name.

Lifestyle firm owners tend to enjoy the sales and client relationship aspect of the business and are less interested in managing teams and/or are unwilling to hire a full-time COO. On average, they employ fewer than 10 individuals with 57% operating for more than 20 years. Fifty-five percent of assets under management range between $150 million to $500 million, with 8% exceeding $500 million. This model applies if you believe that taking on the challenge would affect your personal time and personal revenues in unacceptable ways—and, importantly, you’ve saved at a rate where you don’t need to monetize your practice to afford retirement.

3Which aspect of your business do you enjoy most?

Client Managers typically delegate the investment function to a third party and concentrate on gathering and building client relationships. Advisors who choose to follow this model need to be prepared for growth and build out the infrastructure to support that future growth. They will have to think more like a business than a practice, which will involve an adjustment in the way advisors acquire, service and retain both talent and clients in an increasingly competitive marketplace.

Investment Managers focus principally on the investment process, and consider their ability to select the right investments for their clients as their primary value proposition. However, if your firm is performing all investment-related tasks internally, we believe you may be severely limiting your firm’s future value as your models may not be replicable, have little to no value to a new buyer, and are very labor-intensive and inefficient.

4Do you believe your business operates as efficiently as it can?

We believe the most resilient advisors — and those most likely to prosper — are laser-focused on two priorities: nurturing client relationships and truly transforming the client experience. But to do this, you need to reimagine your business — not just what you do well, but all facets of your business that could boost profitability and strengthen your client relationships and your teams.

Any activity that keeps you and/or your advisors from meeting with clients and prospects to solve their wealth management challenges is a noncore function. If you aren’t already outsourcing the functions of your business that don’t involve servicing your clients, you may want to consider it to further streamline your business.

You’re not alone! An advisor we talked to recently confessed that he was struggling to grow his business, even though he was “giving it 100%.” This is a CEO who has run a moderately successful firm for many years. It was apparent that he wears too many hats and couldn’t possibly be giving 100% to each of these roles because the tasks are too different and the skill sets too broad.

These individual tasks you do are likely being shortchanged. Think about it: most of these duties need more than part-time attention in a thriving business. It may be time to rethink your organization and how work gets done.

5Does your firm’s value proposition match the services you offer your clients?

That’s great news! This means your value proposition answers the question “What do I offer to whom, and why?” Intentionally framing the unique attributes of your business — the whom (the type of client you serve), the what (the solutions you offer), and the why (the obstacles your clients face) — helps articulate what your firm stands for.

Your clients and prospects are looking for solutions that will directly or indirectly improve their financial lives. They want to know specifically how your products or services will contribute to their success — and why you’re uniquely qualified to deliver that value. Your value proposition should serve as the foundation for your business model and help you avoid trying to be all things to all people.

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Ready to streamline? Please call an SEI Practice Consultant at 888-734-2679.

Primary research included survey on Advisory Business Models; March 2017, n=400 Owners/Managing Partners.

Information provided by SEI Advisor Network, a strategic business unit of SEI. Services provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI.

The types of advisors and firms have been categorized by SEI based on shared demographics we found meaningful to distinguish between from our study responses and are for illustration only.