How Wealth Management Firms Can Thrive Amidst Chaos

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By Ron Carson

Back in 2009, at a speech in Scottsdale, Arizona, I told a group of 500 business owners, “Never have the opportunities to succeed been greater, nor have the distractions that can cause you to fail.” That statement is even truer today than it was then.

From the dramatic presidential election campaign to the turmoil we see around the globe, we face a very unpredictable future. That has many investors concerned. How do they know financial planning firms are capable of offering comprehensive investment management services and giving them the right investing strategies and financial planning advice amidst the chaos?

It comes down to what I call the Sustainable Edge. In our recent book by that title, Scott Ford and I look at what it takes for wealth management firms to create the mental space to step out of the fray, consider their options carefully and make decisions from a position of strength, so their firm can successfully navigate the unexpected and serve their clients best. To do that, they need to achieve 15% annual growth.

My coaching program, Carson Group Coaching, currently works with advisors in more than 1,100 firms around the country. I have found that when businesses grow at a rate slower than 15% annually, they are not sustainable. Firms with very slow or flat growth just don’t have the ability, confidence, energy or vibe to prosper.

When you grow at least 15% annually—ideally 18 to 20 percent—you will have the capital you need to remain robust and healthy. As your firm expands, you will be able to offer the growth path, culture, and energy that will attract the top talent you need to be competitive.

The flip side of this is that if you are not growing by at least 15% a year, you won’t keep pace with the ongoing and rapid change in your industry.  This is especially true now, with steamroller forces like automation and globalization bearing down on many firms. Digital technology has brought new efficiencies but also dangerous lures and complexity that can devour your time and throw your business off track.

How you define 15% growth depends on the critical benchmarks in your industry. In many firms, the crucial growth you need is in revenue or profits. In a wealth management firm, it is assets under management. Measure growth as you would oxygen in a body—growth is the critical element for a business to survive.

It is difficult to achieve 15% growth if you don’t have a clear mission or a vision for achieving that growth. Owners of wealth management firms need to figure out their “Why”—the reason their business exist in the first place—so they can set the goals that help them pursue what matters to them and use those goals to shape their daily priorities. They need a good digital dashboard to help them keep track of how well they are doing in achieving those priorities.

Investors need to hold their wealth managers accountable, too. If your wealth management firm is seeing less than 15% grow a year in assets under management, view that as a red flag.

None of us can predict the future. But with 15% annual growth, wealth management firms can stay strong enough to weather whatever the future brings and deliver results to their clients.

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