DISASTER IN THE MAKING

Your clients deserve more than just you.  I was reading a profile of a practice in an industry publication recently and my response was visceral.  I just thought…HOW DARE YOU!?

In this profile, an advisor was being set up as an example of how to build a profitable practice by working with a small number of clients (50) in a specific niche with a decent amount of assets per household ($2M).  This advisor is managing $100M with no staff and recently started her own RIA…with no staff.  The profile was highlighting the power of niche marketing as this advisor serves widows based on her own experience. 

Just take a moment to take that in.  This advisor is managing $100M in assets for a vulnerable population and she has no backup of any sort.  She is highly profitable in that she should be making around $1M gross revenue with very low overhead.  She went so far as to leave the potential support of a B/D or larger RIA behind and found her own RIA, on her own. 

This isn't a case study to replicate, it is a disaster in the making.

In my practice, I have layers upon layers of redundancy.  If I am out sick, my practice manager can take care of routine tasks.  If I am incapacitated my team of advisors can step in to fill any gaps.  If I am taken out of the picture my independent B/D & OSJ have resources to help.  If I can't make short-term portfolio decisions, AssetMark keeps things safe and rolling. 

In this profile, this advisor is working with women who have been traumatized by loss in the past and she is setting up a repeat performance.  If she suffers disability or death, these women will be left with no support, no redundancy.  They will be left to navigate on their own.

It all comes down to greed.  It's fantastic to run a highly efficient practice and make $1M with low overhead.  Who wouldn't want that!?  Anyone who actually cares about their clients!  That's who. 

I have seen it over and over with advisors who make VERY good money and are unwilling to pay staff to properly support the business.  I remember talking with one advisor who made about $750k in annual revenue and didn't feel she could afford a full-time staff person. 

What responsible small business owner with $500k-$1M of revenue would imagine building a business with a single point of failure?  In what other industry would that be acceptable, let alone lauded as an example to follow?   It's bad business management and it's all about keeping the most money in the advisor's pocket. 

I am very happy to see my firm's annual revenue go up.  I am also very pleased to watch a portion of that revenue to go to create an ever-improving support team.

We owe it to our clients to build responsible businesses, not just efficient revenue-generating machines for our own benefit!  The solopreneur, laptop warrior culture may be trending on the internet, but it is not a responsible way to build an Advice-Based Financial Planning practice in the business of changing lives. 

I would love to hear from you!  What is your vision for your business and have you factored in what it will cost to properly support that vision?   Drop into The Intentional Advisor Mastermind group on Facebook and let us know what you think!

I hope this serves you,

-Lucila