What’s on Your Mind? A Summary of the Key Growth Issues Wealth Management Executives are Talking About in 2024

By Dan Greene and Rick Swygman | January 29, 2024

One of the immense benefits we have in our role at Greene Consulting is the opportunity to see and hear first-hand all that is going on in the Wealth Management Industry – from the good to the bad, the opportunities and challenges, and the best practices that are being employed to overcome any obstacles or challenges. This is a result of our business being solely focused on the financial services industry for over 45 years and working directly with hundreds of wealth management firms – from small RIAs to regional banks to large banks and broker dealers – thousands of advisors, and the executives leading those firms.

With the start of a new year upon us, we thought it worthwhile to briefly share some of the key issues we see wealth management firms facing and wanting (or better, NEEDING) to address.

Below is a list of the 6 key issues we’ve identified, with brief commentary on each, followed by what we believe to be the fundamental questions that if clearly (and correctly) answered, will lead to the delivery of truly differentiated value to your clients and the growth you are seeking.

1. Creating Organic Growth

While the acceleration in RIA rollups and FA acquisitions continue to move at a rapid pace, we are increasingly seeing firms recognizing the need to grow organically. While the growth rate of nontraditional players (e.g. Fidelity, Schwab, Vanguard) has been over 20% annually, traditional Wealth Managers at the same time have seen only 5-6% growth.

Key Questions

What are the current barriers to organic growth?
What channels should we focus on to drive organic growth (Internal Partners, COIs, expanding existing relationships with assets trading away…)?
Recognizing the fact that organic growth has been relatively anemic, how are we equipping Advisors to have more effective conversations with clients, prospective clients and COI’s that will drive organic growth?

2. Changing the “Financial Planning Paradigm”: Scaling the Planning Experience

Today, every firm touts “Financial Planning” as a core deliverable in their model. However, when examining the data, it’s clear there are still significant gaps in delivery. In fact, the average Advisor in the US completes fewer that 10 “Plans” annually – a relatively shocking statistic. Further, very few firms can claim that their approach to planning has resulted in measurable revenue growth. We believe significant opportunities exist for firms willing to think creatively about their Financial Planning Delivery Model, defining ways to deliver a Goals-based Experience at scale, and, in so doing, drive AUM growth.

Key Questions

How do we increase the efficiency of our Goals-based Planning Experience?
How do we motivate our Advisors to adopt and equip them to deliver this Experience at scale?
How do we specifically equip our Advisors with effective strategies for leveraging Planning to drive organic revenue growth and capture client assets that are currently trading away?

3. Driving Growth through Fee Discipline

Research clearly shows that Wealth Managers have been highly undisciplined when it comes to managing fees. This manifests itself in several ways, including static fee structures for the last 5-10 years (even as the cost of the delivery model has increased significantly), and high levels of discounting off the standard fee schedule. We’ve seen a few firms unabashedly make the move to increase their fees, with little-to-no pushback from clients and a sizeable lift to their bottom line.

Key Questions

How do we evaluate our current fee structure to ensure it reflects the value we deliver while still being competitive?
- And regarding our value, how are we going about ensuring that we are consistently delivering the value we intend to deliver?
What is the root cause of Advisors seeking fee discounts?
How can we move more clients to our standard fee schedule, doing so in a manner that is efficient and does not cause undue disruptions to our business?
How can we eliminate/minimize future fee discounting?

4. Positioning to Capture the Great Transfer of Wealth

Between now and 2045 it is estimated that over $84 trillion will be transferred to the next generation. In fact, by 2030 every Baby Boomer in the US will be over the age of 65. Additionally, studies have found that over 70% of those who will receive an inheritance plan on leaving their parents’ current Advisor. Firms with a clear and focused strategy will be poised to take advantage of this significant trend.

Key Questions

How are we connecting to the next generation to stave off probable attrition?
How are we engaging Baby Boomers in focused Wealth Transfer conversations to ensure they are well positioned to make an effective transfer of wealth to their heirs?
How are we engaging younger Affluent clients to ensure they are well equipped to manage their inheritance?

5. Differentiation through Intentionality: Managing Your Client Experience

Having the opportunity to participate in hundreds of pre-call planning sessions with advisor teams throughout the industry, two things are apparent. First is the challenge of differentiation. The difference between one firm and the next is negligible. Second is the fact that very few teams are highly intentional in how they engage clients/prospects. This lack of intentionality leads to undistinguished meetings and erosion of efficiency (i.e. more meetings to generate desired results). Further, because of this lack of intentionality, the “experience” any given client or prospective receives is solely dependent upon the individual advisor or advisor team with whom they engage.

6. Winning the War for Talent

The war for talent shows no signs of subsiding. Research shows that 37% of Advisors (over 105,000) will retire in the next ten years. And over 70% of industry newcomers drop out within their first three years in the industry. To add to his challenge, stats show that 70% of top advisors who leave their current firm cite poor manager quality as the reason.

These facts, coupled with compensation costs that continue to rise (thus creating margin compression), are forcing organizations to rethink how to attract, build and retain talent.

Key Questions

How do we keep our top Advisors?
How do we source new Advisors? Are there alternative channels for sourcing new talent?
How can we more effectively develop our existing talent and ensure that development sticks?
How can we equip our front-line leaders to provide meaningful coaching value for our advisors?

NEXT STEPS

Our Purpose at Greene Consulting is to positively impact the clients we serve so they can positively impact the lives of the clients they serve. Effectively addressing the issues above, we can say with total confidence, will lead to such an impact through the achievement of greater efficiency and effectiveness for your firm and your practice, and ultimately the realization of your growth potential.

If any one or more of these issues are on your radar as important to address in 2024, we invite you to connect with us using the form below. We would be happy to share more about what we are seeing, and our point-of-view based on our experience with helping firms and advisors tackle these and similar issues.