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Let Go And Prosper: Avoiding Three Common Pitfalls In The Path To Breakout Growth

For owners of investment advisory firms, the key to achieving more may be doing less.

Doing less, that is, of overseeing internal meetings and spending less time on smaller accounts. Principals can potentially accelerate their firm’s growth by adding two key positions that give them more time to go out and bring in new business. Registered investment advisor (“RIA”) firms that employ dedicated management and an associate advisor can significantly increase their rate of growth in assets, revenue and earnings, according to new research from TD Ameritrade Institutional 1 and industry consultants FA Insight.

Firms with a dedicated manager produced 36 percent more income per owner and 41 percent more operating profit per client than firms where advisors do double duty as business managers, the research showed. Likewise, firms with an associate advisor earned 44 percent more income per owner and added clients 15 percent faster than firms without. 2

Adding talent isn’t enough, though: principals need to carve out clear job roles, create a framework that can support a far bigger enterprise down the road and then have the courage to step aside.

“Putting everyone in the firm, especially the founder, to their highest and best use is the end game. RIAs that effectively deploy these two key roles create opportunities for a productive shift in focus of the lead advisors, which can produce dramatic results,” said Christine Gaze, CIMA, TD Ameritrade Institutional’s director of Practice Management.

RIA firms typically evolve from a small practice, one principal and an assistant, into thriving businesses with, a dozen or so employees and an owner who still manages operations. Principals often are stretched thin and the firm’s growth hits a wall.

To help RIAs vault this hurdle and join the ranks of major league firms, TD Ameritrade Institutional shows firms a path to pursue breakout growth through a new program which explores the benefits of adding a dedicated operations manager or a chief operations officer and a client-facing associate advisor. The program targets firms with at least $100 million in assets, but may be considered by smaller firms.

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