Sustainable cashflow is the apex for financial advice firms today.
While maintaining a pragmatic and long-term view towards revenue, growth can often prove to be a bitter pill to swallow, particularly amid the growing costs of compliance and everyday administration for many advisers.
The longevity of their financial planning practice necessitates a look beyond the short-term pressures that time-poor advisers already face and seeking out opportunities to take their practice to the next level.
With advisers under greater strain and scrutiny than ever before in today’s financial planning industry, revenue growth represents the key to success and longevity. It is the lifeblood of any business, and in an increasingly competitive environment, advice firms must find ways to continually increase revenue.
To scale your business to new heights and increase its value, you need to focus on the rate at which you can grow your revenue. Just as you find ways to create value for your clients, it’s vital that you continue to create value in your business.
Below are three key strategies for driving revenue growth for financial advice businesses today and why it’s paramount for licensees to keep a close eye on building the ramparts for their business if they want to remain relevant to the clients of tomorrow.
1) Grow your client book
The first and most effective way to drive organic revenue growth is by growing your client book to attract new clients as well as increasing your share of wallet with existing clients.
Recent research from CoreData has shown that two in three “mass affluent” Australians aged over 18 (66.9%) do not currently have a relationship with an adviser; and of these, close to half intend to enter the market for financial advice. Also, two-thirds of advisers (63.7 per cent) moved to virtual meetings during the pandemic, and since then 57.9 per cent of Australian advisers reported they are now communicating with clients more according to CoreData’s figures.
Despite this, a stark advice provisioning gap continues to remain. These Australians represent a tremendous opportunity for advisers to grow their client book and ensure they are able to provide advice beyond those traditionally within the ‘A’ and ‘B’ segments.
Building out your share of wallet is equally important. That means identifying opportunities to cross-sell and upsell to existing clients. This can be achieved by having complete visibility into clients as well as over each division, business unit, team, and team member all in one platform. By mining data across all parts of the business, firms can identify opportunities to extend products and services to their existing client base.
Unfortunately, the majority of advice businesses have been unable to effectively leverage this concept. Many advice businesses (both independent and aligned practices) run their service offerings as siloed, separate divisions. For example, wealth management, mortgages, and insurance are often treated as standalone divisions. This leads to an eternal problem for vertically-aligned businesses with unstructured and legacy data, especially at reporting time when key client data is held across multiple systems.
Being able to interact with your clients across different parts of the value chain and having meaningful data that can help generate cross-selling opportunities will ensure that you can continue to increase your share of wallet. Your current clients are also an incredibly important referral channel that can help you grow your client book through peer recommendations. By understanding their individual needs, you can recommend additional
products and services, increasing the revenue per client.
2) Implement a business development strategy
It’s no secret new business is absolutely critical to growing revenue. It’s paramount to have effective marketing, a well-orchestrated pipeline of prospects, and efficient onboarding.
Streamlining the client journey, advice generation, and implementation process brings potential to scale.
However, what’s often forgotten is how vital it is to understand how much revenue you generate and where it comes from. This is where a business development strategy can help anchor your approach and provide holistic visibility over your performance indicators to drive new revenue outcomes. Identifying how much you
earn from specific clients, product lines, and business units allows you to focus your efforts
on the areas that contribute the most to your bottom line.
A contributor to a good business development strategy is data. Firms need to be tracking profitability and resourcing; how much time and effort are you putting towards a client and how profitable are they? It can be the case that high net worth clients (although alluring) are often more expensive to service. With enough data, firms can build a profile for their most profitable clients — narrowing in on particular age bands, occupations and locations.
Once they figure this out, they can then put their efforts toward attracting clients that fit this profile.
A well-implemented business development strategy should be the cornerstone for your advice firm’s vision for scale. This strategy can help you stay on top of both potential revenue-generating opportunities, as well as present a clear picture of where effort should be spent and what types of clients to acquire. For this to work, it’s important that your strategy can accurately account for estimated versus actual revenue.
3) Prioritise High-Value Activity
Administrative tasks such as scheduling meetings and completing paperwork can take valuable time, yet they don’t necessarily add to your bottom line. If advisers could reduce the time spent on menial tasks, they’d have more time to attract new business and service existing clients.
Optimising your workflow engine can allow you to automate your business processes, reducing time spent on repetitive and administrative tasks. By automating business processes, firms can reduce the time spent on repetitive and administrative tasks, enabling a shift in focus toward revenue-generating activity. Empowering firms to lift their bottom line by spending more time doing what they do best — fostering deep relationships and
delivering value to their clients.
With optimised and automated processes, management can gain visibility over work in progress, and advisers can see tasks being done for each of their clients at any given time. This will help prioritize resources and streamline the client experience.
By utilising these three levers, you can consistently and significantly increase your revenue and scale your business to new heights. This will ensure your firm can continue to grow its foundations, contribute to consistent, significant revenue growth and attract the clients of tomorrow.
Umesh Banga is senior director, go-to-market for Practifi in Australia, New Zealand and Asia Pacific.
