Earlier this year, I had the privilege to attend David DeVoe’s “Elevate” conference in Nashville. As the chief revenue officer for a nationwide RIA focused on growth, I consider David a dynamic thought leader in our space. Barron’s has called him “the M&A guru,” so when he gave the keynote address, I was listening.
His insights on the necessity of organic growth for RIAs were intriguing.
DeVoe shared that RIA growth in 2017 was 23%, which has made RIAs appealing to private equity firms. But upon a closer look, DeVoe suggested, the industry might be mistaking market performance with plain-old business growth. He said, “13 percentage points of that 23% growth rate came from market returns and another percentage point came from M&A activity, leaving 9 percentage points for organic growth. The organic growth rate fell to 7% in 2018, 4% in 2019 and 3% in 2020.” Last year the industry had an uptick to about 4% organic growth. He called the limited organic growth “a tragedy,” and pointed the finger at those of us in the RIA space for ignoring opportunities.
Thankfully, I didn’t feel like he was talking to us at Sowell Management. Sowell is a unique RIA – a national firm that is an “advisor to financial advisors,” providing IARs and RIAs an array of services, including billing, account management, end-to-end technology and portfolio management, among others. And one thing we have never ignored in our more than two decades in this business is the importance of growing organically.
Bill Sowell, the firm’s founder, has consistently acknowledged that while growth is vital for a firm’s success, balance is equally critical. While seizing M&A opportunities plays a pivotal role in our growth strategy, we consider organic growth to be equally important. Bill has distilled the fundamental components that play a role in our growth efforts, and our entire firm embraces those. Here, he shares them with you.
Ready to partner with an RIA who can help your firm grow organically? Schedule a call today.
Bill’s top three suggestions for growing your RIA organically:
#1 Practice partnership:
True partnership is a collaborative relationship where both parties are deeply invested in each other’s success and share common goals and values – working closely together to achieve mutual benefits. It goes beyond transactional interactions and involves open communication and commitment to long-term success. Valuing partnership fosters trust, loyalty and the positive referrals that drive business. It’s what we embrace at Sowell Management, and I believe it works for any business that wants to grow.
#2 Champion your core values:
Sowell Management aligns core values with its advisors and everyone we work with. Finding the right partner fit enhances your opportunity for success. And aligned beliefs foster deeper understanding and a culture of collaboration, nurturing the relationships that are crucial for growth. When clients share your firm’s core values, they stick with you through thick and thin and are the relationships that last a lifetime.
#3 Tout your technology:
Clients seek streamlined business operations, and offering top-tier technology achieves precisely that. At Sowell Management, we recently launched FLEX Connect, a central hub for everything our advisors do in a day – from account opening to trading to billing. If you give your clients back time, you’ll keep them – and your firm will grow. Providing leading technology also signifies innovation and efficiency, signaling that you’re on the cutting edge – now and into the future.
Bill’s Bottom Line:
David DeVoe notes that the changes in our industry – especially the need to pursue organic growth – should be “a wakeup call.” At Sowell Management, we were never asleep. We learned early that paying attention to the basics – valuing and building partnerships, pursuing clients that share core values and providing tech tools that change the way clients do business – pays dividends. Dividends that equate directly to a firm’s growth. And if we can do it, you can too.