The Greatest Opportunities and Threats for Advisory Firms Today (and what to do about it)

Learning Objectives:

• As a profession, we’ve got growth issues (and opportunities). The data is clear: respondents are dependent on market performance. While this isn’t news, we hope that any growth pain felt last year serves as a reminder that if you’re not growing, you’re dying. We’re watching how this trend impacts M&A and succession trends. Challenges often bring opportunities, including growth from existing clients and graduating beyond founder-driven growth.
• Capacity is at a premium. It’s time to figure out how to do more with less. While firms’ growth lagged, we continue to see historically high productivity metrics, which tells us that firms are at capacity. However, top performers caught our attention; they were able to do (a lot) more with less. It’s no surprise that operations staff are having a well-deserved moment from a compensation perspective. We believe firms will need to continue to invest in their operations to sustain their growth and capacity.
• Firms are spending again. Top firms are investing cautiously. Top-performing firms are managing expenses across the board more carefully compared to their peers, including on their talent. While talent is a capacity driver, it’s also an investment that needs to be managed and developed. How you manage your balance sheet has implications in both the short and long term. With a hot M&A market, well-run businesses demand a higher valuation and multiples. If we’re talking multiples, make sure you have realistic expectations; many firm owners don’t. Do you consider yourself a financial advisor, business owner, or both? Learn how advisory firm owners who consider themselves a business owner think about running their business today and into the future.