Despite the fact that independent investment advisory firms are growing at an exponential rate, their unfocused business development models might hinder their success, according to a report, “Achieving Growth with the Right Business Development Structure,” by
“It’s a great time to be an independent advisor, but many firms are looking for guidance on how to manage their rapid growth, overcome barriers to growth and maintain a superior level of client service,” said Deborah Doyle WcWhinney, president of Schwab Institutional.
The report focuses on successful firms’ approaches to growing their business, such as why they employ certain tactics, and how advisors can determine the most suitable business development structure for their firm.
The report focuses on three business development structures and evaluates the strengths and weaknesses of them. The principal centric model has firm principals responsible for business development. The dedicated model approach appoints specialists within the firm to take care of the business, and the fully shared model allows business development responsibilities to be shared across the entire firm.
“As firms grow in size, the majority undergo a shift from principal-centric to dedicated business development or fully shared models,” said Dave Welling, vice president of strategic marketing programs at Schwab.
He noted that while more than 80% of firms with less than $100 million in assets under management rely on a principal centered model, only 40% of firms over $250 million use this model for a new business development. The other 60% have adapted to either a fully shared or dedicated model.
