Loreen Gilbert is thinking big.
Gilbert runs WealthWise Financial Services, a 20-year-old firm in Irvine, Calif., with about $165 million in assets and $1.3 million in revenues. She has two revenue streams: wealth management and 401(k) plans. Her long-term objective: Grow the company 10-fold in 10 years.
Though Gilbert is the firm’s rainmaker, she has on staff a CFA, who does portfolio work, among other tasks, another advisor and two administrators, one of whom is licensed. Compensation for advisors is a salary plus bonus, which is based on revenues from clients they’re serving. For now, Gilbert also does most of the 401(k) client work. But that’s about to change: She’s in the process of hiring another advisor to work on the retirement business, which, she figures, requires a full-time focus. And she wants to expand from a largely regional client base to a national one.
To boost her efficiency, Gilbert recently winnowed her client base to about 200, so “I’m not as overwhelmed with small clients,” she says. Her minimum is $500,000 in investable assets, but her target is $1 million or more.
That’s all in the service of achieving her long-term growth plans. Can she do it?
Senior Vice President of Strategic Initiatives
It’s a very ambitious goal to grow 10-fold in 10 years. The best performing firms of that size have an average annual growth rate of about 16 percent. With that in mind, one of the glaring issues I see for her is being the only rainmaker. The fact that she has support staff is great. But she’s going to need a new source of clientele to gather more assets. Maybe that’s referrals from centers of influence. Maybe rollover opportunities from the 401(k) market she serves.
Firms that grow like that have some sort of secret sauce, whether it’s having several regional CPAs feeding her clients or becoming the go-to person for a specific niche. Ultimately, however, she needs growth through acquisition to help her meet her goal.
She also needs to use technology, like videoconferencing, if she’s going to have clients who are geographically dispersed. For her to be able to have back-to-back meetings while she’s still sitting in the office would create additional leverage in the business.
Strategy & Resources
That kind of growth typically happens through a combination of organic growth and acquisition. It’s typically not done by expanding into other geographic markets.
Also, about the two lines of business: She might be perfectly fine in terms of having revenue and cash flow to grow. But to expand at that rate, I think she’d be wise to choose between one or the other. At least for the near term; put the time and energy into one area and maintain the other. Firms with high growth tend to have a narrow focus. Also, I recommend she think about her goals in smaller increments—not just what she wants to do in the next three years. Break it down into 90-day increments.
Finally, it’s unusual for a small firm to have a CFP doing portfolio work. That’s usually outsourced. It could give her a competitive edge. A certain type of client may appreciate the fact she has her own portfolio management capability.
Managing Director, Wealth Management Services
It’s great for an advisor to have goals, as long as they’re as clear and specific as possible, to increase the chance of achieving them. What will the mix of revenues be? And what type of clients will she serve? Is her goal to increase assets? Revenue? Profit margins? Net income?
She has to pinpoint what her competitive advantage is. For example, with 401(k)s, is it cost reduction, fiduciary fulfillment, employee education? Connected to that is her marketing plan. For starters, what professional associations should she join so she can network more effectively and what professional relationships does she already have with centers of influence? How can she establish new relationships with CPAs and attorneys who could provide her with some leverage to gain introductions to new business? Then there are events: Will she go into companies and conduct educational workshops? Or will she run forums once every quarter at a local country club to get in front of more affluent people? She needs to address all these questions.