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David DeVoe RIA EDGE Photo by Ali Hibbs
David DeVoe speaks at the RIA EDGE Conference.

DeVoe: ‘We’re the White Hats’

David DeVoe discusses the whys and ways of RIA growth-by-design.

For David DeVoe, CEO and founder of the RIA M&A consulting and strategy firm DeVoe and Co., growth isn’t simply good for a registered investment advisor’s bottom line, it’s practically a moral imperative.

“The bigger you get, the better you're able to serve clients,” he told a room full of advisors, executives and other industry professionals at the RIA EDGE conference at The Diplomat Beach Resort in Hollywood, Fla., on Wednesday. “You can tailor your services more. You can be more responsive to what their needs are. And you can have a greater set of products and capabilities that you can offer them.”

Growing firms also gain more staff, an important element that can sometimes be overlooked yet also stands to benefit from—and contribute to—continued growth, DeVoe said.

“The career paths are better at a faster growing organization, a bigger organization,” he said. “The compensation picture is better and better.”

DeVoe said his intention wasn’t to sell the group on growth, but to encourage them to “gain clarity and conviction” regarding their individual firm’s purpose and vision. Only then, he declared, would they be able to effectively execute any plans for growth while, at the same time, motivating employees to engage in the process.

It’s not enough to simply grow for growth’s sake, or even for the purpose of increasing revenue and income, he maintained—a critical component of good growth is the ability to tie it to intrinsic benefits that will be achieved, for existing investors but also extending out to ever larger neighborhoods and communities.

“I think the RIA community is so great in so many different ways,” he said. “For me, it’s almost heartbreaking that we’re not growing as fast as we should be. We’re the white hats. We’re the good people. We should be doing more and growing faster.”

Noting that employees comprise about three-quarters of a firm’s expenses and can “make or break an organization,” DeVoe invoked psychology to point out that intrinsic motivators—vision, values and purpose—engender three times more engagement than extrinsic motivators such as income and recognition.

It’s easy to get overwhelmed by the complexity of considerations involved in building a plan for growth, DeVoe said, so what’s needed is “a nice, methodical, elegant approach to get started.”

There are a limited number of ways an RIA can grow, he said: market performance (which is outside of a growth-by-design framework); gaining new clients, either through business development or through referrals; asset movement among existing clients (addition, drawing down, attrition); merger and acquisition activity; and one-time events that generate additional capital, such as outside investment.

“Growth isn’t based on charisma,” he said. An effective plan would consider brand, marketing strategies and optimizing existing areas of growth. Steps to successfully implement that plan include assessing the current state of one’s firm, crafting a strategy, improving core elements and building new capabilities.

Identifying a target client profile is also an important element of any design for growth, a process that includes assessing current clients first and then identifying the characteristics as well as the personas of desired additions. Being specific can increase referrals, said DeVoe, to a point. When speaking about potential prospects, being able to describe a desired client in detail can spark recognition, but it’s important not to be so specific that other desirable segments aren’t represented.

Finally, being able to clearly communicate a differentiated value proposition is an integral part of foundational growth.

“Once you have the target profile, then you're in a position to talk about your unique value proposition,” DeVoe said. “Do them in that order.”

“Do your best to articulate how you're different from others," he said. "Push yourself, challenge yourself, challenge your staff to think through what that looks like and how to articulate that. It’s going to affect how you talk about it. You want to use words that are going to resonate with people.”

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