Growing practices need more hands on deck
Sole practitioners or leaders of small firms who want to take their practice to the next level should seriously consider hiring more advisers, though there are, of course, cost decisions to consider, observers say.
“If your practice is growing, you can only go for so long before clients might begin to notice that you’re juggling too many balls,” says Harriet Brackey, a CFP and the director of investments and the co-chief investment officer at GSK Wealth Advisors in Hollywood, Fla. “Adding good technology will help, but hiring someone is really the eventual answer.”
If a sole practitioner decides to add advisers, typically client service improves and a practice can gain more revenue, Brackey says.
Catherine Seeber, a CFP and a partner and senior adviser at Wescott Financial Advisory Group in Philadelphia, says that the decision as to whether to stop being a sole practitioner is an individual one.
She points to the 2015 FA Insight “Study of Advisory Firms: People and Pay,” which found that the most financially successful and profitable advisory firms are taking home more in owner income than advisers in larger ensemble firms.
However, Seeber, asks, what other “prices” are they paying?
At the same time, adviser recruiting firms say that there is growing consolidation of firms because it is difficult and expensive to be a sole practitioner, she says.
Much of the recent merger activity among advisers is based on the fact that the solo firms recognize that their expenses will overwhelm them if they don’t find at least one other practitioner with whom they share the burden.
“Personally speaking, ignoring the glory of autonomy or financial and hardship impact on the solo practitioner, the overwhelming benefit of having more planners on staff is the leveraging of knowledge among your peers,” Seeber says.
In retaining and acquiring clients, they often feel more satisfied knowing that there is a deeper bench of support and human capital, she says.
That isn’t to say, however, that sole practitioners don’t have a wide array of support and people that can be the “team behind the scenes,” Seeber says.
“You just have to be more strategic in your alignment of networks and hope that all of your outsourcing is working in tandem with one another,” she says. “Without saying, the obvious disadvantage of a solo practice is succession planning.”
This story is part of a 30-30 series on ways to upgrade your practice.