Drive organic growth by adding services | Job Binary

In Herbers & Company’s view, merger and acquisition activity in the financial advisory industry will slow due to higher borrowing costs and fluctuations in firms’ asset levels amid struggling markets. It focuses on organic growth.

For many firms, the term “organic growth” is synonymous with marketing. But at Herbers & Company, while our marketing practice is an important engine of growth, it is a more powerful driver of growth than other fundamental activities, including a strong, consistent client experience and reliable service delivery. Doing these things right will provide more organic growth than marketing alone, because if they’re done right, they’ll turn your clients into the voice of your firm.

If you have a solid customer experience and a strong core service offering, adding a service or expanding your existing one may be the most effective next step to drive organic growth. Three service firms may focus on tax planning, estate planning, and retirement planning. Yes, I know you are offering these services. But what if you could offer them?

The demand for these services is invisible. Get tax planning. Only 18% of accountants offer tax planning advisory services: they mainly provide tax advice such as preparing returns. But what about tax planning? Accountants who provide tax planning typically do only about a third of their clients. This is despite effective tax planning; the average annual total of hourly fees charged per client is $2,351.

In other words, tax planning is a broad opportunity with a large addressable market. Clients from various welfare segments need to be served. The story is similar to estate planning — where most Americans fall behind — and retirement planning, especially income distribution strategies. While retirement planning is positioned as a core proposition for many advisory firms, deeper analysis of allocations and savings in the face of inflationary economic cycles is lacking.

Adding services where there is a real need helps consulting firms retain clients: the more a firm meets a client’s needs, the harder it is for the client to switch. Adding and deepening services also significantly increases organic growth. Our experience working with thousands of firms over the past two decades has shown us that increasing services that focus on the speed of asset accumulation will reduce withdrawal rates.

If consultants choose to charge additional fees for new services, their income will increase. If they use their new services as a cost leader, their lead ratios will increase. Either way, adding services increases customer referral rates, a key metric for firms looking to maximize sustainable organic growth.

So how should firms go about adding and/or expanding services such as tax planning, estate planning, and retirement planning? The first step is to clearly understand the purpose: What is the business purpose of enabling the service? Next, the firm needs to identify the key performance indicator (KPI) it wants to move.

Let’s say you’re going for long-term organic growth. Your goal may be to increase asset accumulation and decrease withdrawal rates. In this case, your KPI is simple: total AUM.

Once you know what you want the new service to achieve and have a way to measure your progress, you need to implement it. We tell clients to start by looking at the existing client experience, which is visually plotted on a timeline without the new service. The cornerstones of most firms’ client experience are the data collection or discovery meeting, the financial planning presentation meeting, the six-month review meeting, and the annual investment management and financial planning meeting.

The next step for such firms is to create a personalized journey for the visual client experience of tax planning, estate planning or retirement planning. As an example, using a tax planning service, a client experience data gathering meeting may occur before a financial presentation meeting, requesting the client’s tax return shortly after that meeting, and performing a tax planning scenario analysis. A tax planning meeting is scheduled after the financial planning meeting. Then, after the annual meeting on investment management and financial planning, a year-end meeting on tax planning is scheduled (see Figure 1).


What if your primary goal is short-term organic growth rather than long-term organic growth? You just want to increase the client’s income, so your KPI will be the total fee charged for tax planning. What you need to do is create a tax planning schedule for your existing client experience, decide how to price it, and then offer it to clients for this additional fee. Four tax planning client experiences, for example, could be valued at $2,500 in one year.

Or let’s say your goal is to increase short-term lead flow: you want to attract more prospects. In this case, your KPI could be a lead rate per month. Your activity will be to create a tax planning loss leader service model. In this case, your plan is to review your tax returns – continuing to use tax planning as our example – for free. This client experience happens before the prospect becomes a client—you request a tax return, do a scenario analysis, and use a tax planning meeting to learn about the prospect’s situation and needs. The goal, of course, is to have a complete client experience, including core elements and new services.

Another goal may be to increase referrals to long-term clients. In this case, your goal would be to increase your client referral ratio, the KPI being the total number of referrals from your clients each month. In this case, the required action is to create a personal service offer and present it to clients on a regular basis.

A visualized client experience involves an advisor requesting a tax return, performing a scenario analysis, and then conducting a tax planning meeting. Next will be a data collection meeting for key services, followed by a meeting to introduce the financial plan and a six-month follow-up. Before long, you’ll be requesting tax returns and doing an updated scenario analysis. The annual meeting is followed by a year-end tax planning meeting.

Firms may have some of the expertise needed to add or deepen internal services, or they may need to hire experts. In some cases, it makes sense to buy a small firm funded from the firm’s profits to add a service capability.

Sustaining organic growth depends on firms’ ability to continue to deliver consistently excellent client experiences. This is true when firms offer only a few core services, and this remains true as they grow and add services. So, if you plan to grow by adding services, do it with a clear goal, execute the service carefully and measure the results carefully. It will be more work than a marketing push, but the rewards will be bigger and longer lasting.

Angie Herbers is the founder and CEO of Herbers & Co, a consultancy for financial advisors.

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