Beverly Flaxington

Over 90 advisors responded to a survey I conducted earlier this year with Advisor Perspectives. Here are the important insights into which activities help find new business for RIAs and IBDs.

While overall assets were up across advisory firms, thanks to a positive market, the hunt for new assets coming from new clients continues to be a struggle for many. Here’s what’s working and what’s not based on the survey results.

Ranking on a scale of 1 to 10, with 1 meaning “worst,” I aggregated results by the bottom and top third self-rankings (1-3 and 8-10, respectively). When asked about overall new sales effectiveness for the firm, both RIAs and IBDs gave themselves the highest ratings in the “middle” (4 – 7). IBDs rated themselves in the worst categories by a factor of 3 to 1 versus the RIAs and neither category gave themselves a “10” rating overall. Below I have broken down the efforts into individual sources of new revenue.

A whopping 32% of IBDs said their client referrals were in the lowest categories possible while only 13% of RIAs answered similarly. But both advisor-types showed very low numbers on the high end of the scale. Obtaining referrals from COIs (centers of influence) fared even worse with both sets giving this category overall low ratings – close to 37% for IBDs and close to 42% for RIAs. The last category of prospecting, obtaining new clients in general was also weak with 32% of IBDs giving this the lowest ratings and 26% of RIAs. It’s important to note that in no case did either IBDs or RIAs give strong ratings in any aspect of new business growth.

One surprising differentiator was in the area of formal sales training. IBDs overwhelming rated formal sales training they have received in the higher categories, with over 90% rating it between 5-9 on the 10-best scale. By contrast, only about 14% of RIAs rated the results from formal sales training in the top third.

When asked to explain obstacles to growth the most common themes were lack of time and lack of focus. Other responses included:

  • Poor sales skills of team members;
  • Insufficient money devoted to selling; and
  • No formal written sales plan.

A few respondents said they had “no need” for new sales, and no obstacles to growth whatsoever. These firms appear to be in the minority.