The Best Practices of Fast-Growing Advisory Firms

Lisa Salvi is a member of the Advisor Services leadership team and is responsible for Schwab’s Business Consulting and Education offer. Her team develops and manages programs and one-on-one consulting engagements designed to help independent advisors make lasting and significant improvements within their firms by focusing on key business, technology, and cybersecurity issues. Salvi’s team leads the annual RIA Benchmarking Study, the Compensation Study, and programs that support the development of advisor talent through executive education and student initiatives. They also provide insights and tools that help the Advisor Services sales and support teams deliver outstanding client service to independent advisors.

Salvi has more than 16 years of experience working with fee-based advisors. During her 11 years at Schwab, she has held several positions, including Chief of Staff to Bernie Clark, head of Advisor Services. Salvi holds a bachelor’s degree from the University of California, Los Angeles, and the Series 7 and 24 licenses.

I spoke with Lisa at the Schwab IMPACT® conference on October 29.

What is the role of the Business Consulting and Education team? How do you work with advisors?

Our team’s vision is to help advisors make significant and lasting improvements within their firms on the things that matter to them. Through our consulting work, we help them on topics like developing a strategic business plan, growth strategies, creating a referral culture, transitions, cybersecurity and technology. We have a new program launching that will help them redesign a workflow within their firm using some design theory. Often a big topic is how to supercharge growth, but we also want to help advisors with day-to-day aspects of running their businesses.

What are Schwab’s “Guiding Principles for Advisory Firm Success” and why did Schwab create those principles?

When we look at our Benchmarking data, we see that the median firm five years ago sat at about $350 million in assets under management, and today they've grown at about 11% and they're sitting at $587 million. But then there's a subset of firms at the top 20% of growth that are growing at a 16% rate. That $350 million firm has now grown to over $700 million. They've more than doubled in size. They've probably hired five or six people within just a five-year period. They're just growing at incredible rates.

Our advisors always ask us how those firms are doing it, and so we took a look, and we realized that there are five things firms are doing exceptionally well when they're growing at those incredible rates. Those are the guiding principles for an advisory firm's success, and they center on things like: (1) strategic planning is a leading indicator of success; (2) value is defined through your clients’ eyes; and (3) operational excellence creates greater capacity for clients, meaning your compliance systems, cybersecurity systems and back-office operations. If you do those well, you have more time to spend on the client experience. The fourth principle is “your reputation is your brand” – all of your marketing, referrals and digital presence. The fifth principle is “people are your most important asset.” None of these principles are revolutionary, but firms that do them well, commit to them and put planning and rigor around them, outperform.