Dan Klein Senior Practice Management Consultant TD Ameritrade Institutional

Transcription

1 Dan Klein Senior Practice Management Consultant TD Ameritrade Institutional TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission. This material is designed for a financial professional audience, primarily registered investment advisors 1

2 Important Information TD Ameritrade is not affiliated with and does not necessarily endorse or support any of the third-party companies, products or services mentioned. All logos, product and service names are the property of their respective owners. TD Ameritrade makes no representations or warranties with respect to the accuracy or completeness of the third-party information, opinions or views provided. Past performance of a strategy or product does not guarantee future results or success. Examples provided for illustrative purposes only. Actual results will vary. Supporting documentation for any claims, comparison, statistics or other technical data will be supplied upon request. TD Ameritrade and FA Insight are separate, unaffiliated companies and are not responsible for each other s services and policies. This presentation includes a feature that allows recording of electronic (including audio) participant-shared content. By continued participation in this session you automatically consent to such recording, and the subsequent rebroadcast of any recording. 2

3 Agenda Growth by Design Celebrating Success Strategy Guides Growth A Focus on Client Experience Priority: Marketing and Business Development 3

4 The Virtues of Growth by Design Growth by Design, a study in achieving sustainable growth FA Insight 2014 Growth by Design Study Nearly 75% of firms indicated achieving significant growth Just one-third of firms reported sustainable growth Sustainable growth firms demonstrate: Higher rates of growth Greater productivity More revenue Higher profitability Exclusively Sponsored by TD Ameritrade Institutional 4

5 Profile of Growth by Design Participants Participating Firms by Gross Annual Revenue Participating Firms by Affiliation Model Bank trust or ind. trust co., National fullservice, 5% 6% Other, 2% > $4M, 20% $1.5M $4M, 25% $100K $500K, 24% $500K $1.5M, 31% IBD only, 4% IBD with insurance, 9% IBD with planning RIA, 4% RIA only, 58% Primarily RIA, 11% Note: RIA Only are independent RIAs (filing own form ADV) with no broker-dealer affiliation. Primarily RIA are independent RIAs with broker-dealer affiliation for conducting limited commission-based business. IBD with planning RIA are primarily independent broker-dealer-affiliated firms that maintain their own RIA for the purpose of providing planning services only. IBD only are independent broker-dealer-affiliated firms with no insurance agent contract. All fee business is conducted through the broker-dealer s corporate RIA. IBD with insurance are independent broker-dealer-affiliated firms with insurance agent contract. National full-service includes employee or 1099 advisors affiliating with national, regional, or boutique brokerages. Bank trust or independent trust company includes any trust division of a bank or independent trust company, with or without their own RIA. 5

6 The Sustainable Growth Firms Lead the Way Sustainable growth firms achieved higher rates of growth while generating greater productivity, more revenue, and higher profitability FA Insight distinguishes sustainable growth and growth-at-risk firms Firms by Growth Status Sustainable growth firms excel in: Strategic planning Serving clients Marketing and business development Operations Growth-at-risk, 39% No significant growth, 28% Sustainable growth, 33% 6

7 Annual Percentage Change Sustainable Growth Offers a Variety of Rewards Typical Sustainable Growth Firm $215, Revenue per FTE 25% 20% 15% 2013 Growth Rates, Sustainable vs. Growth-at-Risk Firms 22.2% 18.6% 19.0% 18.1% Typical Sustainable Growth Firm 10% 8.3% 7.2% Sustainable Growth Growth-at-Risk $1, Profit per Client 5% 0% Clients AUM Revenue 7

8 Celebrating Success 8

9 Strong Growth by Any Measure Median Growth Rates, saw record client growth, the strongest AUM growth since 2009, and the strongest revenue growth since 2010 Annual Percentage Change 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 17.5% 15.2% 15.5% 11.0% 11.4% 9.8% 6.4% 6.7% 6.0% Clients AUM Revenue

10 Median Revenue per Professional Record Levels of Professional Productivity $600,000 Revenue per Professional, $500,000 $400,000 $300,000 $419,087 $363,600 $479,500 $200,000 $100,000 $ Professional Productivity Increased 32% Between 2009 and

11 Overhead As a Percentage of Revenue Overhead Expense Margin Drops to New Low Overhead Expense Margin, % 41.7% 41.1% 40% 38.1% 39.2% 38.1% 36.8% 35% 30% 25% 20% 15% 10% 5% 0% Median Cost per Client in 2011 $2,860 Median Cost per Client in 2013 $2,101 26% Reduction Since

12 Median Income per Owner Median Operating Profit Margin Higher Margins Lead to Record Owner Income Income per Owner and Profitability, $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $295, % $227, % 25% $344, % 20% 15% 10% Income per Owner Profitability $100,000 $50,000 $ % 0% 12

13 FA Insight s Four Stages of Development Firm Stage 2013 Gross Annual Revenue Range Characteristics Operators $100K $500K Owner/operator dominant One owner serves as the firm s sole professional, performing many other roles within the firm One administrative employee Cultivators $500K $1.5M Established business cultivating opportunities to grow One owner Employs second professional and support staff member Accelerators $1.5M $4.0M Firmly established and ready to accelerate growth initiatives Ownership distributed to at least one other person Employs full-time management position and multiple administrative and support staff Innovators >$4.0M Innovating best practices for the rest of the industry Biggest and most complex organizational structure Multiple owners Employs specialized technical staff and multiple dedicated managers Percentage of Participants 24% 31% 25% 20% 13

14 FA Insight s Standout Firms Achieve Superior Growth and Income Growth and Income Medians for Standout Firms vs. Others, 2013 Annual Revenue Growth Owner Income per Revenue Dollar Firm Stage Standouts Others Standouts Others Operators 40.5% 14.8% $0.75 $0.58 Cultivators 26.3% 12.3% $0.72 $0.45 Accelerators 23.6% 11.5% $0.60 $0.42 Innovators 20.1% 10.6% $0.58 $

15 Strategy Guides Purposeful Growth 15

16 Strategic Plans Are Frequently Less Than Ideal Strategy does % not influence staff members individual performance objectives Strategy is not % understood by all team members Source: The 2014 FA Insight Study of Advisory Firms: Growth by Design 61 % Strategy lacks implementation detail for meeting objectives 16

17 Focus on Lagging Indicators Challenges Effective Strategy Development Typical Strategic Plan Objectives Lagging Financial Indicators Revenue growth Asset growth Client growth Profitability 72% 68% 83% 88% Client retention 66% Leading Non-Financial Indicators Client satisfaction Process-related efficiency or productivity Staff growth Staff retention 63% 60% 56% 47% Other 3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Firms Responding 17

18 Superior Client Experience Is Top Growth Driver Leading Drivers of Recent Growth Superior client experience Operational efficiency Marketing/business development effort Capabilities or expertise of staff members Merger or acquisition 19% 43% 40% 49% 60% Delivering a superior client experience was reported as the number one influence on recent firm growth across all four firm stages 0% 10% 20% 30% 40% 50% 60% 70% Percentage of Firms Responding 18

19 Business Development Most Expected to Impact Future Growth Factors Expected to Have Major Impact on Future Growth New client business development 69% Operational efficiency gains Additional business from existing clients Clearer strategic focus Improved capabilities or expertise Improved client experience Merger or acquisition 51% 46% 41% 36% 33% 28% Additional products or services 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% Percentage of Firms Responding 19

20 Percentage of Firms Responding Sustainable Growth Firms Show Greater Attention to Strategic Plan Implementation 70% Strategic Plan Characteristics, Sustainable Growth vs. Growth-at-Risk Firms 60% 50% 58% 51% 46% Sustainable Growth Growth-at-Risk 40% 35% 30% 20% 10% 0% Clearly understood by all Contains implementation detail 20

21 Good Things Happen When You Focus on Clients 21

22 Percentage of Firms Responding Standout Innovator Growth and the Client Experience Firms Citing Superior Client Experience As Key Growth Driver 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 67% 62% 71% 57% 58% 48% 77% 57% Operators Cultivators Accelerators Innovators Standouts Others Standout firms tend to get a much greater share of new clients through referrals from existing clients relative to other firms 22

23 Sustainable Growth Firms and the Client Value Proposition 76% of Sustainable Growth Firms Have Developed a CVP 89% of Sustainable Growth Firms Implement Their CVP Consistently 78% of Sustainable Growth Firms Utilize CVP to Determine Pricing Sustainable growth firms gain an advantage through the consistent implementation of their client value proposition i.e., clients consistently experience the value promised by the firm 23

24 Why Marketing Must Be a Priority 24

25 Marketing Planning Requires Greater Attention and Skill Annual Marketing Plan Development and Effectiveness Marketing plan is ineffective, 4% Marketing plan is somewhat effective, 33% Marketing plan is effective, 13% Does not develop an annual marketing plan, 50% 43 % of firms surveyed describe their business development activities as a primary factor in driving past growth 25

26 Client Referrals Are the Primary Source for New Clients Sources of New Clients Professional organization referrals, 4% Seminars, 4% Media, 5% Other sources, 7% Acquisition or merger, 6% External professional referrals, 10% COI relationships, 15% Client referrals, 50% 26

27 Who Do You Serve? Target Market Characteristics Levels of investible assets Life stage Attitudes Occupation Income Geographic location Self-employed business owners Industry of employment Specific technical advice needs Gender Specific affiliations Other 17% 11% 10% 8% 15% 37% 36% 35% 30% 62% 59% 73% 0% 10% 20% 30% 40% 50% 60% 70% 80% Percentage of Firms Responding 27

28 Percentage of Revenue Standout Firms Allocate Less to Marketing Relative to Peers Percentage of Revenue Devoted to Marketing, Standouts vs. Others 3.5% 3.2% 3.0% 2.5% 2.3% 2.6% 2.5% 2.0% 1.5% 1.5% 1.3% 1.8% 1.8% Standouts Others 1.0% 0.5% 0.0% Operators Cultivators Accelerators Innovators 28

29 Percentage of Firms Responding Sustainable Growth Firms Maintain a More Structured Marketing Function Marketing Planning, Sustainable vs. Growth-at-Risk Firms 70% 60% 61% 50% 40% 30% 41% 28% 46% 32% 25% Sustainable Growth Growth-at-Risk 20% 10% 0% Has position dedicated to marketing or new client growth Develops an annual marketing plan Has an effective marketing plan 29

30 Professional Capacity for Business Development Activities 20 % of professional capacity within sustainable growth firms is dedicated to business development 30

31 Percentage of AUM Pricing to Enable Profitability 1.2% 1.0% 0.8% Median Fee As a Percentage of AUM, % 1.00% 0.90% 0.70% In the Last Two Years 42% of Firms Implemented a Pricing Increase 0.6% 0.50% 2014 For 0.4% 0.2% 0.0% $500,000 $1,000,000 $2,000,000 $5,000,000 $10,000,000 Client Relationship Size 71% of Firms, AUM-Linked Fees Cover Services Beyond Investment Management 31

32 Wrap Up 32

33 Final Comments Growth by design has never been more relevant Full Study Results Available at Greater sustainability can be achieved through: Defining your growth strategy and focusing on implementation Building the business around the needs of your clients Making marketing a priority 33

34 Breakout Growth : Advanced Strategies to Attract the Right Clients Growth Plan Niche Marketing (Define) Branding (Express) Pricing Strategies (Price) Strategic Introductions (Cultivate) High-Impact Events (Deliver) How do you become all things to a select few? Do you have a clearly defined brand? How are you priced today relative to the market? How are you meeting ideal prospects today? How are you using events to attract new clients? Do you have a defined client segmentation process? What does your ideal client look like? How can you attract more ideal clients? Can you articulate your vision for your firm? What is your mission? How do you create value? Does your brand differentiate you? How does your pricing model need to change relative to your clients and services? How does your pricing stack up relative to cost, market and value delivery? How do you implement change? How do you find and create introduction opportunities with ideal prospects? How do you perform due diligence on prospects? How are you leveraging your current network? What type of event strategy is the right fit for your firm? How can you use events to better engage with clients and prospects? What topics/event types would best resonate with your target audience? Conduct a comprehensive client segmentation exercise Identify your target segment Choose your niche(s) within your target segment Understand how many existing clients meet your ideal client profile Assess niche viability Establish credibility with niche(s) Conduct branding awareness study Evaluate/define your brand Develop value statements Define proof points to support your value statements Reflect the brand in your messaging and communications Assess pricing relative to the market Examine pricing in light of cost management Understand your costs, the market and the value you deliver Determine the right pricing structure for your firm Assess implementation of pricing changes Identify your short list of targeted prospects Research your short list via social media and prospecting tools Determine activities necessary to effectively help you connect Consistently cultivate relationships over time Define your strategy Identify who can help Choose your event type Create your invite list Define and deliver the experience Track and measure success 34 4

35 Questions?

36 Thank You!

37 37