Elevate: Growing RIAs offer experiences, not products -Dlight News


On day one of DeVoe & Company’s fourth annual Elevate conference, held this week in Nashville, speakers highlighted the importance of growth for RIA firms, shared thoughts on how to motivate employees and customers, and heard new ideas how independent firms can outperform established competitors institutions far into the future—and even have fun doing it.

The three-day event revolved around the twin themes of growth and talent, and DeVoe & Company, the boutique investment bank and RIA M&A advisor, scheduled Wednesday’s sessions on growth.

“Valuations are actually driven by a variety of different elements, but they fall into three main categories,” said David DeVoe, founder and CEO of DeVoe & Co. “Growth, Profitability and Risk – and growth is the most sensitive.”

DeVoe describes himself as a nerd on the subject, saying that for every percentage point a company increases on its growth trajectory, the company’s value increases by 7%.

He also noted that average organic growth rates across the RIA space have declined more than 50% since 2017 — the same rate at which the average consultant has slashed their marketing and business development budgets over the same period.

“From my perspective, this is a tragedy,” he said, citing the market’s need for biased advice. “We are the good.”

He argued that a 1% annual increase in a company’s growth rate is easily achievable with a “sustainable, comprehensive and integrated” business development strategy.

“That’s what I really want to encourage you all to do,” he said. “That’s what we’re going to focus on over the next few days, which is to help you implement those tangible elements.”

DeVoe said that an effective growth strategy relies on identifying a target customer profile and a differentiated value proposition. Then he dusted off some of his favorite research:Started by Richard Ryan and Edward Deci in the late 1970s – to emphasize the fundamental importance of a clear mission, vision and statement of values.

Ryan and Deci’s research found that financial rewards are less motivating than sense of achievement and social reinforcement. in one subsequent study Yun Jik Cho and James Perry measured engagement among more than 200,000 public sector workers were three times more correlate more strongly with intrinsic motives (feelings of personal accomplishment and satisfaction) than with extrinsic motives (external approval and financial returns).

“Obviously, a great way to emphasize importance is with the classic film Kung Fu Panda,” he offered.

The film’s protagonist, a chubby animated panda with little coordination but big dreams of becoming the one to save his village, is driven by intrinsic motivations. Meanwhile, his friend and savvy rival is vying for the same position but motivated to seek money and fame.

Guess who wins?

“Giving people more money to engage in behavior is very different than inspiring them or helping them find the place where they can intrinsically do it,” DeVoe said. “So I encourage you to think not just about your employees, but also about your customers and the people you will be selling to. Inspire them to focus on the essentials of the equation.”

Quote from a frequent TED speaker Simon SinekHe added, “People don’t buy what you do, they buy why you do it.”

Wednesday’s keynote speaker was Dennis Moseley-Williams, founder and CEO of an eponymous practice management company and “Certified Expert in the Experience Economy.” His main focus was to make the consultants understand that the path to growth is not just about adding more services to the offering.

He reiterated the often-voiced encouragement to financial advisors to be “more like Starbucks” and to care less about the cup of coffee and more about the customer experience. Howard Schultz, the CEO who made Starbucks a global phenomenon, hasn’t thought about coffee in more than 25 years, he said.

To only offer investment advice, Moseley-Williams said, is tantamount to not thinking beyond that cup of coffee or selling that commodity.

“What industry are you in?” he asked. “Are you selling things, delivering services, or leading transformations? How do you know when your deal is closed? This is the development of your economic value.”

According to Moseley-Williams, most RIAs go beyond selling goods but get stuck on providing services — that is, financial planning. Companies that want to create more value and generate more revenue should think about how they can offer their customers memorable, personalized and unexpected experiences.

He emphasized that falling prices do not add value. “It just makes things cheaper.”

“You don’t want to win this race to the bottom,” he said. “If you want to create more value, give them something different, something generous, something they didn’t expect to find in the financial services industry.”

What Starbucks did was create a home away from home for its customers, spending money to provide them with things like free Wi-Fi and insulated mugs, and creating a story around the community.

“If you don’t think you’re selling coffee, you just want to create convenience, don’t worry about what those things cost,” Moseley-Williams said. “You give them away generously because you know that in the end people will pay! It’s not about the coffee, it’s about how the coffee makes them feel.”

Moseley-Williams said he recommends companies identify and adopt a key idea or theme that all of their customers agree with.

“That’s the big idea that brings me and all my clients together; It’s like going to church,” he said. “Everyone here, me and all my clients, we all believe the same thing and we strive for it.”

Ultimately, he encouraged advisors to become advocates for their clients. This includes making time and helping out with difficult life events, proactively providing supportive materials and contacts relevant to them, organizing customer events, and checking in regularly.

McKinsey agrees that the industry is headed in this direction, he noted. A Report published in early 2020 Noted that advisors are “gradually moving away from their role as investment manager and becoming more of ‘integrated life/wealth advisors’ advising clients on investment, banking, healthcare, insurance, tax, estate and broader financial wellness needs” , from year to year 2030.

Moseley-Williams said 79% of clients currently have a purely transactional relationship with their advisor, while 73% would be willing to share more information “if it would result in perks.”

“The value of the consultant is not in the budget,” he said. “Once you have a financial plan, you can actually talk about interesting and important things, about who you want to be when you grow up and what you want your life to be like. Financial planning is a return on investment; I’m talking about a timely return.”

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