Consistent, organic growth is our industry’s greatest challenge, but few firms actually go through the exercise of intentionally laying out how they’ll achieve it, focusing solely on “grit and effort.” A true strategic plan isn’t just a document—it’s a blueprint for sustained growth and long-term success.
It’s not just conjecture or anecdote, but a well-documented fact: in Schwab’s 2024 RIA Benchmarking Study, 82% of Top-Performing Firms have a written strategic plan.1,2
So, where should you begin in building a strategic plan for your firm?
Begin with the End in Mind
If you’ve heard me speak, you’ve probably heard me reference Stephen Covey’s principle of ‘starting with the end in mind’ as it relates to RIA firms. The reason for this approach is simple: if you aren’t able to clearly define where you want your firm to go and what you’re building, it will be nearly impossible to make the right decisions year-over-year.
If anything, you and your team should be able to clearly define the following:
- Vision: What are you aiming to build—a local niche practice, a regional multi-office organization, a lifestyle practice or a true, growth-focused operating organization?
- Mission: What core values and standards do you want your firm to uphold? How do you want to be perceived by clients and the broader market?
- Value and Clientele: To whom are you delivering services? What segment of the market are you targeting, and what unique value can you offer them? Is there a specific niche?
Establish a Baseline and Understand Where You Are Today
Before charting a course forward, it’s essential to understand where your firm currently stands as a reference point for future comparison, but also to highlight key areas of focus for the business. In our client work, we focus on the 12 value drivers for wealth/RIA businesses, but at a minimum, the core components of this baseline assessment should include market positioning and financial health.
Market Positioning
As Jack Welch famously said, “There are only two sources of competitive advantage: the ability to learn more about our customers faster than the competition and the ability to turn that learning into action faster than the competition.” In a world with increasingly scaled competition and expanding service offerings (read: “compressing margins”), this means deeply understanding your target market and aligning your value proposition to meet their specific set of needs and address their pain points.
- Target Market: Who are you serving, and what do you provide them?
- Service Model: Does your business model allow you to profitably serve this clientele?
- Differentiators: What sets your firm apart? Is it service and quality, specialized knowledge, niche expertise, depth of service or something else?
Your positioning will have a significant impact on your organic growth potential and referral power.
Financial Health
While managing purely to maximize financials is rarely recommended, a business with a weak financial position has minimal operating leverage. Key breakdowns for financial health should include:
- Focusing on tracking growth: Focus not only on overall growth or shrinkage in fees and AUM, but where it comes from:
- Increased AUM: Existing Clients – New Assets
- Increased AUM: Existing Clients – Market Growth
- Increased AUM: New Clients
- Decreased AUM: Existing Client Withdrawals/Drawdowns
- Decreased AUM: Client Losses
- Benchmarking your firm’s performance: Benchmark against industry standards and use metrics such as:
- AUM (Assets Under Management) Growth
- Net New AUM
- New Client Growth
- Revenue Per Advisor
- EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) Margin
- Client Retention Rates
Define Your Goals
Your plan should be a combination of long-term goals and short-term objectives (one- and three-year). As with most, we recommend SMART goals.
Examples of strategic goals might include:
- Financial Goals: Increase AUM by 15% over the next 12 months through a combination of organic growth and strategic acquisitions.
- Growth and Client Acquisition Goals: Boost new client acquisition by 50% in the next two quarters by implementing a targeted digital marketing campaign and enhancing referral programs.
- Long-Term Goals: Identify specific milestones, such as establishing an equity distribution program or establishing a human capital strategy for the organization.
Continuously Track and Refine Your Plan
A strategic plan is not static. It must evolve as your firm grows and the market changes:
- Track Alignment: Institute key performance indicators (KPIs).
- Updating the Plan: Schedule regular reviews— typically this is done annually—to reassess your strategic plan.
- Identifying Misalignment: Where does your firm’s current position diverge from your desired future state?
- Client Segmentation: Are you serving and prioritizing the right clients? Do your current clients align with your long-term goals?
- Ownership and Equity: Consider the long-term independence of your firm. Is your ownership structure conducive to developing next-generation leaders and owners, or is there a need for equity restructuring?
- Growth Targets: Are your growth goals realistic? For example, is it feasible to grow from $1 billion to $3 billion in AUM within five years?
1Top Performing Firms are those that rank in the top 20% of the Firm Performance Index. The index evaluates all firms in the study according to 15 metrics to arrive at a holistic assessment of each firm’s performance across key business areas. Past performance is not an indicator of future results. 2024 RIA Benchmarking Study from Charles Schwab, fielded January to March 2024. Study contains self-reported data from 1,304 firms. Participant firms represent various sizes and business models categorized into peer groups by AUM.
2Source: https://content.schwab.com/web/retail/public/about-schwab/2024-Charles-Schwab-RIA-Benchmarking-Study.pdf
