By Jim Palumbo, Principal and Chief Development Officer


This is the first of a two-part series on how to grow your practice strategically. Watch for Part II in the Q1 2020 issue of Dynamic News.    

There are typically two ways to grow a wealth advisory practice: organically and strategically.

Organic growth is the area in which most wealth advisors focus, growing the number of clients and/or assets under management. This is also referred to as horizontal growth. You’re distributing your service to an ever-wider audience. Gather more clients and you typically increase gross revenue.

Strategic growth focuses on growing your business vertically. You’re participating in different parts of the service distribution pipeline, or you’re adding new services to your existing clients and services.   This can include the addition of:

  • Staff such as a paraplanner or CPA that can create another service stream for the practice
  • Advisors that can bring or create new clients and AUM
  • Partner(s) that can multiply results and share expenses
  • Successor(s) of a retiree’s practice, thereby adding new clients.

Here, we’ll focus on adding staff or advisors, leaving the partners and successors for Part II on M&A. Let’s examine how adding income-producing staff is desirable and contrast it to non-income producing staff.

Income vs. Non-Income Producing Staff

The Dynamic Business System presupposes you’re outsourcing the back and middle office, and portfolio administration to Dynamic, gaining efficiency because you don’t have to hire non-income producing staff for clerical and administrative tasks—what Jim Cannon calls “administrivia.” You can then focus your development plan on adding an income-producing role such as a paraplanner, accountant or marketing specialist. Interestingly, the cost to bring in a skilled or semi-skilled team member is not significantly higher than a non-income producing support person.

According to, an early career paraplanner earns an average total compensation of $43,919[i] while a salaried early career financial advisor is $58,078[ii]. Compare this to a financial advisor assistant at $42,015. The cost to add a skilled team member is only about 4% or 14%, respectively.

Marketing representatives may earn an average of $44,295. A staff accountant earns an average of $49,969, and a starting CPA $47,000 at the low end of the scale up to $65,000 median income[iii].  While you’re outsourcing the administrivia, you’re able to build a team of talented people around you that can support your goals by delivering appropriate services to you client segments.

Transitioning from Practice to Business

As you begin to extend your services beyond what you alone can do, you can find various revenue projection models for accounting/tax service and marketing roles, but paraplanner revenue projections are hard to find. Kitces estimates a lead advisor can make a 25% margin from a paraplanner role.[iv] You will find many articles online regarding ROR on a marketing role, however a good rule of thumb is to at least break even on the first-year gross revenue. A $50,000 per year marketer should generate at least $50,000 of first-year fees.

By adding marketing, planning or accounting/tax services professionals, you can deliver targeted and varied value propositions as well as experiences to your appropriate client segments. According to the many client studies you can find online, segmentation is one of the best practices and business models to achieve greater client satisfaction, retention and firm performance.

Attracting and Recruiting Advisors

For this drill-down, let’s contrast a producing advisor to a junior staff advisor. A producing advisor will be marketing, prospecting and networking to create new client relationships in concert with your firm’s strategy; a staff advisor will likely be helping a senior advisor manage client relationships and activities.

It’s important to note, you want to attract people before you recruit them. Is your practice well run, ethical and profitable? Is your reputation in your community five stars? If the answer to those questions is yes, then most of the work is done. Other advisors will want to join a successful team or practice.

You’ll be providing registration, compliance supervision, platform, resources, mentoring and a collaborative environment. Dynamic will likely provide the first four and you’ll provide the last two. In addition, you’ll need to devise a compensation arrangement. Depending on the experience of the advisor and the resources you provide, that can range from 40% to 90% revenue share to the advisor.

Assuming an 80% revenue share to the advisor, an associate with a $30 million billing at an average of 150 BPS would create about $90,000 of gross profit (not counting overhead) to the firm. If you add five of these advisors to your team, you could add nearly half a million in gross profit to the business.

As you consider attracting and recruiting early stage wealth managers to your firm, your business plan should consider your intellectual, network and monetary inventory. When adding new team members, considering the following:

  • What resources do you have or need? Cash flow, capital, workspace or virtual, IT network, communications or virtual equivalent.
  • What activities do you require? Training, marketing support, supervision, accountability.
  • What partnerships do you have or need to develop? Payroll, insurance, recruiters, COIs, referral sources.

I often talk with advisors about the business of the business. The most common refrain I hear is you’re all too busy. In fact, many of you are running around with your hair on fire and are stressed out by the overwhelming tide of tasks and activities. If that’s you, I encourage you to take full advantage of your Dynamic relationship.

Go for full utilization. Let us do the heavy lifting, and you do the fun part. I know, you love to control everything, but growing strategically means getting comfortable with delegating. It may not be the way you’ve always done it, but it’s what’s right for your clients and your family. Let go of the trivia and focus on deepening and strengthening relationships. After all, it’s what you’re called to do.






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