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You’ve likely also heard that advisory will be the high ground that remains after automation filters through the profession. So, firms clearly want to grow advisory, but we also found in our study that the top two blockers to advisory growth aren’t a lack of client demand — they’re internal.
Talent availability was the biggest constraint on advisory growth, cited by 35% of firms, followed closely by partner time and alignment at 34%. Here’s what that looks like: I recently worked with a firm that created its bookkeeping practice by “not saying no” when clients asked for things. It augments the firm’s very successful tax and estate work. They decided to elevate the bookkeeping practice into a more scalable CAS group, but then the cold water of reality hit them: They had one part-time partner running an unappreciated and understaffed team. Without significant changes to the team, there was no chance for growth.
On the partner time and alignment front, I did strategic planning with a well-run firm, and they came up with “Expand advisory niches” as one of their strategic initiatives for the year. It was beautifully written up. Three hundred and fifty days later, a short burst of work happened, but otherwise the initiative went nowhere. One of the champions had retired in the meantime, and the other was split between duties and had been unable to pay it sufficient attention.
These stories are understandable and painfully common, but the good news is there are ways to move past these blockers to advisory growth at your firm:
Build a business plan
Lack of talent is often a symptom, not a root cause. If advisory growth is not an operational priority, the sourcing and development of talent will likely be lacking. “We should do advisory” needs to become an approved business plan for a specific advisory area, such as, “We’ll have 30 outsourced CFO clients in three years, and here’s the plan to get there.”
Pick a specific area. “Advisory” is business jargon, but CAS, tax planning and wealth management are real services that can be built out. Once you have aligned on the specific service you are growing, map out revenue goals for the next three years. Then develop a staffing plan: How many people do you need? With what skills? At what levels? It’s worth considering the technology plan at the same time, as this may affect how you choose to staff a particular service.
With that level of clarity, you are ready to confidently train, hire or move internal resources into work on that advisory service line. Don’t let “too much compliance on my plate” be the reason your staff can’t build out advisory.
Put one partner’s name against it
After all the praises have been sung about how advisory is going to be great for your firm, you need to name one partner who will take responsibility for the success of each specific service line. Would it be nice if we referred clients to the wealth management group — or is someone setting targets and holding us accountable? Is our controllership work ad hoc — or is someone defining recurring monthly service levels that we can roll out to all our clients? One person taking ownership makes the difference.
Pay for performance
In our polling, 53% of firms reported paying partners for cross-selling advisory work. Those firms said advisory accounted for 28% of their total revenue compared with 19% for firms that didn’t compensate for it, so it’s likely that tying partner compensation to it has accelerated their growth.
Common ways firms paid for advisory growth included setting partner compensation goals focused on advisory growth metrics, subjective bonuses and explicit commissions.
However you choose to do it, explicitly paying partners to grow advisory accomplishes several things: You incentivize partners to work harder on this area; you make it a priority, not an extra-credit assignment; and being required to measuring progress against a stated goal in itself helps define a clearer plan for advisory growth.
Many firms have spent years debating when they should do more advisory work. The firms pulling ahead have moved on to a new question: Who owns it, who is building it, and how are they being held accountable?
What growth blockers are you facing in your advisory practice?
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