Four Things I Wish I Knew Before My Advisory Firm Reached $1B AUM
Practice Management

Four Things I Wish I Knew Before My Advisory Firm Reached $1B AUM

My firm made it to the top of the Inc 5000 list and grew from $40M to almost $1B AUM. Here's what I learned.
JD Davis
8 min to read
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I joined my first financial advisory firm in 2009, when I was just out of undergrad. I was just a kid, really, but I thought I knew everything — why else would I try to bootstrap a firm in the wake of a global financial crisis? 

And it really was a bootstrapping effort — we had no budget, a bad website (the designer went bankrupt right before I started), no marketing materials. I spent a lot of time on cold calls that went nowhere (initially — more on that later). And critically, the tech available to advisors at the time was very limited — in the pre-DocuSign era, even something as simple as getting a signature was a challenge. 

It wasn’t all struggle, however. With a lot of hard work, we made it to the top of the Inc 5000 list and grew from $40M to almost $1B AUM. But what I take away from that time is how much I didn’t know — how quickly I had to learn on the job, and all the times I shot myself in the foot when I didn’t learn fast enough. 

These are the top four things I wish I had known or done as I grew my firm to $1B AUM.

I wish I’d understood the customer journey sooner

When you’re trying to solve a big problem, it’s a good idea to focus on incremental change. But to do that effectively, you need to understand the big picture. Things would have gone a lot smoother if I’d done the strategic work of mapping out a customer journey early on. 

It’s common for advisors to take on so much for themselves. Often, especially in a small, growing shop, they’ll be the firm’s main marketer, sales rep, account executive and customer success manager. They may even have their hand in the back office, too. Because of this, they rarely think in terms of a customer journey: how a prospect becomes a client; how that client is serviced by the back office; and how that service creates customer happiness, which in turn creates new referrals. 

The problem is, when you start to really grow, doing everything yourself isn’t scalable. If I’d taken the time to understand the customer journey better, I would have had a better sense of everyone’s role in it — and I would have been able to hand off work, hire more strategically and scale with less friction

I wish I’d embraced what little tech was available at the time

2009 was, in many ways, a lifetime ago. Our tech stack was a lot less sophisticated than the average firm today. Our systems  didn’t play well together — we relied heavily on Google Sheets, shared docs and email, which led to a lot of manual entry and duplicated effort. So naturally I was skeptical about the potential of then-nascent advisortech solutions to actually solve my problems. 

I would say to any advisor starting out today, you don’t have to live in the dark ages like I did! Run towards the light of tech — embrace the time-saving solutions that are now out there. Not every solution is perfect, or the right choice for every firm, but do your research, look at your pain points and find ways to automate the manual lifts and streamline the processes that are slowing your growth. 

Maybe I’m biased because I now work for a company that does just this, but if I had a way to build intelligent workflows and assign tasks around client onboarding, annual reviews, tax prep and other recurring projects, I would have avoided a lot of stress making sure this work went smoothly. 

I wish I’d been better at delegating

This isn’t exactly groundbreaking advice, but even though I’d heard it countless times before, I had to learn it the hard way: you can’t do everything yourself. If you want to grow your firm, hire people who can take your ideas to the next level, give them resources and trust them to execute.

Tech can now automate much of the menial work around client service and admin; that makes it all the more critical to understand the gaps that are left and bring on the right people to fill them. Having clearly defined roles (this goes back to understanding the customer journey) and metrics to go along with them, will help you build out a successful team that can scale with your organization. 

But where do you start with this? My recommendation is to have honest conversations, with yourself, your co-workers and your clients, about areas of improvement. Don’t make excuses for dropping the ball on sales, marketing or customer happiness — instead, actively seek out areas where additional support is needed. 

For me, this meant understanding that inbound marketing was very different from outbound sales, and bringing on someone who knew that field better than I did. Maybe your gaps are elsewhere — either way, the critical difference came when I looked at my own capabilities and admitted where I needed help. 

I wish I’d known that a breakthrough would come, if I was open to it

I spent my first 18 months trying to sell individual strategies to firms — in other words, building our email list and cold-calling. Most of these calls and conversations went nowhere — at the time, we weren’t in a position to offer much of value to the big-ticket customers we were after. There was a lot of rejection, and a lot of dejection. 

But I noticed a pattern in the calls I was having. The companies I talked to didn’t want an investment strategy; they wanted to understand how to grow and scale; they wanted to provide value to clients, and they wanted, themselves, to live happier, more comfortable lives. These are all common aspirations, but when I started pitching those terms — and shifting our business model accordingly — I started to see results. 

I gave prospects two options: take our training and back into the kind of outcomes they wanted, or click the ‘easy’ button by joining our firm and letting us handle the work. Ultimately that proved to be the breakthrough I was looking for: shifting the conversation to focus less on technical details and more on outcomes, and giving potential clients two options for achieving those outcomes. 

Pretty soon, we were onboarding $80M in new AUM a month; our revenue grew by 9,401% over a 3-year period; I was managing a team of 20 and overseeing 80 independent branch offices throughout the country. By 2016, our firm had reached #15 on the Inc. 5000 List of Fastest Growing Companies in America.

Learning to Learn

The biggest takeaway from my experience is that if you want to grow, you can’t stop learning — adding more tools to your toolkit, learning more about your customers, and questioning your assumptions and received wisdom, every step of the way. 

The conventional next step for me would have been to keep expanding the firm, or to move on and start my own shop. Instead, taking these lessons to heart, I went back to school — but that’s a story for another post!

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