Wipfli logo
Insights - Articles, Blogs and on-demand webcasts

Articles & E-Books


Financial confidence is the result of solid strategic planning

Oct 21, 2021

Editor’s note: This article is the sixth in a seven-part series on how wealth and asset management firms can operate in prime.

Does your wealth and asset management firm operate from a position of financial confidence? Do you have the financial freedom you need to grow? Weather another global pandemic? Hire your dream team?

Without that financial confidence and freedom, firms are vulnerable to any tumultuous situation and could see the success they’ve gained start to erode.

Building your financial foundation involves determining your true value, defining success and planning for your future.

True value = growth + profitability

There are many ways to define financial confidence, but growth and profitability are two essential elements.

Few wealth and asset management firms achieve both growth and profitability simultaneously.

For example, some firms make growth a long-standing focus of their ownership. If the firm’s principals excel at sales and client relations, growth targets are likely to be achieved. But profitability can lag even when revenue targets are hit, maybe when a misunderstanding of the costs related to client acquisition and client relations occurs.

Firms that hit profitability goals might show that the business is growing, but that growth might be largely the result of riding a financial market uptrend. That isn’t growth in the truest sense. Attaining real growth is necessary to achieve the financial freedom that enables prime firms to continue their upward trajectory.

The issue is that most registered investment advisors excel at working with investors to grow their wealth; they are primarily focused on client relationships rather than business analytics.

Most firms might have no problem getting clients, building relationships and investing assets.

But top-performing firms have financial confidence gained from understanding the firm as a business, evaluating the cost and profitability of those client relationships and completing in-depth financial analyses.

The strongest firms also complete demographics and market analyses and plan for transitions such as sales, transfer, mergers or acquisitions.

Defining your success

Firms that are ready to make progress on this journey can begin through the processes of discovery and assessment:

  • Analyze at the firm’s financial performance.
  • Interview each key stakeholder, such as owners, executives, department leads and others who are positioned to decide what the firm’s future could look like, who have objective data and who understand the implications of change.
  • Ask: Are we ready to move forward? Are we aligned in our determination to make improvements?

Typically, these exercises will help you identify opportunities for improvement.

  • For firms that want to grow, decide how best to pursue that growth. Look for ways to make meaningful improvements and grow organically. For instance, do you need to add lead-generation tools to your tech wish list? Do you need to collect client demographics and lead conversion rates to determine where to pursue growth?
  • If organic growth doesn’t seem practical, consider inorganic growth. Does a merger or acquisition make sense? The benefits of inorganic growth can be significant, but this type of transition must begin as an intelligent discussion about the target profile and the ramifications (such as dilution of ownership).
  • Determine how the firm is performing relative to higher-achieving firms. What will your firm’s future look like if you commit to certain changes?

The answers contribute to a roadmap that will inform your strategic plan as you move into the next cycle of 90-day goals.

Planning for transitions

Financial confidence also means that the firm’s leadership has a sound plan for the future, which includes embedding transition plans into its strategy.

Planning for transitions is a process, not a singular event. It requires regular attention and input from multiple people in and around the firm.

When you prepare for transitions methodically, it helps take the emotion out of it. And you can make quick decisions when opportunity knocks because the firm’s leadership already knows how various types of change will affect its financial plans and stakeholders. That foresight brings a certain level of financial freedom that enables more confident decisions across the organization.

About our prime series

Prime is a state of being that occurs when your firm’s strategy, leadership, associates, technology and operations are aligned to deliver exceptional business outcomes. Our series covers the key steps to help you get there. In addition, see our additional articles on:


Wipfli logo square

Wipfli Editorial Team

Learn about our solutions for wealth and asset management firms
Learn more