Welcome back to the 254th episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Eliza De Pardo. Eliza is the founder of her eponymous advisor consulting firm, with a particular focus on working with mid-to-large-sized independent advisory firms.
What’s unique about Eliza, though, is the focus she takes on the human capital issues that arise as advisory firms try to scale up, recognizing that a financial advice business is first and foremost a service business, which means attracting, retaining, and developing the firm’s people is the biggest key to long-term success.
In this episode, we talk in depth about the unique challenges that advisory firm founders face as they grow and scale their advice businesses, including how the ability to attract and serve clients is so fundamental to growing the first $1M of revenue but takes a back-seat by the third million of revenue (and all the growth thereafter), why it’s the advisors who are most effective at moving away from the client-facing work to develop their team management skills instead that tend to have the most success at scaling their firms, and why even as advisory firm founders take on a greater focus in management as they grow, the long-term key to scaling is about getting comfortable with the scariest hires of all – dedicated management, including a COO and eventually a CEO that isn’t the founder – to create the infrastructure necessary to grow the firm to the next level.
We also talk about some of the key business productivity metrics that advisory firm owners should monitor as they grow, including their average revenue per advisor (which across all firms averages about $500,000 per revenue-generating professional), their average revenue per staff (which leads advisory firms to hire a new team member every $250,000 of new revenue), and how one of the biggest keys to scaling up is about shifting the ratio of non-revenue-producing to revenue-producing team members from a 1:1 ratio when the firm is small, to a 2:1 ratio as it approaches $1B of assets under management.
And be certain to listen to the end, where Eliza shares her own 15-year journey through the advisory business in building her career as a practice management consultant, the parallels between the challenges in the consulting business and the advisory business when you lose out on a big prospect (and why you have to learn not to take those misses personally), and why most advisory firms need to learn to hire sooner but not necessarily faster (because no matter how much you need the next hire, it’s still crucial to ensure you find someone who will represent the firm well to the end clients it serves).
So whether you are interested in learning how hiring a COO affects advisor well-being, how to know when to scale up and hire, or how to leverage “non-revenue” staff for firm growth, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Eliza De Pardo.