Future-Proofing Your Firm with Strategic Simplicity


Last Updated on April 14, 2022 by John Prendergast

Unwinding the complexity that’s historically been embedded in wealth management begins by taking a few basic steps to simplify your operations. Keep in mind, we did this to ourselves. For decades, complexity was our justification for management fees. Modern-day clients aren’t buying that anymore. Transparency is the key to success in this era.

Robo-advisors figured this out years ago. They simplified wealth management in a way that advisors initially scoffed at. We didn’t believe that clients would sacrifice personal attention for automated investing. Ask the folks at Betterment, Wealthfront, Charles Schwab and Vanguard how they feel about that. Strategic simplicity has them each managing over $20 billion in their Robo offerings.

Robos-advisors figured this out years ago … Strategic simplicity has them each managing over $20 billion.

Digital-first advisors are expanding nationwide, giving prospects more options. Your regulatory burden is increasing, making compliance work overtime. In this environment, it’s difficult to sustain growth. Help yourself by implementing the following strategies:

Strategy #1: Simplify Your Firm Investment Models

Offering to build a custom portfolio based on risk tolerance sounds like a great management strategy until you hit an actual growth spurt. Scaling a practice is simpler when you have building blocks that can be replicated, at least in part. Creating a few “base portfolios” that you can add custom pieces to is more effective than always starting from scratch.

Fewer models can be appealing to potential recruits also. Unlike 401(k) strategies where you’re asking clients to choose conservative, moderate, or aggressive, individual advisors can start with those models and build on them based on the individual client needs. The base portfolio remains unchanged. This simplifies portfolio construction at the firm level.

The simplicity of this strategy can help the firm build a reputation as an efficient operation with advisors that offer a personal touch to each relationship. It also helps maximize returns, since the portfolio construction team will be focused on analyzing and tracking fewer holdings. Most importantly, clients will be happier with the simplicity and more willing to give referrals.

Strategy #2: Simplify Your Firm Communications

According to a study conducted by Microsoft, the average attention span of your clients and prospective clients has dropped from twelve seconds in the year 2000 to a mere eight seconds in 2021. That’s the amount of time you have to connect with your primary target market right now. Are you reaching them in an effective way?

The key to effective communications in wealth management is to simplify the data being delivered and send it more frequently. Are you still mailing 30-page printed performance reports? Those no longer work. Clients are expecting more streamlined communication and have less tolerance for “fine print.” 

Frequent communication of easily digestible data is how your firm can avoid complexity traps. Automating those communications further simplifies the process. This can be applied to performance reports, balance updates, and news releases. Don’t try to combine all of them into one. In modern wealth management, each “touch” helps build the client relationship.

Strategy #3: Simplify Your Firm Operations

Professional sports teams cross-train their players to be able to take the field in multiple positions. By having interchangeable parts, they are stronger as a team. Wealth management firms should view their financial advisors the same way. Unfortunately, the playbook is often too complicated for everyone to understand. That’s a growth inhibitor.

Putting aside the sports metaphor, what I’m saying here is that some firms have too much complexity built into their business model. Customization is great if you’re a boutique shop, not so much if you want to grow past $100 million aum. The system needs to be simple enough for everyone to get on board and cover for each other when necessary.

Take automated reporting as an example. Client reporting is easy to automate, even with multiple customized models, but what about internal reporting? Your firm can’t measure performance when everyone is running a different play. Simplifying the way in which you manage money makes operations cleaner and sales easier on the advisors.

As a final note, remember that it’s all about the client. The strategies laid out here are designed to attract and maintain clients with simple investment models, clear communication, and client/advisor relationships that are not complicated. That’s what the robo-advisors and many of your competitors are offering. Your firm will thrive if you do the same.  

Suggested Articles:


  • Kevin D. Flynn

    Kevin D. Flynn is a former Head Coach at Blueleaf and founder of Flynn Consulting, LLC, a business and financial coaching service for startups and small business owners.

Get NEW posts and shows delivered to you.

The Augmented Advisor blog and podcast help financial advisors learn ways to improve their business with in-depth content from the industry's leading thinkers

We don’t spam! Read our privacy policy for more info.

Kevin D. Flynn is a former Head Coach at Blueleaf and founder of Flynn Consulting, LLC, a business and financial coaching service for startups and small business owners.
icon-angle icon-bars icon-times