I recently had the opportunity to participate in Michael Kitces’ popular Financial Advisor Success podcast. You can listen to the entire interview by clicking the ‘play’ button above. I talk about a variety of topics during this podcast including the “three Ps” I use in my business, how I tripled my business in the first two years, and the key business metrics I focus on. The one part of the podcast I wanted to focus on in this blog is the growth imperative myth and how this can hurt you as an independent advisor. I’ll go over the basics here, but make sure to listen to the podcast as I go into more detail on this and many other topics.

Growth for Growth’s Sake

There is a myth in the financial services industry that growth is always good. Just take a look at how large most of the well-known firms are and you’ll see my point. They believe ­– and want all advisors to believe – that growth is always good and the more you grow, the more successful you are. I simply don’t believe this is true. Random growth without looking into your profitability metrics and what’s going on inside your business can lead to major problems. I come from a corporate background and have it ingrained that you always need to measure efficiency and the bottom line. In other words, you need to treat your business like a business.

You are the result of your thoughts as an independent advisor, and if you buy into the fallacy that you need to grow no matter what, you aren’t going to do it in a sustainable manner.

Ignoring Problems in Favor of Growth

You have the freedom to serve your clients in the way you see fit when you start your own advisory firm. But if you put your business issues and client needs on the back burner in favor of growing as fast as possible, you’re doing everyone a disservice.

Why? Because putting growth first means you won’t look into the issues your business is currently experiencing. Maybe you’re not spending enough money on marketing, or you’re spending too much money on rent or travel. These may be little cancers now, but if they aren’t addressed, they’ll grow into large cancers that will kill your business. You can’t outgrow fundamental business problems. The problems will just grow right along with your business and you’ll end up with an inefficient monster that’s built on a shaky foundation. This is why so many overnight successes fail so quickly. They grew without building an infrastructure to support that growth.

Creating a Business to Support You

One of the perks of being an independent advisor is that you can create your business in any way that best suits you. This allows you to step back and ask: What do I want to be about? What is my business for? How do I want my business to support who I am and what I want to do? Too many advisors switch that last question around. They spend all their time and energy serving their business when their business should be serving them. I doubt you got into this business so you could work 80 hours a week, never see your family, and develop a stress ulcer. But that’s exactly what will happen if you put your foot on the gas pedal without addressing the fundamentals and understanding your values and vision for the future.

Thank you for listening to the podcast and, as always, feel free to drop any questions or comments below!