Does building your business feel like an uphill battle?
So far in 2012, 300-some mountaineers have attempted to climb Mount Everest1. If past years are any indication, only about 90 of them have succeeded. A lot of factors separate the successful climbers from the unsuccessful ones. Some of the reasons, such as weather, are out of the climbers’ control. But other features, such as stamina, tenacity, discipline, vision and experience are within their control – and are hallmarks of most successful Everest mountaineers.
Diligent climbers go through several training stages to prepare for their epic adventure. Each phase requires a different approach and tools – and climbers know that using the wrong tools can be ineffective, and at times, lead to disaster. For instance, at the beginning of an Everest training regimen the gear can be pretty simple: a pair of running shoes to build a base level of cardio fitness. Eventually, climbers graduate from trails to actual glaciers. Hiking boots, crampons and an ice ax are often key equipment during that training ascent. Finally, to reach their Everest goal, climbers add even more technical gear: a harness, ropes, carabiners, helmet, ice screws, oxygen mask. And don’t forget the Sherpa!
Building a successful advisory practice is similar to scaling Everest
In the same way that weather can frustrate a climber’s best laid plans, markets can get in the way of an advisor’s success. But successful advisors, like elite climbers, demonstrate resilience, patience and sheer determination. In addition, the advisor, like the climber, is faced with strategic decisions and critical implementation choices that will determine their advancement to the next milestone.
New advisors often focus on gathering as many assets as possible regardless of quality to reach the first milestone of $20 million in assets under management (AUM). At this early stage of business development, advisors often feel the end justifies the means when every additional dollar in the door can be the difference between staying in business and deciding to fold. For advisors who reach the next milestone, $50 million in AUM, cold calling is a thing of the past. Although their book of business may be in relative disarray, these established advisors can often make a comfortable living at this stage. For motivated advisors, reaching $100 million in AUM is the next goal. Often, this stage requires advisors to address the capacity constraints in their business and adopt a CEO-type of mentality about their book. Instead of focusing on asset gathering, these advisors typically shift their attention to creating a more institutional approach to running their business, streamlining systems and getting serious about implementing revenue-based (as opposed to asset-based) client segmentation. Finally, the Everest equivalent in advisory practices might be to surpass the $250 million in AUM mark. These practices tend to be run like franchises.
For advisors and elite climbers alike, every phase of reaching their ultimate goal requires a new approach. Successful climbers and advisors understand that each stage and its accompanying tools are sequential and complementary. They know that the experience gained and approach used in the first stages are essential – but aren’t sufficient or appropriate for reaching the summit. As you move toward your ideal practice, don’t get discouraged if at times it feels like you have to overcome mountains. Because in a way, you are. In the words of the first person to summit Everest, Sir Edmund Hillary, “People do not decide to become extraordinary. They decide to accomplish extraordinary things.”3 So forge on.
1The Kathmandu Post, “337 raring to conquer Mt Everest this spring,” April 20, 2012. http://www.ekantipur.com/the-kathmandu-post/2012/04/20/money/337-raring-to-conquer-mt-everest-this-spring/234014.html