Did you know these?

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

One of my readers (Sagar – name not changed) wrote to me about how this blog has been helping him. One of the interesting points he wrote – “Well, it encourages me to stand in front of myself and ask questions”.  He shared a few of the questions and then wrote something even more interesting. “Frankly, I feel very uncomfortable when reading you. But I read and wait for your next one.”

It’s lovely to know that my posts make you uncomfortable in a way that they inspire you to act.  Thank you for sharing this, Sagar!

But this post is different as I cover something that many of you are comfortable with. Data, Numbers and Statistics. I will also provide some meaningful context around these numbers.

Let’s begin with the first one.

1. There are around 15,000 independent firms overseen by the SEC (Securities and Exchange Commission) with nearly 64.7 million clients – Source Investment Adviser Association (IAA).

2. There are roughly 9 advisors for every 10,000 clients. This translates to 1 advisor for every 1111 customers. What do you think the number is for India? It’s even higher. The thing to note is that you will never ever run out of prospects or clients. So, don’t settle for anyone who simply has the money.

3. Of the 64.7 million clients, around 4.8 million people have bought financial planning services. This means only 7.4% of the investors actually have some sort of a financial plan. While the number might look slightly different in some other studies, it’s reasonable to assume that this number is in the right ballpark.  The vast majority are asset management clients.

Can you believe how low this number is despite the birth of financial planning as a profession in 1969 (in the US)?

One this spells opportunity in the US but imagine how low this number is in India. This once again means you will never ever run out of prospects or clients. Needless to say, there is a huge opportunity waiting for all of us.

4. According to the Investment Adviser Industry Snapshot 2022 published by IAA and National Regulatory Services, asset growth was highest for the largest advisers. Advisers with more than $100 billion in assets experienced a CAGR of 14.9% over the past 4 years – far ahead of advisers with $100 million to $5 billion in AUM, who saw a CAGR of 6% over the same period.

While the numbers look overwhelming, the findings in India will not be much different.

5. The next data point deeply connects with the above one and has implications for all of you.

For every 1% increase in growth rate, the value of your firm increases more than 7%. This is because growth demonstrates a strong company with happy clients and happy employees (but there is always a BUT, but that is not the subject of this post). As I have written earlier, one of the key drivers of valuation is your firm’s future rate of growth.

Some questions that are critical.

  • How fast will you grow?
  • What is the predictability of this growth?
  • How strong is your talent pool?
  • What are the risks to this growth?

Despite the importance of growth, many are simply clueless about their real rate of growth. More importantly, the growth rate at most firms is fairly low (in the lower single digits).

This leads me to the next point about faster growth.

6. One of the fastest ways to grow is by focusing on a world class Client Experience. According to Pershing (one of the biggest custodians in the US), firms focusing on Client Experience grow 5 times faster than those who don’t.

What does this ultimately mean for you?

It not only means happy clients, and happy team members, it also means increasing the value of your firm significantly (by at least 50-200%).

7. Last but not the least (there is no data in this one), competition is heating up for all levels of client assets. You can no longer hide under the “They won’t come to my town” Tree. WealthTechs are leaving no one even if they bleed while doing so. The way to win this battle is by adequately preparing for it.

Now that you know the above data points and insights, the question is what are you going to do about it?



P.S. We cover Strategy, Growth, Valuation, Referrals and many more areas with exclusive content, scripts, and action points in our latest offering – HRAC – HappyRich Advisor Community – To sign up, click here.