The Growth Formula of an IFA Firm

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.

January 3, 2020 | 7 Minute Read

I often get asked, “What is your Growth Formula or Is there a Growth Formula that I should be following ?” 

We all love formulas and silver bullets and so I have attempted to capture my learning in a formula for you. I am confident that people who implement this diligently will benefit leaps and bounds. In reality, the growth formula is made up of very simple and boring things done over a period of time and like I mentioned in my first post “What Not to Do is even more important?”

Before getting into the details, let me make a few observations of some IFAs (including financial planners) and tell you a story of a legendary basketball player Kobe Bryant. You might wonder what has basketball got to do with an IFA but it has and I promise you will see it soon.

Some of the IFAs that I have come across in the Asset size of ₹50-₹300 Crore think that they have arrived in life. They think they are really big and they don’t need to focus on the basics rather some of them don’t even have time to pause and think. I have heard them say things like, “This will be relevant for smaller IFAs” and I wonder whether these folks have really even understood this business. Success is not a destination but a journey. Likewise, Growth is a Fundamental Part not just in Business but in Life. If you stop growing as a person, professional and a firm, you start to degenerate and will soon disappear when hit with the exponential change that we are all witnessing.

The first thing to understand is to be open to learning and change. Think about whether there is a better way to do what you are doing. However, the really successful guys always ask themselves, “How can I take care of my clients better?”. I will get deeper into this subject in a future post on Learning and Change but for now, let me get back to the story and the growth formula.

I recently met with Kobe Bryant’s ex-assistant coach, Alan, in the US and he was narrating his experience with the legend. Alan had recently joined as his assistant coach and he asked Kobe “Can I come to see to you train sometime?”…Kobe replied, “Sure ..See you at 4..” This was 4 a.m. and not 4 p.m.

To impress Kobe, Alan went at 3:55 a.m. and he was shocked to see the gym lights on. Kobe was sweating profusely and had been warming up for almost 25 minutes having started at 3:30 a.m. sharp. Alan was shocked to see Kobe doing the basic warmups and stuff (of course in Kobe’s own style) so he asked him “Why are you doing this? You are the legendary Kobe Bryant”. The response was simply mind blowing and you will do well to digest this….

“I am Kobe Bryant (I am who I am) because I NEVER EVER GET BORED OF THE BASICS.”

Pause for a minute and reflect on this. It is a very powerful statement with a lot of meaning. I can tell you that the best in any profession never get bored with the basics. Yet in our space, a lot of people feel that they have arrived because of their asset size, inflated egos and all the wrong reasons.

So the first thing in the growth formula to understand is that never ever get bored of the basics and BE the BEST in What you do (We will certainly discuss this in more detail as well). Since this is a qualitative feature I am not mentioning it in the formula but you need this as the foundational element of your work.

The Growth Formula that I have come up with is the following:

Your Time * Ideal Clients * Customer Lifetime Value. 

Let’s go over each part of this formula.

Your Time: As I mentioned earlier, Time is your Capital and a Finite Resource so where you spend it and where you don’t is extremely critical. There isn’t any debate about this.

Ask yourself “Am I able to LEVERAGE my time?” Finally, I used a Finance term and I am sure some of you will love me for it. Leverage essentially means that can I increase my capacity with what I do. Spending time on reading and thinking creates knowledge leverage. I am sure you get the drift here.

Ideal Clients: Who is your Ideal Client? I can tell you who he /she is not (The one with just loads of money). An ideal client is someone who is able to see value in what you do for him/her, is motivated enough to do something about his/her situation, is someone who is not looking for yes men in suits and is someone you enjoy working with for the next 30 + years and beyond (even if the person challenges you to be better). 

I will write more about how you can do it in the Marketing Section of the Blog.

Customer Lifetime Value: A ₹5 Crore portfolio for 1 year as a client or a ₹1 Crore client for 30 years. Who is more valuable for you and your firm. Think about this…

You will realize that the ₹1 Crore portfolio will become bigger in the future and most importantly you have helped your client live his happiest financial life (Not only will he be your brand ambassador but also be referring his friends and family to you).

I have spoken to hundreds of IFAs who are stuck with clients that they don’t enjoy working but have no choice. Thus a simple yet extremely difficult thing to do is to say NO to a prospect if he/she does not fit your Ideal Client Profile.

Have you ever said No to a prospect? I am not saying you should say No for the heck of saying No but the ability to say No to a prospect will actually help accelerate your Growth Formula.

I hope you loved this post. Feel free to share it with your fellow IFA colleagues and friends. 

My objective here is to add real value to as many IFAs as possible and help you build the wealth management firm of the future. Let me know your thoughts and if there any topics that you would like me to cover.