A Solution in Search of a Problem
By J.R. Robinson, Financial Planner (September 2025)
Over the past few months, I have read a number of articles, including data provided by industry thought leader Michael Kitces, illustrating how organic client growth appears to be stalling among small to mid-size registered investment advisory firms. The articles suggest competition from larger, private equity-funded RIA aggregators as a likely source of the “problem.” To help financial planners and investment advisers address this, the September 8, 2025 issue of Nerd’s Eye View, contains a guest post from a sales and marketing coach titled 3 Growth Strategies That Won’t Plateau As the Firm Grows: Build Scalable Processes into Double-Digit Growth. The article presents the decline of organic client growth as a surmountable problem. I believe entire premise is flawed.
Far from being a problem, declining client acquisition rates are an inherent goal of many independent RIAs as they strive to get their firms to the point at which future growth comes almost entirely self-sustaining from market returns. There are decreasing marginal returns from scaling, and many firms, including Financial Planning Hawaii and Fee-Only Planning Hawaii, would prefer to focus on providing great service and value to existing clients rather than adding more clients in an effort to quench an irrepressible thirst for more revenue.
For many RIAs, organic new client acquisition rates of 0-5% per year are all that is needed to replace lost revenue from clients who may pass away or leave for other reasons. The ability to grow assets simply from the growth of the market value of client assets over time is a uniquely magical, low-stress way for RIAs to grow revenue and earnings over time. It is the secret sauce that differentiates financial planning and investment advisory practices from most other small businesses.
The primary way for a dental practice, an accounting practice or an auto body shop to increase revenue and earnings, is to get more patients, clients, or customers. In most RIAs, revenues rise organically over time from market appreciation. Of course, this model also requires the ability to withstand significant downturns. However, for the most part, fixed costs at RIAs are relatively modest relative to revenues - at least for established RIAs-, which provides a built-in cushion in leaner return environments. Fortunately (for both clients and financial planners), market values tend to rise over time.
Beyond refuting the thesis of the article, I also found the author’s comments to be generally cringeworthy. Any time I read an article that is written for financial planners and the author discusses “sales funnels” and “closing techniques,” it is time to break out the eyes-rolling emoji. The only thing we are “selling” at our shop is financial planning advice. To read my commentary on LinkedIn, CLICK HERE
