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Hosted by Financial Advisor Coach, Ray Sclafani, "Building The Billion Dollar Business" is the ultimate podcast for financial advisors seeking to elevate their practice. Each episode features deep dives into actionable advice and exclusive interviews with top professionals in the financial services industry. Tune in to unlock your potential and build a successful, enduring financial advisory practice.
Ray Sclafani (00:01.508)
Let me set the stage. I was in a strategic offsite planning session with a firm that I've coached and consulted for more than five years. They manage an excessive $5 billion in client assets, a truly successful business with great people, loyal clients, and really strong leadership. And they're intentional about building an enduring firm and succeeding in succession for everyone on the team. However, over the years, every time I've mentioned the words organic growth, the room
practically shudders. You can see it, heads tilt, shoulders tighten, as if those two words carry some kind of disease. Now I get it, for them, growth sounds like pressure, like bigger goals, more clients, maybe less balance, or even a breach of fiduciary duty. But the kind of growth that I am talking about isn't about chasing numbers, it's about managing capacity. Here's the situation.
For years, this firm has struggled to find the right senior sophisticated advisors and relationship managers to join their team. They've stayed committed to quality, which I admire, but the result has been a slow tightening of capacity year after year. And because they excel at what they do, they provide great advice, clients continue to refer them. So without any deliberate intent to grow, without any target measured growth rate, they've
Grown anyway, more clients, more complexity, more demands on the same people. Now that success has created a new challenge. Their senior relationship managers, the ones who built the firm, are starting to set transition dates. Succession is no longer theoretical. It's here. It's now. But there aren't enough next generation advisors with the capability ready to take on those client relationships. So three forces are colliding.
increased demand for advice from existing clients, an expanding client roster, and a shrinking senior team. The result? A firm stretched thin, overwhelmed, and increasingly worried about its future capacity to deliver the capability, the excellence that it's known for. And that's the irony. This isn't a firm that lacks integrity or heart. It's a firm that stopped measuring its capacity
Ray Sclafani (02:25.585)
and ignored the growth targets it was already hitting. When I asked how many new clients they'd brought in over the past year, nobody actually knew exactly. Someone on the team quickly jumped to the laptop, pulled up CRM, looked it up. It was more than 70 new clients, really good ones too. No wonder they were feeling stressed. Five years ago, they made what seemed like a noble decision. Let's stop setting growth targets.
Not because they didn't care about progress, but they didn't want to chase growth for growth's sake. They believed avoiding targets kept them focused on serving clients. But here's what I've seen after years of working with them. Without growth targets, they weren't able to manage the capacity. You can't see when the system is reaching its limits. You can't plan succession effectively. And you can't protect the promises you've made to clients without setting growth targets.
When I talk about growth targets, I just don't mean the AUM and revenue goals, more money, more profits. I mean management targets that help you lead responsibly, the dashboard, the metrics that tell you when you're nearing your limits and it's time to act. If you consistently track key indicators like revenue per professional, revenue per client, and time spent per client by segment, you'll start to see where pressure is building.
Those benchmarks, tell the truth long before burnout does. But here's the reality, finding, hiring and developing great advisors, that takes years. And with a shrinking number of advisors in our business, AI won't solve everything. The pain this firm is feeling today began three, four, even five years ago when I first brought it up. The pain this firm may feel if they don't act in two or three years from now is already taking shape today.
Intentional growth isn't about just expanding size. It's about planning your capacity in advance so you can honor your commitments to existing clients, shield the team from burnout, and be able to take on those clients that are referred your way. When leadership fails to measure capacity and set these growth targets, two things happen. First, your best people end up working harder every year just to hold the line. Second, your clients start to feel it even if they can't quite
Ray Sclafani (04:45.785)
put their finger on it. It's not failure, it's success outgrowing its structure. And I encourage all leaders to be able to answer questions such as these. How much true capacity do you really have in your firm? How close are you to exceeding the benchmarks for client load, time and revenue per professional? How far ahead do you need to hire and develop talent to sustain current client commitments? And what's the acceptable rate of growth based upon your current and near term capacity?
This is the real work of leadership. It's not about chasing growth. It's about stewarding it. Because if you can't measure capacity, well, you can't manage it. If you can't manage it, well, you can't lead responsibly. This firm, like many others, is now at an affliction point. Succession is colliding with capacity. The demand for advice with their existing client roster is rising. Wealth transfers are underway. They're needing to connect with the next generation client.
and their next generation of advisors while eager is underpowered. And the leadership team is realizing that by avoiding growth targets, they didn't preserve integrity, they just delayed preparedness. The best leaders use benchmarks as early warning signals. When those numbers move beyond the target range, you're extending past sustainability. That's when it's time to hire faster, train deeper, and advance talent internally with the firm sooner.
Because in our business, drift doesn't look like decline, it looks like exhaustion. It looks like loyal people doing more every year just to keep up. The firms that endure are the ones that grow intentionally. They measure capacity with discipline, they align ambition with capability, and they build before they break. That's what leadership looks like. It's not just about leading people, it's about designing the system that lets those people thrive.
At that offsite, after a long silence, the CEO spoke up. He looked around the table and said, I believe I've failed to set growth targets that were acceptable based on our ability to really serve. Well, that was the moment it clicked. The team got it. The conversation shifted from defending the present to designing the future. And that is what this is really all about. Not just chasing growth, but understanding it and managing it and leading it. So here's my challenge to you.
Ray Sclafani (07:11.586)
Step back with your leadership team as we think about the new year ahead and ask yourself, well, how do we know when we're at capacity and what benchmarks are we using to tell us before it's too late? Solve that question with data, not guesswork. Use math, not just emotion. You start measuring the right things. You'll stop being surprised by the pain and then begin just to lead more effectively.
Because the truth is pretty simple. If you're not growing intentionally, you're shrinking unintentionally. If this conversation hit home, please share it with your leadership team, spread it around, talk about how you're measuring capacity, how you'll know when it's time to expand, because the firms that prepare today are the ones that thrive tomorrow. With each one of these episodes, I introduce a few coaching questions as a guide to maybe foster the conversation with others in your organization. Today, there are four.
coaching questions. First, what would change about your firm's priorities if you measured capacity with the same rigor that you measure profitability? Number two, how far ahead do you need to be hiring, training, and developing your next gen of advisors to sustain your client commitments and the expanding number of referrals that you're likely to be receiving? If you look five years ahead, what would, quote, enough capacity look like in people, structure, and systems? And number four,
What benchmarks like revenue per professional or time spent per client per segment could serve as your early warning signals for strain and how will you act when they move? Thanks for listening and thanks for leading with intention. Please share this episode with others and feel free to give us a five-star review. We'll catch you next week.