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DeVo launches program to help RIA promote organic growth

DeVoe & Company unveiled a new consulting platform focused on driving the organic growth rate of participating firms. Founder and CEO David DeVoe said his firm launched the platform in response to the seemingly slow rate of growth for the average advisory firm, which is often masked by market performance and overall industry growth.

“It’s not intuitively clear that the industry is slow-growing,” DeVoe said., “The industry does a great job of serving customers a significant portion of their lives, yet growth isn’t what it could potentially be.”

The Devo GrowthBuilder platform is led by Bob Ciullo, who recently joined as Managing Director to run the program. He previously served as chief advisory officer at several RIAs and oversaw 250 RIAs as a managing director at Schwab Advisory Services.

The program breaks down a firm’s growth capabilities into five sections, including prospecting, evaluation, positioning, closing and retaining, and begins with GrowthDiagnostic-45 questions to measure the firm’s current state. , resulting in a numerical grade in each of the five categories.

According to Ciullo, this initial batch of questions focused exclusively on growth, unlike other platforms that focus more broadly on a firm’s total health. From data from prior to the program’s soft launch, as well as other DeVoe data and his own expertise, Ciullo said RIAs were generally scoring high on closing and retaining customers, but facing shortfalls earlier in the development process. fell.

He said, “The weaknesses here are prospecting,[where]activity is definitely slowing down, assessing whether the prospect is a good fit for them, and determining how much they want to convey their story and value proposition to potential customers. Explains well.”

The questionnaire asks firms to rate their effectiveness on a number of topics, including creating new prospects, assessing potential needs and whether firms have specialized business development tools, including a type of prospect scorecard or a designated business development officer. is included. Following the questionnaire, Devo will work with the firm, including biweekly meetings with executives and weekly team meetings with advisors, as well as one-on-one coaching opportunities with each advisor.

Ciullo said the program’s customizable format could be particularly beneficial for solo practitioners and small firms whose principals had to juggle the dual demands of business development and relationship management at the start of their firms. Often, the skills the elder principals developed for prospecting were not filtering for their successors.

“They’re wearing so many hats that they can’t focus on growing the business, and that still hasn’t translated to the next generation. He exists, and it’s starting to show,” he said. “With the markets performing as they have, it has compounded the growth spurt.”

According to a study by Dimensional Fund Advisors, the industry has had a high growth rate over the years, but it hides the fact that the growth rate of the average firm is declining. 2021 Fidelity RIA Benchmarking Study It also acknowledged that while all firm sizes had grown, larger firms grew faster than their smaller peers, a trend Fidelity identified with large business development initiatives and a potential for quality and/or scale during the COVID-19 pandemic. responsible for the flight. The weak position of organic growth contrasts with DeVo’s assessment on inorganic growth, as the company forecast a record 2022 for RIA M&A activity.

DeVoe said that expansion was most evident among so-called “meta-RIAs,” a phrase he used for about two dozen large firms with the ability to quickly grow their business and manage. But DeVoe worried about the long-term impacts of large RIA growth leaving behind typical, small business growth, and said GrowthBuilder was specifically tailored for smaller RIAs that want to grow rapidly without making acquisitions. .

Devo expects the company to be able to pinpoint data from about a dozen participating firms within the year, and expects the GrowthBuilder program to expand to two or three dozen firms next year. But he worried that over time, flat organic growth among smaller RIAs could make it more difficult for businesses of that AUM level to attract and keep employees.

“Good people want to be in healthy firms that are growing rapidly and opening up a variety of career paths and opportunities for them,” he said. “And if industries or specific firms are unable to achieve reasonable growth rates, they will suffer the loss of human capital and often their best people.”

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