How the Fastest-Growing Advisory Firms Are Different, in 7 Charts

Some financial advisory firms are enjoying robust growth while others are struggling to increase assets under management, attract and retain top talent, build scalable processes and deliver personalized client experiences, according to a new report from Nitrogen, a growth platform for wealth management firms known until recently as Riskalyze.

Competition in the industry is fierce; many firms are concerned about losing clients to rivals. New advisors face major challenges, and significant numbers of them fail within three years.

One major challenge firms must navigate today is the trust gap between clients and financial advisors. Recent research found that only one-fifth of workers and retirees strongly agreed that they had been fairly treated by their financial professionals. This trust gap can lead to clients being fearful and is a major obstacle to overcoming financial literacy.

Nitrogen’s study examined hypergrowth and slow-growth firms to uncover the strategies and practices that contribute to their varying levels of success. For purposes of the report, hypergrowth firms are defined as those that grew by 21% or more in 2022, while slow-growth firms grew by 5% or less.

Nitrogen recruited more than 1,000 participants in the U.S. for the study via email, social media and in-product messages, receiving usable responses from 925 respondents. Of these, 76% were between 35 and 64 years old; 62% were financial advisors who owned their own firm; 36% worked within a firm; and 2% were firm executives.

See the gallery for a look at what the fastest growing firms are doing differently from the slowest growing firms, according to Nitrogen’s study.

(Image: Shutterstock)