The Secret To Growing Your AUM According to Recent Industry Reports

Christine Simone
April 11, 2024

In my conversations with advisors, I’ve found that one of the most common goals (if not the most common goal) for 2024 is to grow their firm’s AUM. Outside of my personal conversations, AdvicePay’s 2024 Fee-for-Service Industry Trend Report confirmed that the top business goal of AdvicePay advisors for 2024 is client acquisition.

A bar graph titled "Top Business Goals of AdvicePay Advisors for 2024 from AdvicePay's Advisor Survey

Interestingly, a similar survey, Nitrogen’s 2024 Growth Survey, found that:

“A majority of advisors want to use software to grow their AUM but may be under-utilizing their existing technologies that could streamline compliance and client engagement efforts. Financial advisors universally recognize personalization as a cornerstone of brand differentiation and client engagement. Yet, there’s a notable gap in harnessing the full potential of technology to elevate this personalization to new heights. The integration of sophisticated client engagement platforms into their tech stack—a move not yet prioritized by many—stands out as a pivotal opportunity.”

The Nitrogen Growth Survey highlights the importance of using technology and client engagement to grow, and the AdvicePay Trend Report also highlights how crucial value-add services are for retaining clients and growing AUM. Take a look at what services AdvicePay advisors are offering:

A bar graph titled "Additional Services Advisors Provide Outside of Financial Planning" from AdvicePay's Advisor Survey

*A special note: Although I was excited to see healthcare planning in the survey, it’s worth noting that healthcare planning, in this particular report, refers to helping clients compare the health plans offered by their employer. AdvicePay’s report doesn’t mention Medicare or Marketplace plan optimization as a component of healthcare planning. 

Advisors offering these value-add services isn’t surprising when you consider that 93% of clients surveyed expected their advisor to offer estate planning services, 92% expected tax planning services, and 65% expected health insurance advice.

Additionally, LPL found that their top advisors* were, “53% more likely to offer estate planning, 41% more likely to offer tax planning and strategy, 28% more likely to offer retirement plan consulting, and 17% more likely to offer insurance.”

So, what does all this mean?

All this data means that to be a top advisor who meets their AUM growth goals, offering personalized client engagement and value-add services is a must. One option, of course, is to hire an in-house specialist. For example, you could hire a CPA for tax planning services; many financial planning firms have already been doing this for years. But that will increase your overhead and result in less specialization if only one, or a few, individuals are focused on that specific area of planning. That’s why many firms are choosing to work with technology providers to increase the level of depth they can reach in these niche planning areas.

Let’s take healthcare planning as an example. As an advisor, you could use an insurance broker, but brokers are typically limited in what plans they can show your clients. They also receive commissions on the plans they sell, which means you run the risk of your client receiving biased guidance. If you’re on the hunt for fee-only health insurance consultants who can show all plan options in several locations across the U.S., you’re better off choosing an in-house software solution that does all that and helps clients optimize their healthcare coverage and costs. Best of all? You don't need to become a healthcare expert if you partner with a technology provider for healthcare planning. Caribou, for example, offers a white-label solution for healthcare planning alongside a team of healthcare experts who can go over the HealthPlanning Analysis with clients. This allows advisors to bring health insurance optimization in-house while remaining hands-off, which has proven to bring in assets for partnered firms.

What about estate planning and other service offerings that create a truly comprehensive financial planning experience for clients? How can advisors offer these services, grow their AUM through client referrals and acquisitions, and create accurate financial plans? If you guessed technology partners, you’re correct.

I think AdvicePay’s report sums it up well:

“Technology stands as both a catalyst and a cornerstone for success for financial advisors. With a diverse array of tools and platforms at their disposal, advisors are equipped to deliver value-added services with unprecedented efficiency. From robust financial planning software to intuitive client-facing portals, these technological innovations not only streamline administrative tasks but also facilitate deeper, more meaningful engagements between advisors and their clients.”

Final Thoughts

Based on the research and surveys mentioned in this blog, advisors need to go beyond basic financial planning to grow their AUM. Offering a personalized financial plan with unique value-add services that meet a client’s expectations ensures they’ll not only stay with you for the long haul but will also refer you to friends and family. Offering additional services like healthcare planning, estate planning, and tax planning also sets you apart from competitors, which will help you attract new clients — leading to AUM growth in 2024 and beyond.

*The top 10% of LPL advisors was determined in terms of Gross Dealer Concessions (GDC) taken from commission data in 2022.

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