Organic growth has long been a challenge for financial advisors. Despite industry growth rates averaging between 4% and 7% in recent years, only a small percentage of advisors are seeing significant gains. Data from McKinsey and Tiburon show that organic growth is disproportionately concentrated among a select few, while most advisors struggle to move the needle.
A common assumption in discussions about organic growth is that an advisor's core value proposition—quality of advice and client relationships—has already been maximized. This belief flows that any further growth depends only on increased marketing efforts, improved digital strategies or better branding.
But is more marketing the answer?
No. Or at least not by itself.
For many advisors, the root cause of poor organic growth is an undifferentiated or unremarkable value proposition.
The logic is simple:
When customers have a truly exceptional experience, they naturally share it with others. They become lawyers. However, a client's willingness and passion to advocate tells a deeper story about the value of the experience. The more valuable the experience, the stronger the belief in the offer, the stronger the advocacy. Advocacy exists on a spectrum—from casual mentions to full-blown evangelism.
Value drives advocacy. And advocacy is a clear signal of value.
The level of advocacy directly reflects the strength of a value proposition. This principle is universal across industries: compelling, valuable and differentiated offerings drive organic growth.
What does this mean for financial advice?
Currently, 70% of organic growth in the industry still comes from referrals. While advocacy and referrals don't always result in new customers, a lack of meaningful growth reflects a lack of strong advocacy—and, therefore, a lack of perceived value. The average Net Promoter Score for financial advisors is around 50, often seen as good. However, this means that 50% of clients don't think enough about their experience with their financial advisor to tell others. And what does this mean for the strength of advocacy from the other half?
JD Power's data points out that just over 10% of customers place exceptional value on their advisor experience, reflected in an average NPS of 93. It's not hard to conclude that this near-clear protection also means enthusiastic advocacy. This is consistent with data from McKinsey and Tiburon, which show that 10% of advisors account for the majority of organic growth.
The connection is clear: Advocacy means value, and value generates growth.
If organic growth is directly related to the merit of a value proposition, the real solution is obvious: multiple advisors must offer a more compelling and differentiated experience.
Marketing is definitely a powerful tool – it amplifies and accelerates. But the success of any marketing effort depends on the strength of what is being marketed. Most marketing campaigns will have limited results if the value proposition is less than compelling or undifferentiated. To borrow an analogy: no matter how much you market a frozen hamburger from a box, it's still a frozen hamburger from a box.
So if you're not achieving significant organic growth, the first thing you need to do is assess the value of your offering and the experience you provide. For many, achieving more sustainable organic growth starts with delivering a more compelling and differentiated offering. And doing so not only drives growth, but also creates deeper, more valuable customer relationships. When measured, this directly and positively affects earnings quality and firm valuations.
After all, growth reflects value, and value is the foundation of advocacy. The stronger your value proposition, the stronger the organic growth that will follow.
Tom Rieman is the CEO of Practice Intel.