Advisors can very easily become complacent. It’s very common to set an established Practice on cruise control and lose focus on what is an ever-changing business (because let’s face it, our industry is ever-changing). But continuing to work on a business is paramount to intrinsic value.
Statistically, the average annual Client addition rate is 4% and the loss rate is 2% (includes deceased Clients). I imagine that without action, this gap will likely close and even swing the other direction as the Baby Boomer generation continues to age. Ideally, Firms should be growing their Client base by 8% every year and only losing 1%.
As your Clients age and pass away (and you lose those assets), you need to be replenishing them at a faster rate than you’re losing them. For a business to really thrive, it needs to be constantly growing – taking your eyes off of Firm growth is never an option. Think “add” rather than “replace”.