Nick Heath: Why growth often stalls in financial planning firms
As published in Money Marketing, 6 August 2025
Most financial planning firms begin with a clear sense of purpose: to give good advice and serve clients well, all while building a business that reflects personal values and aspirations.
Over time, however, many founders find that their role begins to change. They are no longer just advisers, they become compliance officers, investment managers, HR leads, technology troubleshooters and much more. But they still need to serve their clients.
This is what we refer to as the ‘hat trap’. It happens when founders shift from leading their business to carrying its full weight. It can look like control, but all too often it can be the very thing that limits their ongoing growth.
The common response is to hire – more advisers, more support staff, perhaps a tech person or an operations lead. In the short term this can help, but the problem is that people bring cost and if this is not handled extremely carefully profit margins can plummet.
“The ‘hat trap’ happens when founders shift from leading their business to carrying its full weight”
There are, of course, times when wearing multiple hats is unavoidable. In the early years of building a business it can be necessary, but over the long term it becomes important to take a more strategic view.
There are a number of ways to avoid getting stuck and distracted by roles that no longer serve you or your clients. Stuff needs to get done, of course, but avoid mission creep. Founders also need to recognise when something is good enough. It is not necessary to be an expert in every area, and it is more important that core responsibilities are met and that the team is supported.
Time discipline is key to this – administrative tasks should be allocated a defined period. They must be completed efficiently and not allowed to expand indefinitely.
It’s easy to be drawn into tasks that are enjoyable but do not represent the best use of time. Marketing, for example, can be fun and engaging, but rarely outweighs the value of spending time with clients or leading strategic planning.
Firms that successfully navigate this transition often do so not by expanding internal teams but by collaborating with external partners. They maintain focus rather than complexity. This approach does not signify a loss of control but rather an informed choice about where to concentrate energy and recognise the firm’s true value to clients.
There are three areas where this shift is particularly important:
Investment management
This is a function that demands significant time, is tightly regulated and is difficult to perform well in without significant effort and cost. One firm we work with was spending the equivalent of 75 director days each year managing model portfolios.
By outsourcing this responsibility, the directors were able to split focus according to their strengths. One took the lead on operations, while the other focused on growth and acquisitions.
Technology
Founders often find themselves caught in extended product demonstrations or endless integration projects. These activities consume time but do not always deliver results. So, before investing in new systems, it’s worth asking whether they will help the business move faster or simply add weight.
Mergers and acquisitions
These transactions are complex and can be demanding in terms of time and emotional energy. We’ve seen founders invest months into deals that ultimately do not complete, while others go through with deals that fail to deliver the intended outcome.
In our experience, success in this area requires not just motivation but also the right support, financial resources and experience.
“It’s not about how many hats you are wearing today, but which ones it is time to take off”
As financial planning businesses face increasing pressures – heightened regulation, rising costs and challenges in attracting and retaining talent – the ability to focus will emerge as a significant competitive advantage.
Those firms that thrive will be the ones making early, intentional decisions. They will determine where they add value, identify areas needing support and engage partners accordingly, remaining steadfast in delivering optimal outcomes for clients.
At Saltus, we work with firms that are looking to grow, those planning for succession and those preparing for sale. In each case, the right path forward begins with a conversation – not about how many hats you are wearing today, but which ones it is time to take off.