How a ‘shrink to grow’ ethos paid dividends

Don Emond was running up against a wall in 2006. The Cobourg-based advisor had built up a successful practice but couldn’t find much room to grow. His “take anyone” policy had resulted in about 600 relationships, stretching his resources and keeping him from growing his book.

“There’s only so many hours in a day,” Emond told WP. “I either had to hire more people and continue the model that I had, or the service level would diminish in order for me to grow. In order to grow the assets, I would have to change that business model.”

Emond wanted deep relationships with his clients, though, and neither option gave him the space to provide the holistic service he prides himself on. That’s when he went to New York.

“I was fortunate enough to go to Manhattan for the fifth anniversary of 9/11,” Emond said. “While I was down there, I had an opportunity to sit at a group lunch with the fourth largest investment advisor in the United States. He told us that he had a team of five people and a book of $9 billion.”

Emond was floored, asking “how can someone get that big?” The American advisor replied: “shrink to grow”.

Don Emond has run with that mantra ever since. Focusing on high-net-worth clients, he’s reformed his practice into a truly holistic shop that quarterbacks all his clients’ needs. With a “shrink to grow” ethos, Don has grown his book and deepened his relationships without stretching his capacity. All of this began at a luncheon.

What the American advisor had done was define a holistic service offering in Connecticut and put a $5 million account size in place. He started with no clients and grew his book out of exclusively high-net-worth individuals.

Emond thought he’d found his solution. But what works in Connecticut might not work in Cobourg, where there are a few less multimillionaires walking around. Don had to find the right cut-off. He started at a $500,000 minimum.

Over five years Emond sold off about $50 million at the bottom of his book, representing half of his total relationships. He brought on two young advisors to take those clients. Once they’d paid him for the assets, they moved to their own practice. It was a slow-motion transition that left his lower net worth clients satisfied.

Emond designed his new service offering as truly holistic. “We’d not only to take care of people's investments, we’d help them with estate planning, taxes, and actually truly do it, not just provide lip service to it.”

Emond would take new clients to meetings with lawyers where they developed new wills and powers of attorney together. He’d sit with every client to make sure their financial and investment plans were totally connected and aligned to that client’s needs and wants. 

Don adopted the “shrink to grow” mantra to expand his AUM. What he learned, is that the relationships he built with clients could run so much deeper thanks to the time he now had. 

“The impetus for changing the practice was to grow the book without diminishing the service,” Emond said, “now I have less relationships, but more deep and meaningful relationships with far more assets.

“Shrinking the number of relationships in the practice allowed us to spend a lot more time per client per year. We’ve built deeper, more meaningful relationships with every client in the practice. As well, when new clients come in, we're not diminishing the service offering, because we're not at capacity.”

Emond thinks “shrink to grow” can be a successful strategy for advisors squeezed by fee pressure and the call to provide a more holistic service. Mass advice may not be the answer in an era of robo-advisors. Emond’s strategy, focusing on higher net worth individuals through a real commitment to meeting all their needs, has worked for him.

In 2015 and 2016, Emond made it onto WP’s Top 50 Advisors list.

“That was recognition that I was on the right path,” he said.

Recognition hasn’t stopped Emond from pushing, though. He’s still looking around the industry for insights and advantages, even as he shares his own.

“I think that most of the really good things that I incorporated into the practice have come from other successful advisors,” he said. “I'm always looking to people that are more successful and trying to glean best practices and good ideas from those people.

“I think that's part of success, that progression towards a goal.”