Want to scale faster? Start where most practices don’t: capacity. Dr. Jon Randall shares why too many of the wrong clients quietly blocks growth and where to redirect your attention instead.

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Hi, I'm John

And I'm Julie.

We're the hosts of the Hartford Fund's Human-Centric Investing podcast.

Every other week we're talking with inspiring thought leaders to hear their best ideas for how you can transform your relationships with your clients.

Let's go!

Jon, welcome to the Human Centric Investing Podcast. We're so excited to be here with you today.

Thank you for having me on. I'm a big fan, listen to many episodes, and I'm looking forward to this one.

Well, Dr. Jon, we're excited to have you as well because many of the teams and the financial professionals that Julie and I work with, probably one of the biggest questions coming from successful advisors who are growing their practices is, how do I scale this thing, right? Where do I find the time? And today's episode, we titled exactly that, building a practice that scales. And we know that you have worked. With many advisors across the landscape, many financial professionals. So what is it, first of all, how do you think of scale and what kind of mindset should those teams be kind of gaining as they think about, quote unquote, scaling their business?

This term scale is becoming really popular in our industry and I think in business in general. And to do that in the financial advisor space is very possible, but people do ask exactly what you said. How do these practices do it? We've helped many practices, 10X, 100X to go past 10 million, 100 million in revenue. But what is it? And we've really dialed down to a small number of things that we're going to talk about today that have really worked. But to me, Scaling the business It's a different game than the traditional financial advisor game. It's building the business beyond the owner. And to me, that's one of the biggest mindset shifts that advisors need to have, you know, what they did to maybe get them to a million, 2 million of revenue. Those things may not work to get them the 10 million of revenue because it's about other people. And that shift is really tough to do, but that's the key to the ones that are really 10 X and 100 X.

I know you work with many, many advisory firms at different stages of their firm life cycle, if you will. But when financial professionals come to you saying, I want to grow, I wanted to scale, what do they usually think the problem is and maybe how often are they wrong in your opinion or at least don't have quite the right vision at the outset?

It would they all want they all want to start building their house on the second floor is pretty much they'll come to us and say I want to acquire more clients faster. I want to acquire other practices faster. Would you show me how to do those? And those are two of my favorite subjects. I absolutely love those. But what they miss is that they need a foundation and a first floor that will actually allow them to build unlimited number of floors. But that's really what they miss. And a lot of them are stuck in that, you know, million to 2 million range, but they start with us. They've just hit a ceiling in their old model and they need to shift to a new model to really put some zeros behind their numbers.

So Dr. Jon, what goes into what's in that foundation? What's the what is the floor that they're missing? I think I have a hint when you said everybody's about how do I acquire more clients? How do I require more relationships? How we do more business, but everybody forgets that I'm only one person. So I got to imagine that has something to do with foundational level understanding, but what do you got to do?

You've got it. And we've developed our coaching program off of the theory of constraints, which comes from manufacturing. And there's something in the process that could be holding up a lot of other pieces of the process. So to me, there's some scaling topics that are the foundation of this house or this building that advisors are trying to build. And the number one constraint that we see holding practices back from growing and scaling faster is capacity. And it's not just too many clients, it's too many of the wrong clients. And there's many industry studies that support this. Cerulli talks about it, Investment News talks about. Fidelity came out with a study last year said over half of clients of financial advisors are unprofitable for them. But we're all trained from the beginning, more clients, more assets, right? That's what we all do as advisors. And it works to a certain point and then it starts working against us. So thinking differently about capacity, especially from the owner, the founder standpoint, right? How does that founder of the practice, how did they get themselves freer? So they can focus on growth because they're the growth engine. If they get clogged up, the whole system gets clogged out, right. And that's what investment news says every year that practices kind of hit a plateau when they get plugged up, they just get too many clients, too many of the wrong clients and it hurts their growth. And to me, it's that starts with the founder. They usually get clogged at first. And then the other side of that coin, if they are going to scale, the average advisor working for a practice is now producing over a million. So they didn't build that on their own, they're managing that for the firm. And to me, that's the power in scaling. The best practices we work with, their average advisor and their team is managing over 1.5 million of revenue for their firm. You can generate enough profit margin there to invest in new people, to buy practices, right? They're the ones that are really growing the fastest. But. It's that two-sided coin of capacity owner being freer and leveraging other people, other advisors to handle capacity. That's the game of scaling. And to get that right, whether it's the right structure, how do we develop those advisors? That's, the foundation to me. And is practice trying to build a bunch of floors and try and grow too quickly, you start to see cracks in those foundations widen. And what falls through is clients and revenue, usually good clients in revenue. Falls through those cracks. So to me that I can trace so many issues back to so many practices of why they're not growing faster, why they are not acquiring enough new clients, you peel back the onion, the main issue is always with capacity almost every time.

So capacity, it sounds so simple, right? Such a small word, such a simple word. But obviously it's very complicated. When you are working with financial professionals or observing leaders of teams amongst their team, what are some of the more common distractions that you see financial professionals chasing that may be activities that don't really move the needle but feel like. Wow, I'm making a lot of progress. I'm really busy. I'm working on creating capacity, if you will.

Yeah, it's a wonderful question. And, uh, I learned some of this, getting a PhD in performance psychology. Uh, I joke around and say that, uh I got it to figure out why advisors don't do what they should be doing. So I got, but it just helped me understand how we are as humans more. So the way our brain is designed. Is we crave equilibrium. It's part of a safety mechanism that we have as the brain. We can default back to what we know, because if we lived every day and all day every day in constant stress and outside of our comfort zone, be very wary on us as humans. So our brain craves the same equilibrium, right? Look at what we like to eat. Right, as humans we like have, we have our favorites, we have comfort foods. When we go to a restaurant, why I like to get these things. This is the way most humans are. So in the financial advisor business, We have these like root things like I'm just supposed to get more clients and, and new clients. And it will all work out for me. We have this routines that we go back to. So I find that that in itself creates a reason why advisors get stuck in the same cycles, right? They don't shift to do the things they could be doing. They get stuck in the things that they have been doing. And when humans get busier, we're even more likely to revert back to how we are. So we get in this cycle and what happens I see too, it's your point of just what are the distractions. We get in the cycle of just busyness and routine and gosh, I'm a financial advisor, I wanna grow, what should I do? So they look for the quick fixes. Oh, I heard of this shiny new object. If I just go pay for these leads, I'll get a whole bunch of new clients. And so they'll have this uninformed optimism that, ooh, this will be great. And invest a bunch of money into it. And what happens then they end up having, uh, informed pessimism that, oh gosh, that didn't work for me. I wasn't ready for it. I don't know how to close a cold leads, right? It's a totally different game than a warm referral. So it's, it really can trace back to just how we are as humans, why we are just predisposed to do things the same and struggled to do things very different, but I think these like quick fixes that advisors look for. You know, if I just do this, it'll solve all my problems. If I just buy another practice, it'll just solve all of my problems, and it really doesn't. So we just got to shift the foundation, and it is a small number of things. It sounds simple, but it's amazing how distracted advisors are with all this other stuff and cloudiness in their head. If you can cut through the clutter and say, this is the one thing, if you fix this one thing it'll, it's like in the theory of constraints, it's going to unlock all this production. To do more business with clients, to get new clients, to be in place to get practice acquisitions. It really is, it's just knowing what they are and seeing it while they're flying down the highway, going 70 miles an hour. It's hard to see, it hard to change all four tires when you're cruising down the high way that fast. To me, that's just a lot of just how we are as humans but also how it relates to the financial advisor industry.

Can I ask a follow-up question just because I've had some conversations just last week with several financial professionals that were talking about working 18 hour days and you know, 80 hour weeks. And as the rainmaker on the team, they're just drained and exhausted. And I'm just curious at what point, from your perspective, does hard work stop being the answer and actually maybe become more of the problem. Just reflecting on some of those conversations that are so recent in my mind.

Yeah, Julie, you're so right. There is a diminishing return from an energy standpoint, right, that you can apply energy up to a certain point, it's effective. And beyond that, it it's just not so burnout is real. And it's real in the financial advisor industry. And I'm a fan of working less be better in less hours. It's not about more hours. It's about the investment of time. How can you get a bigger return on your investment of Time and really condense and consolidate and you look at Let's look at other idioms like a professional athlete. For example, they're very regimented on their time and they're very careful of their rest time, their sleep, the things they do to recover physically because there's a high physical demand being a professional athlete, so if we're going to apply that in the financial advisor space, yeah, the advisors that work less actually find are far more productive because it's like a pro athlete, right? They're they're investing and have high energy when they need it. They can call on a hundred percent of their energy at any time, which really is the peak energy management, right? To think about call on 100% at any given moment, that's when we're really managing our energy correctly. But if there's just not enough in the tank, there's no way we're going to be as good in all this extra hours being mediocre. That's why there's diminishing returns.

You know, Jon, I have a comment and a question for you. So my comment is I had to chuckle to myself because Julie and I and my team are talking about a new topic we call the overprotective brain. And it's exactly what you just said about how when we get tired or we get challenged or we get stressed, we like to revert back to the things that we do well and we choose not to expand. And actually we call them safety strategies versus expansive strategies. So. The expansive strategy is where my question to you comes from. So let me give you a scenario. I'm a successful financial professional. My business is growing at a pretty good clip, but I wanna do more. But I love constructing portfolios or I love client acquisition or I loved doing the financial plan. How does Dr. Jon Randall come into my practice and what would you say are some typical ways I need to think differently, even though I know we talked to a common friend of ours, Jon Cutten, about this concept about the difference in mindset between being a financial professional and being a CEO. Can you tell me what or give our listeners some ideas of the types of things that they probably aren't doing as a great financial professional that they should be thinking about if they're looking to be a CEO and an expansive CEO at that?

Yeah, there's there's a book I'll reference that to me has helped a lot of people think differently. And, and Jon Cotten, he's playing a whole different game than most people, right at doing nine figures in revenue, 17 billion AUM. I mean, it's just a whole nother stratosphere. And so he's looking at how do I get from 100 million of revenue to a billion in revenue. And you know what, he'll do it. He'll definitely do it that's super expensive, by the way. Yeah, yes, it really is. But it's, it's a, it'S a whole different game. So it's hard to fathom sometimes for advisors that, Oh my gosh, you know, how, how, you how, how on earth could I do that? But one of my favorite books by Dan Sullivan and Dr. Ben Hardy is 10 X is easier than two X. And the premise of the book is that 20% of what you're doing is really the 10 X things that are going to help your business 10 X a lot of what most advisors are caught in it's going to limit their growth. To 2x. And listen, I mean, I was a financial advisor, most of my career, it's so much fun tinkering with portfolios. But is that going to 10x your business having the best portfolio? Probably not. Right? If you're a rainmaker, you're spending time doing that, hey, things that drive growth, okay, that might be it, but is it going to drive enough growth? If You put a zero behind your numbers, is it going be relevant at that point? So that's the shift and thinking is what is that 20% or less? Of what's on an advisor's plate that's really going to 10x the business. And it helps clear away the clutter. Then you can use other, you know, another book by those two was who, not how, then you can look at, okay, how can I invest in another who to take some of the two X things off my plate so I can go do the 10 X things on my plate. Right. So it is about generating profit margin on the who's you invest in on your team, but it's also for those founders out there, those financial advisors. Your investment in time, where you invest time in your business, that's how you generate the biggest return, the biggest amount of profits. And I tell you, as you grow and you grow, it's a smaller number of things on your plate that are gonna make the biggest difference to drive the biggest growth, to put a zero behind your numbers.

What are some of those constraints or things on your plate, as you just mentioned? If I'm a financial professional listening to you right now saying, that's me. Every description that we've gone through, that me thinking that I'm focusing on the right things, but maybe I'm in an aha moment that I'm not, what would you boil it down to? Um, you know, some of those key constraints that I really should be thinking about and thinking about very logically taking some of the emotion out of it, if I really want to 10 X my business.

Yeah, I'll tell you the most common thing we see Julie, um, you know, for, for people listening out there, you can get to over a million in revenue. I get that it's some grit and grind. You can get there and it's about, um just driving your revenue per client, getting new clients. Right. It's about that. And we can talk more about revenue per client, but I find these people that, that crossover million, they start to have this common problem of they get filled up with a lot of client activity, right. And it consumes their week. They may have invested in another advisor on their team, but their habit is to hoard all those client interactions. That new advisor isn't good enough to take over these people. So I need to do it myself. So there's usually underutilized who or who's on teams out there that really aren't leveraged is the right word. So to me, this is part of capacity, the foundation I talked about. It's really part of it of how do you activate that person? Maybe they're not ready to handle your 10 million plus clients or your really sophisticated clients. That's okay. But you know what? I bet there's plenty that they could talk about with clients today, the easier topics. So instead of them taking a block of your smaller clients and fumbling around and eventually leaving your practice, how could they get involved and help with your better clients? How could they handle easier conversations to get you freer, right? And it's about getting freer to reinvest on those 10 X activities. So that's the tough shift and it's most commonly getting filled up with client duties, right? That, that to me is the biggest thing we see that clogs up practices. The growth engine gets clogged up like I've referenced before. So they've got to find ways out of some of that capacity so that they can get back to the growth activities that built the firm and it is how do we get more in, right, how there should be thinking of how do we get More assets in the door, right. That's the biggest driver of revenue and the financial advisor business. So how do you do that organically? If you're ready and you've got the capacity, you've got the team, you optimize what you do for clients. If you are in that space and you want to go out and acquire other practices, Hey, that's a big way to grow really quickly. So some of our fastest growers, you know, I just, uh, visited one of them in Houston last week. This advisor in five years, they were stuck at 1.2 million, exactly what, what I'm talking about. And this year they will cross over 25 million in revenue. I'm gonna say that again, that's over 20 X, right? 1.2 million. They did everything we talked about and they're over 25 million. Now this advisor, most of their time now is how do I get the next acquisition? They've actually hired multiple people to help them go find the next aquisition, right, because they know I need talent and I need the next big wave of new clients. Sure, they do all the, they've constantly find a business with clients. They're doing organic things too, but they know the 10 X is I need talents. To service clients and I need to attract clients at a much faster rate. And that's where their time is invested. So compared to what they were doing, completely clogged up with clients and weren't acquiring any clients. They hit a ceiling to what they could do in their old model. They just shifted the thinking that, okay, I shifted my model and are doing things a little bit differently and the winds came and as you grow past those millions, Mark, once you cross past 10 million in revenue, it's a lot easier. To go from 10 million to a hundred million in revenue. It really is because they have a lot of the blocks that are needed to be built. And our friend, Jon Cutten said this. He said, it took me less than half the time to go from 10,000,000 to a 100 million. Then it did to take, you know, it took them over 15 years to get from a million to 10 million, because there's a lot building in that stage. There's a lot of change in thinking. And to me, that's where advisors need a lot of help because it's they're entering games that they've never played before. Thank you. There's so many shining new objects, there's so many things that are going to hold them back. But it really is cutting through the small number of things that is going to eventually put a zero behind their numbers.

So Jon, it sounds to me like there's a fair amount of having to resist the urge just to do things myself, because I can easily count the revenue that comes from my meetings, but it may be harder to see when I have to invest myself in someone else, but essentially it's a give a man a fish versus teach a man to fish. If I can relay and teach, it's an investment, not just in the capital outlay for that person, but in developing their skill set. Which then can return, but I wanna go a different direction because that's kind of on the financial professional side, but I want to talk about your concepts around client optimization. So now I've got a whole, let's say I've made a recent acquisition or we're growing really, really fast. How do you look at client optimization? How do I decide or how do I quantify the clients that I really should be spending more time with?

Yeah, the best measurement when it comes to the client optimization is what is your revenue per client. So if you take your total revenue or GDC, whatever you call it, you divide it by the number of households you're working with. That's where you get revenue per-client. And the reason this helps, it'll save you from a client with a lot of assets that doesn't produce a lot revenue, right? We've all had them, we've all have them. They've got a ton of Apple stock from work, they're never gonna sell, right, and you don't generate any revenue. So this will protect you from that. It's a really clear measurement, but you should really be driving revenue per client. So it's one of the first things I look at when I look a practice as a whole is how much revenue are they producing from the assets they're managing. That helps me with, okay, how much business are they doing with clients? And then you get down to the next level, it is revenue per clients. So client optimization is all about this. So optimizing is a few different levels. So if we look at where do we compare to industry averages here? In the latest investment news study, which I love, there's an incredible amount of depth and detail in that. Our team gets it every year, we dissect it. According to the most recent one last year in 2025, $10,300 in revenue is the industry average client revenue. All right, so if you're listening and you're below that, that's okay, that's your starting point. So if you are at four or five thousand in revenue, let's say, let's look at where's that revenue coming from. And so many times you look at the bottom half of clients of practices are producing single digit percentage of their total revenue. So then it becomes, okay, we need to find some different solutions here and how we deploy time. So the first stage of client optimization is segmentation and service. I find a lot of practices will service clients kind of similar, is a time constraint. I find the top tier is way too big because maybe they had a line in the sand that if you have over a million in AUM, you're a top client of my firm. Now, most of the clients have over 1,000,000 AUM right? And there's no special experience. So if you think about if you've been on an airplane with the first class section or business class or international, it's small, right? It's less than 10% of the seats. That's all they can deliver a premium experience to. If half the plane was first class, it wouldn't be that special. So that's what's happening. A lot of practices, there's no special tier. So the profit center clients aren't really having that level experience they deserve. And so by shifting time towards them, they have a better chance of duplicating them. But I find the bottom tier is way too small, right? There's so many unprofitable clients that are getting way too much. So how can we be more efficient at delivery? Can we group delivery for a lot of those people that might be a better way to do. Uh, client appreciation events that don't really amount to much. You might want to get clients together and invest a bunch of time with a ton of them, give them all the market update, maybe at a brunch or a lunch or something like that, where you're saving a ton of time, getting these people to get together, maybe doing it virtually doing some group delivery there. So to me it's how do we contain these unprofitable clients or maybe find a different home for them so we can increase the revenue per client. Now that we've unlocked time through segmentation, now client optimization is, how do we drive that revenue per client? What is our pricing of our services? How does that relate to industry averages? Where do we stack up? How can we stack the value of our offering to offset the price so clients wanna engage in it? How do we build that value stack and help the owner or other advisors to deploy that? What are any other revenue boosters that could be deployed? Any other products or services that could be added. So to me, that's the elements of client optimization, but really it boils down to, you can easily measure it by what's your revenue per client and how do we drive that? Because if you drive that as a firm, it all goes to profits, right? It's all going to the bottom line. It's the easiest way to grow and most advisors overlook it.

What I just took away from that is we don't want our best clients sitting middle seat in row 33, or they may start to entertain other airlines.

Yes. Yes, you nailed it. And it's sad. You see it in a lot of practices, you know, you get in there and once the last time we talked to this client, well, they're on a list that we call every once in a while and it's been a minute and I tell you, as an advisor, I love this issue with our industry. Cause that's how I rolled over. So my largest client, they said, yeah, I haven't heard from my advisor in a while, and, uh, it was pretty easy pickings out there, but, uh this is, it's a byproduct of capacity, you have these kinds of issues. It's a bi-product of old habits. And Uh, we really need to evolve how, what we do with clients. So I tell you what the, the practice that get good, a client optimization, we, we hold an annual event each year with tons, hundreds of advisors around the country. We get, we get them all together. And, uh, the one we did last year, uh we did it in New York, Jon couldn't spoke at it was fantastic, but we had three practices that were all organically attracting. Over 100 million in new assets net. And I say net because assets they brought in minus assets that went out for retirements or buying a house. Over 100 million net, all organic, all from referrals. They weren't doing any special marketing tasks, all from referral, no practice acquisitions. And so we had three of them on stage and we interviewed them on what they were doing. And you know what? They all pretty much said the same version of the same thing. That we got clear on our capacity, who we could help best. We re-segmented We're investing more time into our better clients. We're doing more for them than we ever did before. And within about three to six months, we just started getting referrals from them because they felt the difference. So there's all kinds of ways to influence referrals, right? We'll talk about that in another podcast. There's a lot of things you can do to get more from your best clients. But just by being better, they said it just happened. It really just happened, so when you optimize, you really can get organic growth from it. We see it every time and it is in that three to six month window. It just happens without even asking for a referral or doing an event or anything. It really does. So that's the real power in it. And that's why this is the first floor. If you're really good foundation, you got a solid first floor, you can build unlimited floors. But you've got to be good at these if you're going to acquire practices, if you want more organic growth. Because if you are good at client optimization And you want to attract new advisors to or veteran advisors to sell their books to you, oh my gosh, you're gonna client optimization, it's instantly much more profitable.

Well, I know we could talk about this all day and go in all different directions. And thank you, I've learned so much and I know our listeners have as well. If I'm a financial professional who has just listened to this conversation and says to myself, I'm ready to step out of the because I've always done it this way mode and this is my time. I'm going to sort of get out of my own head and start to focus on my foundation. What would their first step be as a result of hitting end on this podcast and focusing on their business, their practice, their team, et cetera?

Yeah. The easiest thing to do is check out one of our XFA scaling workshops. We hold them about every two weeks. They're mostly virtual and we go through this stuff. We benchmark your practice there. We identify your constraints, holding you back. And we also identify what your easiest and fastest growth methods are. And you can see the info on our website, which is XFA.coach and right in there, you'll see information. There's some free stuff. If you want it, you're welcome to it. But the scaling workshops are where advisors start to get the light bulb going off. They start to see their constraints. They start see how they can 10x their business. It's the best next step.

Jon, we want to say thanks for sharing. Well, look, you shared your ideas. We got a couple of book ideas from you. But Julie and I have one more request. And that is we'd like to know a little bit more about you personally through what we call the lightning round. We're good at it. If you're game for it, we're gonna ask you a bunch of top of mind questions. Just want to give our audience a better idea of who Dr. Jon Randall is beyond just the coaching and financial industry. So if you're a game, I'll have Julie fire away. By our way.

Perfect. What's your superpower in one word?

Oh, people tell me this and it's just being a good person in the world. Just be nice to people when you go to a restaurant in business, just help other people out. Don't put other people down and I've learned it from my parents and just try and be a nice person in the world. So one one little thing we can control.

Jon, what's the first concert you ever went to?

Okay, this band called Dream Theater. It's one of my favorite bands. I'm a drummer, really awesome music and drumming. So if someone's into music or into drums out there, they probably know Dream Theater

What's your favorite app on your phone?

Chat GPT gets a lot of use of my phone.

Well, since you're a drummer and you told us your band, what's your what's your pump up song? If you're coming on stage, what is the song you want them to play to intro you?

You know, when I play is this song by a dropkick Murphy's, um, I'm a Celtics fan. They played the beginning of Celtics games. Um, I don't even know the name of the song, which top my playlist. It's short. I just listened to the intro. It gets me fired up. Awesome.

So that's winding you up. What's your favorite way to unwind after a long day?

You know, I'm glad you bring that up. It's classical music. Cause I do that. I work out of a condo, like five minutes from my house and I listen to chill out when I go home. So I'm not like so high grade, but it's good to have pump up music and tone down music, but classical just chilling out Bach or something relaxing like that.

Incredible. Well, we can't thank you enough for joining us today on the Human Centric Investing Podcast. And for our listeners, if you are interested, as Jon mentioned, check out the XFA website at www.xfa.coach. As mentioned, they have some great free resources there as well as the opportunity to register for an upcoming XFA scaling workshop. So Thank you again for being here with us today. Thank you. Thanks for listening to the Hartford Fund's human-centric investing podcast. If you'd like to tune in for more episodes, don't forget to subscribe wherever you get your podcasts and follow us on LinkedIn, Twitter, or YouTube.

And if you'd like to be a guest and share your best ideas for transforming client relationships, email us at guestbooking at HartfordFunds.com. We'd love to hear from you.

Talk to you soon. The views and opinions expressed herein are those of the guest who is not affiliated with Hartford Funds.