Understanding How Growth Barriers Impact Organic Growth

Organic growth in a financial advisory firm is achieved through internal efforts rather than mergers and acquisitions. The key to organic growth is leadership and talent development—without the capacity to serve more clients, growth simply isn’t possible. While increasing client referrals, new assets, and lead generation contribute to growth, none of these can be sustained without a well-structured team that can support and serve clients.

Additionally, achieving organic growth is not a matter of implementing and following a rigid marketing process; it is a continuous evolution shaped by strategic decisions, leadership mindset, and the ability to adapt to growth barriers. It takes the right perspective. By recognizing and addressing common growth barriers at each phase of development, firms can navigate through the barriers without a significant negative impact on their growth rates. Let’s explore common problems at each stage of growth.

Startups & Emerging Firms: The Beginning Years

For startups and emerging firms, the primary roadblocks include securing new clients, building a firm with limited capital, and establishing a strong operational foundation. Many firms struggle with effective digital marketing efforts, capital allocation, hiring and retention of talent, and structuring their service offerings without overserving a client. Without a clear plan, these firms often fail to transition into the midsize category. Expanding beyond the startup and emerging phases of growth requires refining digital marketing approaches, implementing operational processes and procedures, incorporating technology to expand efficiency, and building human capital programs to retain talent.

Midsize Firms: The Transformative Years

Midsize firms, operating between $3 million and $15 million in annual revenue, encounter a new set of challenges that can slow their growth. Leadership development and strategic business planning become critical at these stages. Many firms hit a plateau because they continue to rely on the same intuition-based decision-making that served them well in the startup and emerging phases but becomes inadequate for maintaining growth when there is more talent and more clients within the organization. Transitioning to data-driven leadership, refining career tracks, creating partnership opportunities, and implementing a more robust client experience are essential for breaking through this barrier.

Additionally, in these phases, sales and marketing may depend heavily on the rainmaking of key founders and/or partners. Over time, this growth strategy becomes limiting because a few key business developers cannot produce enough new clients to maintain the growth rates when firm revenues are now significantly higher. This requires reshaping the organizational structure into a more team-based approach with marketing and business development training. This stage requires a sophisticated growth strategy that includes leadership development, managing compensation and equity, and navigating sales and marketing tactics beyond just business development.

Enterprise Firms: Is Bigger Better?

Enterprise firms, generating between $15 million and $40 million in annual revenue, often reach a critical crossroads: is bigger truly better? At this stage, firms have successfully grown beyond the midsize level but now face the challenge of maintaining their competitive edge while managing increased complexity. The most significant barrier to continued organic growth is not just strategy—it’s culture. A firm’s ability to attract, develop, and retain top talent becomes the defining factor in whether it can continue growing. Without the right people in place, service quality declines, client relationships suffer, and service expansion slows. To overcome this, enterprise firms must invest heavily in talent, refine their recruitment and onboarding processes, and implement large-scale training programs.

Culture at this level is not just an internal consideration; it directly impacts client experience and brand reputation. Firms that fail to evolve their culture often struggle with high turnover, declining employee engagement, and an inability to expand service offerings without sacrificing quality. To sustain growth, firms might consider balancing organic and inorganic growth strategies, integrating acquisitions while maintaining the firm’s core identity. Innovation in leadership development, compensation structures, and infrastructures such as technology upgrades can help firms remain competitive without losing sight of what made them successful in the first place.

Dominator Firms: The Value Creators

Dominant firms, with revenues exceeding $40 million and often well beyond $100 million, face an entirely new set of challenges—ones that go beyond growth and into sustaining long-term financial health and value creation. At this scale, liquidity management and capital restructuring become critical; firms must have financial flexibility to invest in their future. Expanding compensation and equity programs can create internal conflicts through ownership dilution. Without a carefully managed approach to liquidity and compensation, firms risk eroding profitability or creating misaligned incentives that impact the quality of advice their financial advisors give to clients.

In addition to financial and structural complexities, dominator firms begin prioritizing research and development (R&D) to stay ahead of evolving consumer preferences and expand service offerings for higher-net-worth clients. At this level, firms can no longer rely solely on past successes—client experiences and expectations shift, technology advances, and new competitors emerge. The risk in a larger firm is slow adaptation to industry changes, losing market share to more agile competitors. The challenge is finding the balance between maintaining legacy success and embracing new opportunities that will fuel future growth.

The Common Thread to Organic Growth Success is Leadership

Every financial advisory firm, regardless of size or stage, encounters growth barriers that challenge its ability to expand organically. These obstacles—whether liquidity in dominator firms, cultural shifts in enterprise firms, strategic commitments in midsize firms, or capital constraints in emerging firms—are pivotal moments that determine a firm’s long-term success. While external market conditions, economic shifts, and competitive pressures play a role, the most significant factor influencing growth is leadership. A firm’s ability to navigate these barriers depends on the willingness of its leaders to adapt, refine their decision-making processes, and prioritize long-term strategy over short-term fixes. Without the right leadership, firms risk getting stuck in growth barriers.

Remember, successful organic growth is not simply about acquiring more clients or increasing revenue; it’s about expanding capacity, operations, culture, and talent to align with your growth goals. Leaders who misalign often find themselves hitting the same growth barriers repeatedly, preventing their firm from ever reaching the next phase of growth.

Growth is not a fixed destination—it is an ongoing process of learning, adapting, and executing the right decisions at the right time. By recognizing and proactively addressing growth barriers, firms can unlock their organic growth.

How We Can Help

At Herbers & Company, we understand that breaking through these barriers requires more than theoretical solutions—it requires a clear, customized strategy that aligns with the firm’s unique strengths and challenges. To help firms determine the right path forward, we develop a focused analysis designed to identify the primary obstacles limiting your organic growth and provide a structured plan to overcome them.