Most advisory practices grow at a surprisingly slow rate when you strip out gains from rising asset prices. The bull market has allowed firms to increase assets under management without fundamentally improving operations or winning substantially more clients. But relying on market performance to drive growth leaves advisors exposed when conditions inevitably shift.
Jerry Michael, President of Smartleaf and Smartleaf Asset Management (SAM), confronts the issue directly—and his diagnosis goes beyond operational deficiencies to something more fundamental. The barrier to meaningful growth isn’t technical—it’s psychological.
“That phrase—‘comfortable being uncomfortable’—came from one of our clients,” Michael explains. “The idea is that major organizational change only succeeds if you can reach that mindset. If you can’t, large-scale change usually fails.”
His observation gets to the heart of why so many firms remain stuck. Advisors have carved out a comfort zone where clients are satisfied, operations run smoothly, and revenue stays predictable. Asking them to step out of that zone sounds unreasonable—until you consider the costs of staying comfortable.
The Safety of Incremental Change—and Its Limits
Michael distinguishes between two paths to improvement. Incremental change feels safe: small adjustments, minor process tweaks, fixing obvious problems. It works because firms never leave familiar ground. Advisors keep doing what they’ve always done—just slightly better. Then there’s transformation, which requires rethinking core assumptions about how a firm operates.
“We always stress that deep change should only be done in pursuit of ambitious goals,” Michael says. “Incremental improvements are fine, but they have limits.”
A paradigm shift means discomfort. Workflows are adjusted. Roles transform. The client experience evolves. Some clients who prefer the old model may leave. Advisors who’ve built identities around being investment experts must recast themselves as coaches and planners.
“Deep change is riskier and less comfortable, but it’s the only way to achieve ‘beat-the-competition’ growth,” observes Michael. “In wealth management, that means moving from 0–3% organic growth to something like 10–15%—which is achievable.”
He compares the potential overhaul to the industrial revolution. Early factories relied on water wheels connected to machinery via complex belts. Switching to a single electric motor improved efficiency slightly—but it didn’t unlock electricity’s full potential.
“True transformation required redesigning the entire factory, not just swapping a part,” notes Michael. “Incremental change couldn’t deliver revolutionary results.”
The parallel to wealth management is clear. Firms can keep tweaking existing models—better CRMs, gradual technology upgrades, modest process improvements—or they can fundamentally reimagine advisory operations. One path feels safe. The other drives growth.
“These results are achievable, but they require deep change,” Michael emphasizes. “And that’s uncomfortable because it means a new workflow, new roles, maybe even a new client experience.”
What Deep Change Requires—and Why It’s Uncomfortable
Achieving double-digit organic growth boils down to a deceptively straightforward formula. “Delivering better service more efficiently,” Michael says. “That’s the core mechanism. It sounds simple, but it’s true: better client service, delivered efficiently, drives growth. That means improving portfolio management and freeing time for clients and prospects.”
He paints a picture of modern portfolio management: one person can rebalance and trade an entire book of business in 24 hours. Tactical shifts across every account should take a single day. Tax-loss harvesting after a market drop? Also one day. Adding customizations, ESG screens, religious restrictions, or direct indexing should require “zero extra effort.” Advisors shouldn’t spend hours on daily portfolio reviews, Michael contends; generating a tax-optimized transition plan for a prospective client should take less than a minute.
Automation can transform the impact of tax management. Smartleaf’s research shows 68% of accounts save or defer more in taxes than they pay in advisory fees. Weighted by account size, the figure rises to 90%; for all-equity accounts, it reaches 99%. Systematizing daily tax and portfolio management can cut client tax burdens by more than 60% and even reduce return dispersion by a similar percentage.
“But more tax management leading to less dispersion?” Michael asks. “The surprising implication of this is that most return dispersion in typical firms is just . . . noise. It’s not there for any reason; it’s just a symptom of how bad most existing portfolio management is.”
But Michael reframes the conversation around tax efficiency. “Clients shouldn’t choose an advisor just for tax management,” he says. “But documenting tangible tax benefits proves that a firm is disciplined, capable, and well-organized—and that inspires trust.”
Achieving thorough efficiency gains requires letting go of old habits. The capabilities sound appealing until advisors confront what it takes. Firms must embrace true automation—not tools that merely add efficiency but systems that fundamentally expand what’s possible. Model-based portfolio management, often resisted because it feels impersonal, is key.
Michael spells out the potential benefits: “Models enable automation of personalization and tax management, which allows you to do more of both. So, models mean more, not less personalization.”
But accepting his reasoning requires letting go of the belief that personalization means starting from scratch for every client. Rebalancing needs to be centralized or outsourced entirely. For many advisors, portfolio management represents core professional identity. Handing off rebalancing can feel like diminishment, even when the move creates capacity for higher-value activities.
“The real value isn’t just the dollar amount—it’s what that documentation proves,” Michael points out. “Clients don’t hire an advisor because they’re good at tax management. They hire them for planning, coaching, and trust. Demonstrating measurable tax efficiency is proof of competence, evidence that your firm is buttoned up and reliable.”
In the Smartleaf approach, the focus shifts to planning, guidance, and holistic wealth management. Advisors who embrace the transition can serve clients better—but many initially cling to old habits where investment expertise has taken center stage.
Firms That Embraced Discomfort—and What They Achieved
The transformation from comfortable stasis may sound ambitious in theory, but Michael shares real-world examples of firms willing to endure short-term discomfort and the results that followed.
One firm has tripled its business while reducing the headcount devoted to portfolio management. Two people now handle all trading—work that previously consumed significant advisor time. The transition has meant advisors no longer tinker with individual portfolios. The loss of autonomy created friction initially, but results have won converts.
Firms no longer need advisors who excel at both relationship management and portfolio construction. One firm reports that removing trading responsibilities has made hiring significantly easier because firms recruit for one skill set rather than two.
Centers of influence—CPAs, estate attorneys, other professionals—have become more enthusiastic referral sources when they see sophisticated tax management in action. Firms implementing deep change report 3–5% annual AUM growth from professional referrals alone. Close rates have improved by roughly 50%. Average account sizes quadrupled. One firm sums up the growth trajectory: business has roughly doubled every two years since implementing systematic automation and centralized portfolio management.
But Michael’s favorite example illustrates how embracing discomfort during crisis moments separates firms from competitors. March 2020 brought the most volatile month for markets in over a decade. One firm traded every taxable account at least once for tax-loss harvesting, many multiple times. The work happened seamlessly in the background while client-facing advisors focused elsewhere.
“As they said, ‘We were on top of it,’” Michael recalls. “Their competitors weren’t. The result: ‘more net inflows from existing clients in six months than in the previous 18 months.’”
Competitors using traditional models faced a brutal choice: manage portfolios or manage client relationships. They couldn’t do both effectively.
Why Clients Adapt Faster Than Advisors Expect
Technology implementation proceeds smoothly for most firms making the transition. The software isn’t the pain point—psychology is. Advisors must adjust how they spend their days, and firms must reshape roles and workflows. The surprise, Michael notes, is which constituency adapts most easily.
“The barrier isn’t the software—it’s change itself,” he says. “Advisors must adjust, and so must firms and clients. But clients actually adapt faster.”
Clients’ priorities are foregrounded. “They care about life goals and financial stability,” Michael adds. “They value advisors who help them navigate change, not just pick stocks.” When firms shift from product-focused conversations to planning-focused relationships, most clients welcome the evolution. The meetings can feel more relevant to their actual concerns.
The advisors who struggle most are often those accustomed to being “the smartest person in the room” on investment minutiae, Michael argues. Shifting into a coaching role requires different skills and a potentially new identity. This transition can feel threatening, especially when sophistication shifts from demonstrating security selection prowess to orchestrating comprehensive financial planning.
Still, taking on the role of coach can be difficult, even when the work proves more rewarding in the long term. But advisors who are able to navigate the identity shift, becoming comfortable with discomfort, can unlock the growth the industry’s best firms achieve.
The Cost of Staying Comfortable
Firms that resist deep change while competitors transform will eventually lose ground. Markets will stall or decline, and without organic growth, firms shrink when conditions turn.
“Markets have been favorable, so many firms feel fine—but markets don’t always rise,” says Michael. “Ex-market growth near zero should concern everyone.”
March 2020 provided a preview. “It exposed just how fragile many firms’ systems were,” he notes. “When markets rise, everyone looks smart. When they fall, weaknesses are revealed.”
The next downturn will be definitive. Firms still operating on pre-automation models will struggle to serve clients effectively during volatile periods while simultaneously harvesting tax losses, rebalancing portfolios, and maintaining client contact. The operational model simply can’t deliver what clients need during crisis moments.
Meanwhile, competitors who endured the discomfort of fundamentally modernizing their practices will demonstrate competence and presence when both matter most. The gap in client experience won’t be subtle. Clients will notice which firms remain organized, proactive, and focused on their needs versus those that seem overwhelmed by operational demands.
The Choice Every Firm Faces
Michael frames the decision starkly: firms must choose between ambitious goals requiring deep change and modest goals achievable through incremental improvement. Both paths are valid—but only one can deliver double-digit organic growth.
“If you want to grow meaningfully, this is a proven path,” he emphasizes. “It’s not painless, but it’s achievable. Success depends on being comfortable with discomfort.”
On this path, the mindset precedes the results. Without embracing discomfort, attempts at large-scale change typically fail because firms retreat to familiar patterns when transformation becomes difficult.
But the firms that push through the discomfort—accepting new workflows, new roles, new client experiences, and new professional identities—report outcomes that seemed unrealistic before implementation. The technology works. The operational model scales. The growth materializes.
The question each firm must answer: Will we pursue the discomfort required for transformation, or will we keep oiling squeaky wheels while growth stagnates at 3%? Markets won’t stay favorable forever. The firms making the uncomfortable choice now will separate from competitors when conditions change.
Michael’s takeaway remains decisive: major organizational change succeeds only when leaders become comfortable being uncomfortable. The barrier to 10–15% organic growth isn’t technical or financial. The roadblock is whether firms possess the courage to step out of comfort zones they’ve spent years building—and stay out long enough for transformation to take hold.
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