From the September 2008 issue of Wealth Manager Web • Subscribe!

So Close

Three, two, one--buzzer! We lose the championship game by three points. Tears are streaming down the faces of my nine- and 10-year old team of co-ed of basketball players who gathered around me for the final talk of the season. I started by thanking them; this surprised them a little. I told them I was proud of them; this surprised them a lot. They felt like losers; I explained to them that they were anything but failures. Even if we had lost every game, they showed great character in practice and in games, and they never backed down from a challenge.

The parallels between coaching and running a business are many. At your firm, does every member of your staff understand their role today and what it could be tomorrow? At my firm, we only recently began to try to figure this out. We started examining our current and future roles because of a point made by one of my favorite people--Rebecca Pomering of Moss Adams. Many firms have organizational charts and job descriptions. What's missing is a path or "defining the lines" as Rebecca puts it: What skills must one learn? What benchmarks and thresholds need to be identified to confirm that a skill has been adequately acquired? What measures and behaviors indicate competence? Higher skill levels and greater responsibility would normally indicate higher pay. At what financial levels is the firm able to pay more? Would it ever be a good idea to pay more even if the firm cannot currently "afford" it?

In addition to salary, many positions should also provide incentive compensation--directly linked to excellence. To be an effective motivator, an incentive plan must reflect the individual's performance. Firm-wide awards can indeed aid in fostering a team culture, but they do not get your staff excited unless the individual has a direct effect on the outcome. Too often, awards to staff members are based upon new business generated by the firm, but ignore individual contributions. Employees who were involved may develop an attitude about sharing the award with those who had no input. As I alluded to earlier, incentives should reward excellence. And incentives that provide the biggest bang for the buck are the ones tied into a firm's overall strategy. For example, one firm's owners wanted to reduce their client load so they could spend more time on business development. They turned over a set of clients to a promising young employee who had reached the point where he could assume full responsibility for some client relationships. Then they put in place an incentive plan with a bonus for acquiring new clients.

The plan failed--producing no new clients and some aggravated old ones. Why? Instead of paying the employee and motivating him to excel at relationship management, his earnings and prospects for partnership depended on seeking new business. Time spent with current clients detracted from his potential. Second, the star pupil was never given any classes in business development, a skill best learned from a good mentor.

Everyone suffered: The employee couldn't get the bonus he wanted; the existing clients didn't get the attention they were promised, and the owners had to spend time on damage control instead of relationship building. Fortunately, the owners recognized that it was their fault--not the employee's--and restructured the training, supervision and compensation. If they hadn't recognized this, it would be about as fair as a football coach ripping into the center for blocking instead of catching a touchdown pass. I know it's a clich? to use sports analogies these days, but there is also a lot of truth in the comparisons and lessons to be learned and re-learned. We didn't win it all this time but hey, there is always next year.

Dan Moisand, CFP (, a principal of Moisand Fitzgerald Tamayo LLC, in Melbourne, Fla., is past chairman of the Financial Planning Association and a two-time winner of the Journal of Financial Planning's national "Call for Papers Competition."

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