Want to Continue to Succeed, Owner-Advisors? Give Up These 3 Sacred Cows

I talked with a prospective client the other day, who asked me an unusual—and excellent—question: “Have you ever had any failed client relationships?” My answer was: “Yes, we have had some clients who haven’t worked out. Not many, but it happens.”

What’s more, in our experience, virtually all of them “failed” for one of two reasons. The first is mostly my style: I’m not a therapist, and I don’t want to be one. I have very little interest in holding a firm owner’s hand and making them feel better about themselves. Consequently, I tend to tell them directly what I think about where their firm is and what they need to do to take it where they want to go. Some people can’t deal with that. Fair enough. 

The second reason our relationships occasionally don’t work out is a much more important—and educational—point: some owner advisors just can’t let go of the past. That is, they just can’t get their brains around the fact that most of the things they did to get to their current level of success are not going to help them grow their firm to the next level.

In fact, we’ve come to realize that the keys to successfully growing an advisory business are different at every growth stage: and the most successful firm owners realize that they will continually have to change the way they run their firms. 

One stumbling block for many firm owners, and a classic example of the evolution of an advisory business (and one we often confront), is “processes and procedures.” Yes, it’s an important step in growing a business to document processes and procedures so that everyone in the firm is playing from the same playbook. And yes, P&P’s are touted in self-management books such as the “E-Myth” as the Holy Grail of running a small business.

But the reality is that processes and procedures will only take a business so far. As you get bigger, P&P’s are not going to solve your HR issues of getting the right people in the right jobs, and helping them to get better.

To do that, a firm needs an effective training program. To create one, owner-advisors need to give up four of their most cherished beliefs: 

  1. Move from a “procedure orientation” to a “resource based” focus. 

    To make this transition, firm owners need to shed their mantle of all-knowing experts and be honest with employees that they don’t have all the answers. However, owners should say at that point: “As a team, we’ll find them together, from whatever various resources are available.” This will empower employees to not only solve the usual problems, but to find solutions to new and uncommon problems, that will arise as the firm as clients grow.

  2. Do for employees what you’ve already done for yourself: reduce the hats. 

    In the early stages of an advisory business, the owner(s) wear many hats: rainmaker, lead advisor, portfolio manager, marketing manager, office manager, CFO and so on. As their firm grows, they hire employees to put on many of these hats. As the owners shed their many hats, the new employee(s) end up wearing multiple hats. In the next phase, firm owners need to take hats off their employees: by focusing on technology and a good organizational strategy—that’s not about who reports to whom, but rather who does what, how they will advance and when to hire new people.

  3. Transition from a static mentality to a growth mentality. 

    When a firm remains the same size and only hires new employees to replace someone who leaves, the training program can be the same for the new employee as it was for the old employee. But when a firm is growing, and the staff is expanding, each new employees is starting in a job that is different from any job that currently exists in the firm.

    The second support advisor or portfolio manager is coming into a different role than the first advisor or manager did. Which means that the training program has to be dynamic and constantly changing to help new employees succeed in their new roles. 

You can see that by taking each of these steps, firm owners are not only solving issues to take their firms to the next level but they’re also creating dynamic firms that have a built-in ability to change as they grow, and to meet new, unforeseen challenges. 

These firms are positioned to grow as large as their owners’ desire—and are the result of their owners embracing the need to continually look at their businesses with an eye toward the future, instead of the past.

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