The other day, I did a podcast with Michael Kitces. We talked about my writing, and then he asked me why I’ve never written a book. Naturally, I’d thought about it from time to time, but I hadn't really considered why I haven't, so my answer off the top of my head kind of surprised me. “I never wrote a business book because they tend to be hero journeys,” I told him. “You know, where the author faces a major problem or pressing question, but comes out on top in the end. In my experience, most business owners need help dealing with failure, which most folks don't want to deal with, let alone read about.”
The legendary New York Yankees catcher and manager Yogi Berra famously said, “90% of baseball is mental, and the other half is physical.” Well, half — or even 10% — of running a successful advisory business isn't physical, but it is definitely 90% mental, especially when it comes to dealing with fear, setbacks and failure. As with other parts of our lives, in business, the only way to truly move ahead is to face the things that are holding us back.
Stand Up to Fears
While we all like to think that we’re unique and possibly extraordinary, I’ve found that most advisory firm owners tend to limit themselves due to a relatively short list of fears. The good news is that these fears usually can be managed once you’ve made the commitment to face them. Here are the most common fears that hold owner-advisors back:
Fear of admitting mistakes. We all know that nobody's perfect. Yet most of us feel that sometimes we have to act as if we are, and leaders seem to feel this pressure more than others. What they don't realize is that the people they are putting on the “perfect” act for almost always know the truth, and their act only makes them look worse. Nobody really expects you to be perfect (nor should you hold anyone else to that standard). Owning up to our mistakes makes us look courageous, honest and open with employees and partners.
What's more, failure to face and admit our mistakes prevents us from moving forward. When we admit a project or plan didn't work out the way we’d hoped, it frees us up to learn from our experience, to explore why it didn't work and try something else that might be more promising.
As I’ve written before, there is no formula for building a successful independent advisory business. With experience, we can narrow the options, but the truth is that because every advisory firm is unique, growth is often a trial-and-error process.
The list of mistakes that firm owners can make is extensive, but the most common include issues with employees, partners, clients, vendors, strategic partners, and new projects or initiatives. In each of these cases, the key decision is when to pull the plug or redouble your efforts.
On the relationship side, it's often hard to know whether you made a mistake or the result was unforeseeable, but it's important to sort that out and learn from it. Then you have to decide whether the situation is reparable or not.
As advisors tend to be people-people, they are often willing to give others the benefit of the doubt and hang on too long. While I don't advocate acting rashly (the other extreme), I usually suggest one heart-to-heart conversation and then a clearly stated reasonable time frame for the other party to resolve the problem. At that end of that period, it's time to make a decision.
With projects that have gone awry, the question is usually whether to invest additional time and money to get the desired result. More often than not, owners will choose to pony up more money rather than admit their idea won't work. In my experience, pulling the plug should be the first choice, overridden only when there are overwhelming reasons to believe that additional financing will achieve the goals. But in either event, it's important to learn as much as you can from the experience. Owners who don't use their mistakes as stepping stones can dramatically slow their growth.
Fear of asking for help. While this issue is somewhat related to not admitting mistakes, it's both serious and common enough to deserve its own consideration. Let me just say it up front: Owner-advisors don't have to be super men or women. And here's a news flash: Your employees and partners already know this. Asking for help is not a sign of weakness. If anything, it's a sign of maturity and drive to build a firm that's bigger than your own abilities.
Asking for help also makes employees feel needed, trusted and important to the success of the firm. It encourages teamwork, broadens experience and creates an environment in which others feel comfortable asking for help, too, which can improve the quality of everything your firm does. I’ve found that good leaders often ask for help, even when they don't need it. Don't let your ego get in the way of building a great firm.
Fear of looking bad. Again, this is related to the first two fears, but is slightly different and equally damaging. Often leaders, especially those without leadership training, feel that part of their job is to create a larger-than-life image. Yes, this approach probably worked for General George Patton, but for owner-advisors, not so much.
Sure, it's important for firm owners to be good at what they do. But it's essential for them to know exactly what those things are and the limits of their expertise. Then, armed with that self-knowledge, you can build a firm that supports you to do what you do best, while adding other talent to fill in the gaps. By pretending to have knowledge or skills that you don't possess, you not only lose the respect of your employees, you greatly hamper the growth of your firm.
Fear of things we don't know. While it's human nature to shy away from things we don't know much about, it can be disastrous for a business owner. Running a small business such as most independent advisory firms isn't like running Fidelity Investments, but it does require a working familiarity with a number of key areas in addition to financial advice, financial planning and investment management, such as legal compliance, technology, employee management, human resources, ownership structure, recruiting, and sales and marketing.
Yes, you can hire outside help in each of those areas — and I usually recommend that firm owners do so. But to build a successful firm, you’ll need to know the basics in each, both to assess the quality of the advice you’re getting and to monitor the successful implementation of your experts’ recommendations. When your firm gets large enough to warrant bringing these services in-house, you’ll have to know enough to manage the people running those areas.
The bottom line is that there are many decisions to be made in each area that will have far-reaching consequences for the success of your firm. All too often, owner-advisors are willing to let others make those decisions. My advice is that if you really don't want to spend some of your time and effort learning about all the areas in a larger advisory business, then stay in your comfort zone and keep your firm small. You’ll be happier and sleep a lot better at night.
Fear of admitting what you want. As far as I can tell, this seems to be a very common fear that people have in all areas of their lives, from relationships to lifestyle choices to careers and, of course, to businesses. My guess is that most people avoid admitting what they really want — even to themselves — out of fear of the disappointment if they don't get it.
I’ll leave you to sort this out in your personal lives. But I’ve found that once business owners articulate exactly what they really want their business to be, their chances of getting it are better than even. Just look around at all the successful advisory firms of every size, service model and target client. To paraphrase the Wizard of Oz: They don't have anything that you don't have, except their owners knew what they wanted. So get over yourself, admit what kind of firm you want, face your fears — and build it.
--- Read 5 Sink-or-Swim Metrics for RIAs in 2017 on ThinkAdvisor.