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Practice Management > Building Your Business

Room at the Top

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Having been around the advisory business for almost 30 years, I’ve come to appreciate two qualities that distinguish financial planners from other capitalists: introspection and intellectual curiosity.

While fear of change consumes many folks, it’s a fear of not evolving that seems to propel enlightened financial advisors forward. That’s because by their nature financial planners help clients to confront their anxieties, and so are comfortable posing the same questions to themselves.

Yet one area where financial advisors are struggling to confront the fear of change is in the admission of new partners to their practices, either through merger or through internal growth and development of staff. In fact, we are beginning to observe a widening gap between the owners of advisory firms and the staffs they employ in terms of authority, accountability, responsibility, and contribution to firm growth.

Have you ever heard yourself making a statement like the following about your staff? “They could never be an owner–they don’t think like entrepreneurs.” Or, “They couldn’t develop new business if their life depended on it.” Or, “They’re too raw–our clients wouldn’t trust them or respond to them.” If you have, ask yourself why you hired them in the first place and why you continue to employ them.

Recently, an advisor asked us to help him develop a practice succession plan. During the engagement, he could not avoid criticizing the quality of his employees. I couldn’t help but ask: “If something happened to you, would you encourage your (not financially sophisticated) wife to engage your staff to advise her on financial matters.” He said “Absolutely not!” With that much confidence in his own people, I began to understand why they were not developing. In fact, it appears they were fulfilling his expectations completely.

We consistently hear practice owners express doubts about the people they’ve surrounded themselves with. Even if they have great people, they seem to expect them to learn these skills by luck or osmosis. They often are doing nothing to train and develop these skills, or rarely even set the expectation for what they want people to do.

Why don’t advisors do a better job of developing employees into peers? Many attribute it to the values–or lack of values–of the next generation. However, we are not convinced that the problem can be so easily attributed to a younger generation without a work ethic. We see too many 20- and 30-somethings achieve high performance after they’ve had the benefit of good mentoring. The widening gap is often because owners of advisory firms have not invested time, money, or trust in the development of those who work for them, and in many cases, live in fear that their employees might outshine them.

This situation is far from isolated. In our 2004 FPA Survey on Financial Performance, nearly half of the participating firms wished they could change something about their business. Second highest on that wish list, with a 20% response, was changing their staff. (At the top was a wish to change their clients, at 25%).

This widespread nature of the problem has led us to conclude that the screening process for hiring staff at every firm should include an assessment of whether you could ever envision the candidate becoming a partner of yours. If they don’t have that drive, even if they have the technical skills to be a good staff person, don’t make the hire.

As an owner of a business, your job is to create an environment in which motivated people will succeed. Reluctance to make this commitment is deeply rooted in the psyche of most small business owners, financial advisors included. If your people develop too well, will you be creating your own competition? Will they grow to the point of challenging you in terms of how many clients they serve and how much revenue they manage? If they become too successful, will they want to be owners? Can you keep them at your practice?

The last question is usually the biggest concern. The most wary advisors are those who’ve been burned by staff who have left. Often they’ll say something like: “There’s no loyalty in this business anymore.” Yet when asked, those who have left respond: “There’s no opportunity in this firm anymore.”

Unfortunately, there’s no silver bullet for people who chose to “learn from the master,” then try to replicate that in their own practice. Restrictive covenant agreements can help, but firms that create a career path, invest in the development of their people, and ultimately allow individuals to become partners tend to be more effective in locking good people into their practices. That’s because the value of being part of a larger, growing team is far more rewarding than the struggle of going it alone.

With this in mind, we recommend that advisory firms that wish to grow into dynamic practices with individuals who share their values, who will contribute in a meaningful way to their growth, and who would make good partners, embark on a strategy that encourages staff development. This plan should include a clearly defined career path, a framework for how partners are admitted, and clear guidelines on how ownership is obtained.

The Career Path

In our semiannual studies on compensation and staffing for the FPA, we are finding that there is more consistency to staff roles within advisory firms, and consequently, more clarity as to their expectations. (To participate in this year’s study on compensation and staffing, go to:

There are four distinct phases in a financial planner’s career before they should be considered for partner (see “The Career-Path Pyramid” below). Here’s how many firms break it down:

1. Analyst. This is a new hire whose primary job is to learn the basics of financial advice, do simple tasks, and become grounded in the language, concepts, and applications of what an advisor does.

2. Senior Analyst. After two to four years, an individual might rise to this position if he demonstrates an aptitude and level of efficiency in performing the basics. The senior analyst would begin to have more regular client contact, though he would not yet be expected to develop business.

3. Advisor or Financial Planner. After four to six years with the firm, an individual might rise to this level based on how well she performed as a Senior Analyst. She would be a primary liaison with clients, and, in fact, may have certain client management responsibilities. She would begin to learn the ropes of business development, have a minimal expectation for bringing in new revenue, and bear some responsibility for supervising younger staff.

4. Senior Advisor or Senior Financial Planner. After six to nine years, a person would rise to this position where he would be heavily oriented toward business and staff development, oversee the client management process and, ideally, have primary management responsibility within the practice for marketing, operations, investment policy, or financial planning.

Once the advisor achieves proficiency as a Senior Advisor, she would be considered a candidate for partner. A term of eight to 12 years is reasonable for the development of a home-grown partner. Becoming a partner, however, is not just a function of proficiency in developing a business. It must depend on the advisory firm’s economics and on certain individual thresholds that you, the owner, have laid out.

In fact, many firms are successfully admitting partners who are not responsible for business development. In this case, the advisor should at least be contributing in some form to growth of the business in terms of leadership, if not in the number of active client relationships he or she manages. In other words, someone who is really skilled at delivering advice and keeping clients happy can be worth as much in terms of partner potential as someone who brings in new clients. However, it is important that you include enough “rainmakers” when growing your partner mix or you will run the risk of failing to grow the firm.

It also important to mention that the decision to elevate a person to partner should also be based on whether they are contributing to your firm’s culture as well as to your finances. Within Moss Adams, for example, we have been attempting to integrate our statement of cultural values into staff development and partner admission. We have observed material improvement in the candidates we advance, and have subsequently shared this principle with financial advisors who struggle with the same issues. Our statement of cultural values revolves around the acronym “PILLAR”:

P – Passion for Excellence

I – Integrity

L – Lead by Example

L – Lifetime Learning

A – A Balanced Life

R – Respect for Others

Advisors who have adopted similar principles have also developed a staff evaluation process that revolves around these basic concepts. They apply these principles to appraising their staff, and for upstream evaluations that their staff conducts on them. In our own case, PILLAR is the foundation on which we evaluate all candidates for partner. Failure to follow these principals is usually the reason why an individual will not advance to ownership in the business.

While revenue production is important to the growth of every enterprise, the risk every advisor faces in promoting people who are just coin operated and don’t share your values is that you will end up with a business that you won’t like. You will also have created partners that you won’t like. Your fears will be self-fulfilling.

Mark Tibergien is a nationally recognized specialist in practice management for financial services firms, and partner-in-charge of the Securities & Insurance Niche for Moss Adams LLP, the 10th largest CPA firm in the U.S. You can reach him at [email protected].


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