Wising Up

My newest client is one of those advisors who would generally be considered wildly successful. He has more clients then he can handle, manages some $250 million in assets, generates nearly $1.5 million in annual revenue, and brings close to $900,000 to the bottom line. To paraphrase Austin Powers, his colleagues want to be him, and consultants want to help him build an “elite” $5 million practice. But instead of reveling in the success of his model practice, he’s absolutely miserable and afraid to admit it–he goes to bed every night tired, worried, and wishing he could turn back the clock and build a very different firm.

After working with him for a few months, I realized the money and the lifestyle that comes from his “success” are irrelevant to him. He doesn’t parade around in Armani suits, drive a BMW, or belong to a fancy golf club. No, he does for himself exactly what he does for his clients–saves much of his income for his retirement so that some day he can buy a beach house in Santa Barbara and live comfortably. He wants to help people reach their retirement goals and provide high-touch client service to make sure that happens.

Instead, he works long hours, has no partners, does virtually all the client meetings himself, and although he pays his employees well above industry standards with great benefits and an amazing retirement plan, his growing staff of seven continually fail to meet the goals he sets, exhibit chronically low morale, and regularly demand higher compensation. What’s more, the single goal that he strives to achieve–high-touch client service–seems out of reach. He has a company that requires him to be a manager of people rather than an inspiration and guidance counselor for them. In his mind, he’s failed.

In dealing with hundreds of financial planning firms, I’ve noticed this disquieting trend more times than I can count: Advisors becoming disenchanted with their own practices. They get so caught up in growth–which consultants proclaim they must attain to reach “critical mass”–that they forget why they started their business in the first place. Almost always, advisors find themselves owning a firm they dislike or one that no longer motivates them to do their best work. Ironically, the more successful they become, the more unhappy they feel. The solution? Simple: before you create any kind of a strategic plan, determine your own vision of success.

Most consultants would strive to groom my “successful” advisor into a manager of people and develop an organizational structure that would solve his employee problems. But I’ve found the one-size-fits-all-grow-your-way-out-of-problems solution to small business management rarely works in the long run because it fails to address the real issue: the lack of direction by a business owner who has not found his vision of success.

Without a business owner who’s motivated and inspired by his vision of success, problems start to multiply one on top of another: uncommitted, unfocused employees will lack respect for the owner; employees who try to fill the leadership void will constantly bang heads with each other and with the owner, creating high turnover; a chronic lack and misuse of financial resources; and an unhappy owner who becomes burned out, inefficient, tardy or absent for important meetings, procrastinating endlessly, and focusing on petty issues. Such an owner drives employees crazy, and leaves the practice adrift.

In my experience, nearly 95% of firms decide to grow or keep growing, adding more clients, staff, income and assets, yet at least one third of those firm’s owners regret growth because of the lifestyle sacrifices growth demands. Managing growth in your business requires knowing exactly what success means to you. No research paper or consultant can tell you what your practice should look like if you don’t know where you want to go.

Questions to Define Success

Here are five questions that I use to help advisors find their personal definition of success. If you answer these questions honestly, you will be more prepared to accept help from an objective consultant who can help you build a business that will truly make you happy.

What job do you want? There are two types of planners. There are those who enter the profession for the long-term income potential it offers; and the ones who are driven by the need to help, motivate, and inspire their clients. There is merit in being part of this industry with either of these goals in mind, but whichever you choose will determine the role you play as owner.

If you mostly want the income potential, then you are going to have to step into a manager, strategist, or rainmaking role within your company. Rarely when growing a business with optimal income potential does the owner assume or stay in a comprehensive advisory role working solely with clients. More often an owner will gravitate toward more of a managerial role. In this case, you would spend most of your time prospecting for new clients, inspiring, training, and managing staff, or strategizing about the most effective ways to grow the business you’ve created. As the business gets larger in terms of assets and more profitable, more of your time will be focused on these activities and less on the business of creating plans or meeting with clients.