Growth, Growth, and more growth. These days the financial advisory community is obsessed with growth. Broker/dealers and custodians are ever less subtle about pushing their advisors to grow their practices into larger businesses, and as you likely know, there are myriad experts lining up to tell you just how to do it.
In these columns, we’ve discussed how potentially disastrous it is for advisors to just blindly follow the herd and grow their practices without considering whether that’s what they really want. We’ve also tried to provide tools to help you decide what your ideal practice would really look like, so you can build a firm that supports your personal definition of success rather than modify your goals to serve the firm you’ve created.
It’s occurred to me recently, however, how deeply this drive to grow permeates many advisory practices, creating a standard of growth for all employees. I fear I’ve even contributed to this myself, with my not infrequent insistence that to attract and retain high-quality employees, advisory firms need to have clear career tracks that include the potential for firm ownership. While it’s true that a career path is important to most young professional advisors today, I don’t mean to suggest that all employees are, or even should be, career oriented: some folks who can make a substantial contribution to the success of your practice may have reached, or will soon, a level beyond which they don’t want to advance. As an effective manager, it’s up to you to gauge what motivates each of your employees, and to get the most out of them by helping them to get what they want out of their job.
Many of you may have already experienced what I’m talking about. As your firm grows, there are plenty of opportunities for employees to move up the ladder: your first administrative assistant could become office manager; receptionists can move into the back office; support planners become lead advisors, and then junior partners.
Yet one or more of your employees may well have no interest in moving up. While flattered by your confidence in her, your admin assistant turns down the opportunity to become office manager, the support advisor who manages your investment portfolios declines the opportunity to take responsibility for clients of his own, or your best lead advisor turns down your offer of partnership in the firm. Each of these situations is far more common than you would think, with the latter development–advisors turning down firm ownership–becoming quite common in today’s larger firms.
It’s Business, Not Personal
Unfortunately, many advisor/owners view an employee’s reluctance for advancement as a lack of personal drive, or sometimes even as a lack of loyalty or commitment to the firm. With that point of view, it’s easy to see how relationships can quickly go down hill, often resulting in the employee eventually leaving the firm. Although it may be hard to see at the time, this is truly a lose/lose situation: the employee has lost a job at which they were good, and would have been happy to do for years to come; the firm has lost a valuable employee, along with its investment in that employee’s training, and the time it will take to recruit and train someone to replace him.
As a manager of human resources, firm owners need to understand that their personal definition of success is not going to be everyone’s definition. Just because you’ve committed to put in the long hours and heavy workload required to grow your practice doesn’t mean that all your employees will be willing make that same sacrifice. That doesn’t mean they can’t continue to be valuable members of your successful team. It all depends on your ability as a manager.
In the early years of an advisory practice, the owner advisor and her one- or two-person staff will probably have to put in some long hours to get new clients set up, send out quarterly reports, etc. That’s to be expected, and pretty much business as usual in a startup firm, as long as your employees are willing and you fairly compensate them for their contributions to the growth of your practice. But as the firm grows, and your process becomes more systematized and client work becomes more routine, the long hours, at least for many of your employees, should gradually become the exception, rather than the rule.