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Practice Management > Building Your Business

Dream Teams

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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.

As a result, everyone on your staff doesn’t have to be a “go-getter.” In fact, a firm with too many superstars can create more management headaches than the opportunities they present.

Ask and Share

By now, you’re probably familiar with the five questions that I ask my clients, and anyone else who comes within ear shot, to help find their personal definition of success. I recommend that owner advisors and all their employees answer these questions, and share their answers. If you can better understand what motivates each employee, and what they want to get out of their relationship with the firm, you’ll stand a much better chance of finding the right job in which they can help you build the firm you want.

What job do you want to have? Are you happy doing what you’re doing now, or do you ultimately want to be an owner in the firm? Once both you and your employee have a good understanding of where they want to go, it will be much easier to motivate them, and to help them get there. Listen to their goals without much comment, but be honest about their potential: if you truly can’t see them getting to where they want to go with your firm, let them know that, and tell them where they could end up. If the job and the career path isn’t a good fit, it’s better you both know it now. Don’t push them to go beyond their vision: if a young financial planner would prefer to manage portfolios, you’ll be far better off with someone in that job who’s experienced and loves what they are doing.

What level of income do you need to generate? If they want a high income, then they are going to have to step into a manager, lead advisor, or rainmaking role within a larger firm. Rarely can an employee who doesn’t supervise people or work with clients maximize their income. As the business gets larger, with more assets and more revenue, there will be more opportunities to step into one of these roles. The folks who choose this path will become the leaders of your firm.

On the other hand, if doing a particular job or having a particular lifestyle is more important to an employee, a lower-level position with less opportunity for advancement may better suit them. Let them know the implications of their choice, but keep in mind that the decision is theirs.

What lifestyle do you want to have? Some employees are willing to sacrifice their current quality of life in return for career advancement, while others have other commitments and goals. As a manager, it’s your job to help them make an informed decision: where will long hours and hard work take them with your firm, and where could they go with a somewhat lower commitment? How much time do they need to spend on their work to feel satisfied with their contribution but not consumed by their job? And what other interests and needs are they not willing to curtail for their jobs? Understanding the answers to these questions will help you determine just what you can expect over the long-term from each employee.

How do you want to retire? As a financial advisor, you know very well that people’s retirement goals are a major factor in how they live their younger lives. Helping your employees to include this piece of their financial puzzle in their career decisions will not only help them throughout their lives, it will also help you gauge their level of maturity.

What are you willing to give up? Working at an advisory firm can offer the opportunity to make well into six figures as a respected professional. But to get there requires long hours and hard work (and additional schooling in some cases). It’s not for everyone, nor should it be. Their ultimate decision will require tradeoffs between income and lifestyle, the job today and their retirement tomorrow. As an advisor, you regularly help your clients wrestle with many of these same issues. It’s not too much to ask you to use some of your expertise to help your employees sort through their choices, to find the right job and career path so you both can get what you want from your firm.

Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at [email protected].