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Practice Management > Building Your Business

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There comes that awful realization in every advisor’s life when he finds himself in the netherworld between wisdom and obsolescence. It’s that moment when the reality dawns that he might not have the passion for the job, nor the skill. It’s the recognition that “to die with one’s boots on” is neither metaphor nor joke, but the revelation that your clients and staff may no longer feel you are guiding them effectively. Yet, long before this sense of ennui arrives, the advisor may find himself at a crossroads over whether to devote time to serving clients or to managing the business because of a desire to do both well. As the leader of the business, how do you know when it’s time to step aside?

The velocity with which advisory firms are growing is accelerating this crisis for many. Each lead advisor has a physical limit to the number of optimal relationships she can manage. Similarly, each manager has a physical limit to the number of individuals she can supervise. In either case, that number depends on the practice model and the nature of the role, but it is an irrefutable fact that time is a finite resource.

This problem is more acute in fast-growing practices where both staff and clients are tugging on the advisor’s sleeves hoping for attention. Management by crisis becomes the modus operandi. How ironic that in a business where a key function is planning that its principals are reacting instead.

When the founder is creating and managing a large volume of relationships and still assumes responsibility for stewardship of the enterprise, something has to give. Unfortunately for many, their death grip on both creates an illusion of control. Common signs are statements like “there’s nobody here who can manage the practice as well as I.” “My clients will only stay if I’m involved as their advisor.” “I have the biggest ownership stake and therefore more at risk–I’m not giving up the reins to anybody.”

It seems that management transition occurs most often when advisors are close to exiting from the ownership of the business. But ownership transition should not be the catalyst for management change. By that time, it may be too late to ensure a legacy. Therefore, practice continuity and growth should be the driving forces.

Wisdom, or Obsolescence?

Most owners of practices who have gone through the early struggles of the business have far more relevance than obsolescence when it comes to making management decisions. Wisdom can be shared, and empathy can be imparted, though that presumes that the founder has not waited too long to hire and develop new leaders and new advisors.

The closer one is to the end of his career, the fewer options he has to provide for an orderly transition. It’s common practice to see advisors hire someone as their eventual salvation only to be disappointed by the person’s performance or perplexed by the individual’s lack of skills. Then what? Start over?

Recently I met with an advisor who had over the past 20 years built a substantial practice in terms of clients and assets under management. The growth was especially remarkable considering he was a solo practitioner who had only recently added two support advisors, and who for all this time had only an administrative assistant who also managed elements of the practice. Now that all his children have left the roost and his wife is more forcefully encouraging him to start enjoying the benefits of what they have sown, he was at the proverbial crossroads. Neither of the young support advisors employed by the practice was in a position to be a relationship manager, and his office manager was not strong enough, nor young enough, nor interested enough to run the practice.

The owner’s choices are: add more people at the right level to solve both problems; hire two people he can groom to serve in either a management or advisory capacity (or both); merge his firm into a larger enterprise that already has infrastructure so that he can focus on the clients he wants to serve.

Knowing that he wanted to materially slow down in a few years, he couldn’t bring himself to bring in just one person who may or may not work out. This forced him to seek out merger options with firms that already have a deep talent pool who can take over both client and practice management. This was a suboptimal decision in his mind, however, because it would cause him to officially lose control of the business prematurely.


The lesson from this and other experiences is that the leadership of a practice, regardless of size, should conduct an inventory of each person’s skills and contributions relative to the roles they are performing–including the founder.

The process of introspection will not tell you whether it is time to relieve yourself of either your advisory or management duties. It should serve, however, to provoke you into realistically examining whether you are doing justice to your staff, your business, your clients, and yourself.

Of course, clarity in itself is not the solution either. Clarity around the issues allows you to conceive of a tactical plan to begin changing the way you are operating. A big part of this is to understand yourself and what influences your decisions.

For example, do you feel the need to be in control of every decision?What would a person have to do to gain your confidence to make decisions without you? Do you feel the need to have clients recognize you as the person with all the answers? What is preventing you from elevating other staff in the eyes of your clients? Are you concerned that if you invest in the development of people, they will just leave anyway?

Is Anybody Leading?

My questions about practice management and leadership not withstanding, there are a number of advisory firms who have taken an enlightened approach to adding dedicated management. At Moss Adams, we have found that the rate of growth for those with dedicated management is superior to those without it. More than half of firms with revenue over $2 million have professional management–that percentage increases as firms get bigger.

Assuming you are persuaded to hire dedicated management, what would be their roles and to whom would they report? How will you define and measure success in their roles? Are you prepared for the short-term cash flow adding dedicated management will cost you until you are able to leverage off the new position?

The same is true for hiring advisory staff. Generally it takes 18 months for an advisory firm to digest a new hire and see that individual begin hitting her stride from a productivity standpoint. Can you manage that, and if not, what level of volume must you generate in order to free time to focus on where you make the greatest impact?

In either case, it is important to recognize that the decision to add either professional management or other professional advisory capability is an investment on which to get a return, not a cost to be managed. Done casually, the decision to hire can be frustrating if not ruinous. Done thoughtfully, owners of practices can achieve great financial and emotional fulfillment through their businesses.

Whether advisors are better tasked with management or client service is not predetermined. There are plenty of examples in which advisors have not only evolved as stellar business managers, but sometimes at a level better than they performed as advisors. It’s rather a question of which role you can perform with focus and at a high level.

As practices become more complex the decision is inevitable. But it is wise not to let fate or circumstance dictate that choice.


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