The Long and Short of Business Life

Where to Turn?

Lamentably, industry organizations such as the CFP Board of Standards do not include practice management in their continuing education offerings. Many who come into the profession are not prepared to manage, let alone lead, a practice. Many of the university programs in financial planning are under the auspices of social sciences colleges, and focus more on the counseling aspects of the profession than the business aspects. Exceptions do exist, such as Texas Tech University in Lubbock, which collaborates with their business school to offer a master’s degree in financial planning.

There are any number of reasons why it may be difficult for advisors to send their associates to places like Texas Tech or Stanford University’s leadership program. For the most part, leadership and management development fall on the advisors themselves, who may not have had much training in this realm either.

In reality, every area within a practice needs management including strategy, business development, operations, investment management, planning, compliance, and administration. Typically these responsibilities are concentrated in the hands of one or a few principals. By grooming the next generation of advisors, operations people, and business developers, owners put their businesses in a better position to capitalize on the demand for advice.

Whether practitioners generate their own curriculum or seek help from others, several essential skills must be emphasized in the development of leadership talent:

1. Clarify firm vision: Train leaders to define the business, who they serve, and what they need to do to accomplish firm goals. Align each area of management with the goals, visions, and values of the overall business. Understanding the firm’s strategic planning allows future leaders to make informed decisions for continued growth.
2. Communicate and direct: Leaders must be able to inspire others to pursue the vision and accomplish the goals of the business. While most advisors are adept at persuading clients to action, oftentimes they are reluctant to push their own associates to higher levels of performance. While some lead by position, the most effective lead by persuasion.
3. Challenge the process: As businesses evolve and grow with the clients they serve, processes often need updating. Good leaders will monitor what’s working and what’s not, and have the courage to make changes that may temporarily unsettle staff and clients.
4. Enable others to act: Perhaps the hardest part of being a leader is effective delegation. While in the short term it may be “quicker to do it than to teach it,”allowing others to make mistakes and learn helps the firm in the long run. With delegation comes accountability, so holding people to their responsibilities is a key part of effective delegation.
5. Acknowledge talent: Every good leader knows that people need, want, and deserve to be credited for their contributions to the success of the business. It may be difficult to subordinate one’s personal ego when managing a team or managing a business, but people will almost always respond to positive reinforcement. At the top of the house, owners must lead by example, applying the same encouragement to other partners and leaders in the firm.

Share the Wealth

Before implementing a leadership development program, owners of advisory firms must decide to share authority with others. Giving accountability to others should include the power to act. Of all the decisions that practice leaders need to make, when to lighten the grip on the rudder is the biggest of all.

Reluctance to entrust associates with management responsibilities is the hobgoblin of every small business owner. It’s often hard to see the people you hired have matured in their abilities and character since they joined you. Vesting in them the responsibility to help transform the practice into something greater raises a whole new level of concerns.

This shortsighted approach exists even in advisory firms that have been sold to consolidators. They have managed to transition ownership to a rollup firm or a bank, but they have not been able to develop their successors in business development, business management, and financial advice.

Unlike plants or animals, advisors have the opportunity to ensure the longevity of their firms. But they must rise to the challenge.

While industry providers are part of the solution, the trade associations, custodians, and broker/dealers can only do so much to tee up this issue for independent advisors. Ultimately, owners need to invest time, money, management, and energy in a talent recruitment and development program for their own businesses. Associates within practices need to step up and take ownership of their future as well. It’s worth it.

Building a strong practice that endures for the long term benefits both clients and the staff that will grow and succeed you.