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Practice Management > Building Your Business

Formulas For Success: When Followers Lead

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For as long as I have participated in organizations, I have heard some variation of the adage, “Leaders are born, not made,” or the contra position, “Leaders are made, not born.” I suspect that both concepts are true. Individuals who have an innate sense of responsibility and a drive to succeed will usually not leave the steering to others when there is a feeling that the group, the business, or the family is drifting off course. We often do not notice those leadership traits until confronted with a crisis, a difficult decision, or an urgent circumstance. It is fair to say that all three of these conditions exist in the advisory world today.

The drop in net worth and client confidence, with no obvious way out, presents us with crisis. The decline in revenue, profits and income presents us with many confounding decisions. This combination of negative pressures forces us to act decisively and with a sense of urgency so that our business, our client relationships, and our personal wellbeing are preserved.

So, who will rise to the occasion? It is common for people to confuse ownership and leadership. Many even confuse management and leadership. Leadership is a trait, whereas ownership and management are states of being. Some lead by position–CEO or owner–others lead by persuasion, with clear direction, conviction, communication, and inspiration.

Those who lead by position use leverage and title to achieve their goals; but often this style does not result in an enduring achievement. Those who lead by persuasion are focused on creating a culture of commitment to the shared goals. Why is this important? Because the essence of an organizational culture is what people will do when you are not looking.

As advisory firms become larger and span of control becomes more strained, they often do not have enough formal leadership positions available for people to occupy. This void is when we find followers emerging as leaders in their own right.

What defines a leader? There are seven characteristics that I consistently find in the people I have come to regard as leaders:

1. Vision

2. Decisiveness

3. Focused on results

4. Ability to delegate

5. Ability to develop people

6. Empathy

7. Managing risk


Many years ago, I was in Alaska during the time of the annual Iditarod Trail Sled Dog Race. A local I had come to know liked to say that the view only changed for the lead dog. That metaphor for business leadership has always stayed with me.

Individuals with vision have a plan–a picture of what success will look like. This framework allows them to think more clearly about the resources needed and where the pieces will fit into place. Much like the box cover of a jigsaw puzzle, when you see the final outcome, you can begin to coordinate the itty-bitty pieces into a successful result.

In the advisory business, I find that there are two predominant ways that practitioners think: strategic vs. tactical, or conceptual vs. linear. Both approaches for developing an outcome are critical and complementary, but also tend to present interesting conflicts. The linear or tactical thinker will try to ask the question, “How do I get there more efficiently?” The conceptual or strategic thinker will try to answer the question, “Am I heading in the right direction?” One thing is certain: if you are heading in the wrong direction, you do not want to get there more efficiently.

There is a compelling book written by Daniel H. Pink entitled “A Whole New Mind: Why Right-Brainers Will Rule the Future.” The author argues that we are entering a conceptual age, where linear-type processes like accounting and computer programming are being outsourced because it is a more commoditized function. Pink says that the truly valuable people going forward will be designers, inventors, and storytellers–individuals who draw on creative strengths. Management trends indicate that he may be onto something. We have experienced the outcome of an era in which major businesses have been run by accountants, investment bankers, and programmers. Are shareholders wholly satisfied with that outcome?

So who in your organization consistently demonstrates conceptual strength and an ability to envision an outcome that others can rally around? Are you tapping into your own creative abilities to set the right direction for your enterprise?


At a recent conference for financial advisors, I posed the question, “Who feels that you acted quickly enough amidst the market meltdown?” Very few raised their hands. That is nothing to be ashamed about because it would have been difficult to predict that the events surrounding Bear Stearns, Lehman Brothers, auction rate securities, Bernie Madoff, and TARP would have become a part of our weekly routine, let alone individual defining moments that impacted our business.

But in the aftermath, how did we handle the crises and act to mitigate the damage? Much like the U.S. Airways pilot who landed his plane in the Hudson River without losing a single passenger, we could have done nothing to stop the market disaster. However, we could have acted to limit the damage. Pilots are trained to override their fears, their natural tendencies, and take action that at times may be counterintuitive. In business, certain individuals demonstrate that same trait by quickly gathering facts, considering points of view, and acting decisively, even when they do not have consensus or unanimity of opinion.

Focused on Results

Individuals who regard themselves as “idea people” are a dime a dozen. Ideas without the ability to execute are dreams. I have never known good leaders to fantasize their way to success. The critical part of developing a vision is translating this picture into actionable ideas, assigning responsibility to the right people, and holding them accountable for the outcome.

Excellent leaders also allow for introspection. And the best leaders became so after having made a series of mistakes. Without learning from those experiences, they would have been destined to repeat them for the rest of their careers.

Ability to Delegate

Delegation is more of an attitude than a process. One’s ability to effectively delegate requires confidence in the person to whom we are assigning the task, a belief that it is better to use delegation as a way to teach people new things, and an acceptance that the person to whom we delegate will probably make mistakes.

Effective delegators are those who are clear about what they are asking someone to do. They set boundaries, such as time, communicate the desired outcome, and execute a process for monitoring without taking over the assignment.

For many entrepreneurs, this is very hard. How many times have we heard ourselves saying, “It is faster or easier to do it myself than to teach somebody else what has to be done.” While this may be true the first time, it certainly is not true for the rest of your career. If you are an advisor, how much sense does it make for you to be the receptionist, handle trades, and input data into financial plans? Is that where your greatest value is?

When you learn to delegate correctly, you experience the power of operating leverage, as well as the fulfillment of giving other people challenging jobs in which they will continue to learn.

People Development

One of the great clich?s of American business is that “people are our greatest asset.” Unfortunately, businesses make this expression trite by failing to invest in the process of matching the right people to the right job, by not helping them to realize their potential, and by creating an environment in which people are unmotivated.

A good question to ask yourself is whether you have ever been mismanaged. Then, examine your own processes to see if you apply those mismanagement techniques to your own staff. Here is a good test of whether your people development is working: when you give individuals increased responsibility, do they develop a successor to take on their old job? Those who are grooming people who can replace them are demonstrating excellent leadership traits and confidence in their own progression.


This is a good catchall term for the intangibles that make for a good leader. Included would be active listening, clear communicating, an ability to persuade, and an ability to relate.

A big challenge for leaders is confusing the roles between being the boss and being a friend. Empathy should not be interpreted as the need to coddle. The key is to remember your roots, distinguish chronic complainers from those who have legitimate issues, and bring closure to matters.

One would think that this would be a natural role for advisors who must act in this capacity when working with clients. But, for some reason, co-workers and employees are not regarded the same way as big clients.

When others on your team see that you understand their point of view, that you give consideration to their perspective, and you take into account whatever demons they are dealing with, then you give yourself the credibility to ask people to work longer, harder, and smarter.

Managing Risk

Ultimately, the best leaders are those who are not so blinded by growth that they forget to consider the downside. Effective leaders in this business systematically evaluate risks to their business in the form of client acceptance, in appropriate behavior by employees (and themselves), and in not skirting the gray areas of compliance or regulation for financial gain or to appease a client.

Especially in the aftermath of the Market Cataclysm of 2008, leaders who can instill a culture of safety in their business will go a long way towards reinforcing the priorities of the firm.

Who Will Emerge?

The business of financial advice has not been under this much pressure for many decades. Not only is the industry seeking credible and capable leaders, but individual firms are attempting to mine their human capital for those jewels on their team that will bring a new light to their enterprise.

The individual leaders who will emerge from this mess will have demonstrated the capacity to build trust, encourage debate without rancor or recourse, create commitment, enforce accountability and focus on the outcome. They may already be in positions where this expectation is thrust upon them. More likely, they are sniffing out their opportunity to come through the window that you could open up for them.


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