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Expert's Corner: Bringing Structure to Discussions

By Joni Youngwirth

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Using a structured approach to discussing important issues in your firm can dramatically improve your decision making process. It typically results in better input from others when you need to decide issues like whether or not to terminate an assistant, implement a new CRM, obtain or drop an RIA, or how to revise a financial planning process to include a written document. If the answer to any of the following questions is yes, then a structured discussion process may be helpful to your practice.

o When you meet regularly with a group of colleagues, do the same individuals voice their opinions while others remain silent? Do you wish you could hear more often from those who seldom speak but who offer valuable insights when they do?

o Have you ever procrastinated indefinitely on making a decision because you were stuck and needed input?

o Do your group discussions get off track and waste your time?

A Structured Process

Here’s one example of a structured approach for facilitating efficient and effective discussions. Its purpose is to elicit quick feedback on a specific topic. First, let’s review the process; later, we’ll apply it to a real situation involving seven advisors. Ten minutes is the hypothetical time for the process, divided among the steps outlined below.

The Written Statement

Before you begin, the individual with an issue he or she is looking to resolve must write out a statement clearly explaining the situation and articulating the feedback requested. This often overlooked step is critical.

Step 1: Share the statement. The individual who owns the issue should read, verbatim, the written statement, which might go like this: “My right-hand person’s performance used to be great but now is only mediocre. I’ve documented this in her last two reviews, and a little progress has been made. What would you do if you were me?”

Next, the issue owner should share background information. It is especially important to include what he or she has already tried and how it worked.

It generally requires two minutes or less to introduce the issue, without interruption from group members, which sets the stage for a focused discussion.

Step 2: Questions and answers. Taking turns to stay focused, the group takes a total of two minutes to ask questions about the situation.

Step 3: Write down responses/collect thoughts. Each participant then writes down his or her response to–or thoughts about–the situation. This step typically takes one minute. Even if all participants don’t write their responses down, this minute gives them time to collect their thoughts before speaking. Another purpose of this step is to lessen the likelihood of “group think” and to get honest exposure and a wider variety of insights.

Step 4: Share input. Each participant reads what he or she has written, a step typically requiring a total of one minute. Again, participants take turns so each participant has the opportunity to speak.

Step 5: Open discussion. The group launches into discussion to probe responses, gather more information, and come up with solutions or a combination of responses. The length of time for this step varies, based on the overall time allotted for the structured discussion. If, for example, participants agreed at the outset to share 10 minutes of their time in total, the open discussion step would last about 4 minutes.

Step 6: Summarize. The individual who owns the issue summarizes the input and shares his or her decision or inclination for action.

A Real-World Example

The process sounds fine–in writing. But what happens when you try it in reality. Here’s a true story, with names changed to protect the innocent.

Bob’s practice is fee-based, with about $70 million in assets under management. He has two support staff, plus one junior CFP advisor serving in an analytical financial planning/service role. Bob is with a broker/dealer and is a registered investment adviser (RIA). For more than a year, he has thought about whether to keep the RIA or become an investment advisor representative (IAR) of his B/D’s RIA.

Bob shares his question with an outside consultant who recommends working with a facilitator to run a structured discussion during a conference call with six other advisors–three RIAs and three IARs–to gain some perspective. All are CFPs with the same B/D, with roughly the same amount of revenue, approximately 75% of which is derived from assets under management.

Before the call, Bob made the following written statement:

I need input on potentially dropping my RIA and doing all my financial planning and consulting as an IAR of my broker/dealer through its wealth management consulting program. In the last 10 years, the regulatory burden of having an independent RIA has increased. Couple that with some facts about my past and projected advisory fees:

o I charge $10,000 or less in planning fees per year.

o In the future, I intend to charge initial planning fees and ongoing wealth management fees. I haven’t decided the amounts or projected the revenue, but I am pretty certain that it will be a lot easier administratively to charge ongoing fees using my B/D’s program because I can debit existing accounts for the fees.

Other than changing my company name (I have financial advisors in my name), what are the pros and cons of dropping my RIA and affiliating with the IAR of the B/D for my planning and wealth management fee business?

Bob reads the statement above to the group.

The six participants were told only that:

o Their input was requested on an issue which another advisor was dealing.

o No preparation was required.

o The call would run from 15 to 30 minutes.

Step 1: Share the statement. After introductions, the facilitator stated the purpose of the call: an advisor wanted input on an issue, and a structured process for discussion would be followed so that the call could be kept short. The facilitator asked Bob to read his statement.

Step 2: Questions and Answers. Immediately following, the facilitator opened the floor for questions; examples were:

o Why was Bob hesitant to change?

o What are possible names for the new firm entity?

o Has Bob spoken to compliance?

o How difficult has it been to keep up with regulations?

The facilitator’s presence set the tone, ensuring enough time for Q&A before anyone jumped in with recommendations.

Step 3: Share responses/collect thoughts. Participants were then asked to take one minute to write down their reaction to, or organize their thoughts about, Bob’s request. After one participant asked, “Now what do you want from us?” Bob simply reiterated, to keep the group focused on the issue at hand, “What do you think are the pros and cons of dropping my RIA and affiliating with the IAR of the B/D for my planning and wealth management fee business?”

Moving on to Step 4: Share input, the facilitator asked each participant to share his or her thoughts. Here are a few highlights:

pros of dropping the RIA

1. Fewer regulations

2. No annual filing

3. Simpler, more flexible fee structure

4. Not an issue for clients; so shouldn’t be an issue for Bob

5. Bob can make name change work, if he positions it positively to clients

Cons of dropping the RIA

1. Name change requires cost of printing revised marketing materials

2. Maybe there is no need to change the name, as Bob may be able to call himself a financial advisor; check with Compliance

3. Signs and letterhead must change; sign changes perhaps expensive

Step 5: Open discussion. A few additional things came up when the group moved to the next phase. One was that it was unclear whether a name change was required.

Step 6: Summarize. Bob said he was clearly leaning toward giving up his RIA but intended to do a little due diligence with his Compliance department to gather information about some specifics.

Compliance will share information such as:

o Services he can and cannot offer

o A realistic quantification of the time he can save from eliminating the administrative burden if he moves from RIA to IAR

o The effect of state regulation on advertising. For example, most states don’t allow the word “advisor” unless one is an RIA, but the title “financial advisor” (clearly different from the DBA name) is allowed for an IAR of the B/D, depending on the state. At a minimum, disclosure usually needs to change.

o Details on how to administratively make the change and the impact of timing, as renewal fees for the next year are due in the fall.

o Potential new regulations regarding ERISA-related business.

Debriefing After the Discussion

The call was a beta test on the application of the structured discussion process. At the end, the facilitator invited participants to share feedback. Typical comments included:

o Stating the purpose of the discussion at the beginning kept participants on task.

o Ground rules set at the beginning were important.

o Setting time frame for each step kept group focused and efficient.

o It is valuable to have defined time allowed for each component.

o This structured system works much better because everybody participates.

o The process ensured only one person spoke at a time.

No sooner had the call concluded, than one participant e-mailed the facilitator. He had outlined the steps of the process for use in facilitating his own future calls. For the structured discussion approach, you don’t need an outside facilitator if participants are amenable to someone within the group taking on the role.

It’s interesting to note that, during the debriefing, participants learned that one of the three IARs had previously been an RIA and had already given up the RIA. Moreover, another participant–currently an RIA–noted that because of the conversation, his interest had been piqued, and he, too, intended to investigate whether it would be easier for him to give up his RIA. He added that when he got his RIA, there had not been an option to charge for planning services as an IAR.

Are There Drawbacks?

Think twice before using the process with a large group. Similar to herding cats, a structured process works better with a small group.

Clearly, the call could be replaced with a face-to-face meeting. Old-fashioned or new-fashioned, virtual or in-person, whatever medium you use, it is important to be clear about the issue addressed and the input sought. And whether you use a six-step process or only the first step, greater efficiency comes from preplanning.

A little bit of time well-spent can lead to big benefits

It is humbling to discover what we can do with 10 or 15 minutes–especially in light of how often we tell ourselves that “We don’t have time.” This simple, elegant process can be surprisingly efficient and effective. The structured discussion approach can help you maximize time, ensure that everyone is heard, streamline involvement for all participants, and yield powerful input.

Joni Youngwirth is the managing principal of practice management at Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser, in Waltham, Massachusetts, as well as an occassional contributor to IA. She can be reached at [email protected].