The typical advisor has likely attended multiple coaching programs, has participated in dozens of practice management workshops, and has seen more presentations of best practices than there are episodes of Law and Order. Unfortunately, the sad reality is that having done all of these things, the average advisor is probably only marginally more successful in building a business than he would have been if he simply stayed at home. The biggest obstacle on the road to building a business is usually the person in the mirror—the advisors themselves.
Building a business that goes beyond the personal skills and time of the advisor is an act of extraordinary effort that requires passion, commitment and difficult decisions. Realistically, most advisors do not want to create a business—what they seek instead is a solid income and balance of life. Most of all, most advisors seek a sense of achievement and success. Building a business may be the wrong goal to pursue to begin with.
Are You Pursuing the Wrong Goal?
Most advisors join a coaching program or attend practice management workshops because that’s what everybody does—not because they know what they are trying to achieve personally. After all, who doesn’t want to have a bigger practice, maximize profitability and create more equity value? Who doesn’t want to have six-pack abs, climb Mt. Kilimanjaro or complete a marathon? Then again, who wants to go on a stringent diet, train twice a day for months, spend all their savings on equipment and nurse bleeding feet and bursting lungs? Only a few will have the passion, dedication and the natural talent to achieve such goals.
The first question that advisors should ask themselves is “What do I really want to achieve as a person?” The size of the business and its profits are often part of the answer in my experience, but it often strikes me that we are ignoring the cost in this cost-benefit analysis. To truly believe in the goal you have to consider the trade-offs it will require. Are you willing to spend long hours working? Are you willing to give up significant occasions in your family? Are you willing to put the needs of the business ahead of relationships with other people? Can you bear the responsibility of being wrong? Can you stand the criticism of others? Because each and every one of these will happen to you as you embark on building a business. The business is a beast that feasts on your time, your energy and your money.
The advisory industry is full of the mesmerizing stories of entrepreneurs who have built great businesses. I have had the privilege of knowing many of them and in every one of those “success stories” I can think of, I know there was also a story of many days spent away from home, of having to fire a close friend and a partner, of relocating your family because of the needs of the business, of missed kids’ soccer games and badly neglected golf games. The most successful entrepreneurs I know are well-rounded people with good families. They have hobbies and are good tennis players, golfers, cooks and whatnot – until you start talking to them and you realize that there is almost nothing else in their lives that they are as passionate about as their business. It is what drives them and what makes them go and there is no plane they will not get on to pursue a deal or a client.
Most people don’t climb Mt. Kilimanjaro and run marathons. These are experiences beyond what the average body and the average life want to handle. Building a large advisory firm is another such goal—a beyond-average achievement that will tax the entrepreneur and his or her resources. I believe that just like most people would chose to run and hike moderate distances and maintain balance in their lives, most advisors would rather balance their personal and professional goals.
There is nothing wrong with creating a personal practice that, while overly dependent on the advisor, provides a balanced life and good income. It is a path though, very different from that of building a business. Some levels of income and value will not be achievable, and success will have to be measured differently—a more personal definition than just AUM or income. Most advisors can’t bear to let the opportunity go by, but don’t have the passion and conviction to pursue it. So how can you be sure that you are not missing out on what could be a fledgling opportunity?
Can You Make Decisions?
Perhaps the first step is to ask yourself if you can bear the burden of decision-making. Most people prefer to have control, but very few are willing to bear the responsibility of making decisions. The world has many more “auditors” than real entrepreneurs.
As difficult as it may be to evaluate the image in the mirror, ask yourself—how decisive are you? Can you bear the responsibility of being wrong? Can you make decisions with unclear and unreliable information? Can you stand being the “bad guy?” If the answers tend to be “no,” it may be that you will be much happier and more satisfied in a structured environment where you are not the “captain.” This does not mean that you have to work as an employee, but you may consider merging in a larger firm where you are a “practicing partner”—someone who is focused on clients and does not have to bear the burden of management. If it is not in your nature to be a captain, if you need structure, you may find it tremendously frustrating to constantly have to make decisions with unclear outcomes.
Do You Really Have A Vision?
Most businesses are invented—they are not created on a recipe. Columbus and Magellan did not get their maps from the “Seven Secrets to Discovering New Worlds” workshop. They got on a ship and told everybody that they had a vision of where it will go.
I think that most workshops and coaching programs are really filled with “involuntary entrepreneurs” who are there to find “the answer”—the recipe that they need in order to function. Having a recipe is not a bad idea—unfortunately, it is incompatible with achieving extraordinary results. You can’t say—“I am a great chef, just pass me the cookbook!” You have to invent your own recipes. You can’t build an extraordinary business on a coaching program—you will have to invent it. That’s not to say that you can’t do some darn good cooking from the cookbook. It is also not to say that the great chefs don’t go to school. It is just to say if you want to have a uniquely successful business, you have to invent it.