Who’s Responsible?

Recently, an advisor called me for help. He said his employees weren’t motivated, and he needed a better compensation program to improve the situation. I’m all about improving advisor’s situations by motivating their employees, so I agreed to help. But, as I gathered information about his employees and the jobs they do—in order to match their jobs with their compensation—I realized that the firm’s compensation structure wasn’t his problem: He had six employees each doing five or six different jobs, with most of them overlapping. While it’s almost impossible to construct a comp plan to reflect those kinds of contributions, the problem was in the organizational structure of the firm. I asked him why he thought the problem was the comp structure. He said, “Because my employees keep complaining that they aren’t being fairly compensated for what they do.” No kidding.

This is a very typical situation in advisory businesses. Advisors notice a problem such as a lack of motivation, or they hear a complaint and automatically jump to what seems like the “obvious” solution. In my experience, more often than not, as in this case, they haven’t actually identified what the real problem is. So, it should come as no surprise that their “solutions” rarely achieve the result they were looking for. So, then they jump to the next “obvious” solution, which yields similar results, as their firm sinks deeper and deeper into a stressful work environment and declining quality of client services. A much better approach would be to take the time to properly identify the problem before launching into the “obvious” solution.

In my experience, 95% of all problems with independent advisory firms result from the same problem as the above example: poor or no organization of the firm’s workload. I know that sounds like an exaggeration, but believe me, it’s not. People feeling unfairly compensated, feeling overwhelmed, lacking motivation, performing poorly, projects and tasks falling through the cracks, resistance to new projects, slow firm growth, lack of advisor leverage, and poor client service can almost always be tied back to a lack of organization.

Now, I’m not talking about the kind of organization typically found in an “organizational chart.” Org charts usually just show who reports to whom. What I’m talking about is which jobs everyone in the firm is really doing, not just their job titles on some chart. Someone may be called a “lead advisor,” but if they are also the compliance officer, they are wearing at least those two hats, and probably more. Someone else might be the “back office” person, processing and confirming trades in client portfolios, but if they also manage the firm’s technology, help create and mail the quarterly reports, and scan documents and keep client files to date, their actual performance and workload can be hard to track.

So, when an advisor’s employees exhibit or complain of any of the above problems (or just about anything else), the first place to look is who’s really doing what in the firm. Often, an owner/advisor will think he or she knows, but all too often, they don’t. Consequently, they can have a distorted view about what each employee’s job is really like, and how their firm really operates. The first step to getting a handle on what’s really going on is to have a staff meeting to discuss all the tasks that the firm performs, for anyone at any time, from answering the phones to contacting the clients to creating financial plans, and everything in between. Next, beside each task, write down who performs that task and if they perform it all the time, occasionally, or just once. It’s important to be clear that you’re not asking anyone to “rat out” their co-workers, but to show how important it is for the firm and the employees that everyone gets a clear picture of who is really doing what tasks. In some firms, it may be necessary to do this in private, employee by employee, to get truly open and honest answers.

Once you have the lowdown, I’d be a rich woman placing bets that the picture which emerges will be vastly different from what the firm owners think it is: with people performing tasks far afield from their job descriptions or management’s knowledge. That insight is the first step toward addressing the real problem. Armed with an accurate picture of how things get done around the firm, it’s usually pretty easy to see why some employees feel overwhelmed, underpaid, or underappreciated—and who’s stepping up and who isn’t.

Typically, what’s happened is that as the firm has grown, what once was a reasonable workload for all the employees became more than some employees could, or were willing to, handle. Consequently, they tend to shift some of their work onto more capable or good-hearted employees. But at some point, even the best of employees exceeds their maximum capacity, becoming burned out, disgruntled, and even “problem” employees. This is one of the reasons that the “firm structure” problem is hard to identify: The best employees often appear to be the biggest problems, when in fact they aren’t the problem at all.