One of the biggest problems that larger advisory firms make is that they continue to act as it they are smaller advisory firms. Almost all of today’s larger firms (let’s place the cutoff as having 30 or more employees) started out as smaller firm (with less than 10 employees). That kind of rapid growth is great for owner incomes, and often creates a personal touch to client services that stays with a firm long after it’s outgrown its mom-and-pop roots. At the same time, larger numbers of owners and employees can also create problems and challenges not found in smaller firms, which require solutions that smaller firms typically don’t need.
For instance, communication in smaller firms isn’t usually a problem. With a few employees working in one large or a couple of contiguous offices, keeping abreast of changes to procedures, how to use technology, onboarding a new client, or, well, anything new in the office is virtually automatic. In fact, trying to keep some things from becoming common knowledge is usually much more of a challenge. When you’re a small firm, knowledge transfer happens quickly.
But when firms grow beyond 10 or so employees, move into larger offices, and start to form into working teams—client service, back office, financial planning, investment management, technology, marketing, compliance—communication between these factions becomes much more difficult. For instance, if the investment folks find a slick new way to navigate the CRM database, it can take weeks or months (or never) for the rest of the firm to hear about it.