One of the biggest challenges that we have in getting advisory firms on the right track to financial stability and growth is changing the mentality of owner-advisors. Perhaps the most crucial step in the growth curve of independent firms is when firm owners make the transition from thinking about their practice as a “great job” to seeing their firm as a “successful business.” While there are a number of ways this happens, the most important is for owner-advisors to stop viewing the role of their employees as “supporting ” them and start seeing them as “business builders.”
Most independent advisory firms start out as one, or sometimes two, advisor shops, with an employee or two to answer the phones and enter client data, so the advisor(s) can spend his/her time working with clients and attracting new ones. The next step is usually adding someone to interface with the firm’s custodian or B/D, executing and confirming trades, downloading data for client reports.
In a firm at this stage, the advisor is the business, with the employees there to take busy work off the advisor’s desk, so he/she can spend time generating revenue. But as advisory firms grow beyond this point—adding more clients and more employees—a funny thing happens: the business becomes less about the advisor and more about the overall experience that clients have with the firm, which increasingly depends on the employees.
Don’t get me wrong: at this point, the advisors are still the most important folks in the firm. Yet the business isn’t “all about” the advisors anymore, it’s about the client service that the whole firm delivers—which increasingly depends on the employees. The point is that relatively soon in the growth curve of independent advisory firms, the whole team becomes “the business,” with everyone in the firm playing an important role on that team. The owner-advisor(s), then, need to make the mental transition from viewing him/her self as the firm and the employees as “helpers,” to seeing everyone in the firm—including themselves—as having essential roles upon which the firm’s success (the delivery of high quality client service) and growth depend.
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In our experience, this isn’t an easy transition for many owner-advisors to make.