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Practice Management > Building Your Business

20/20 Vision: Why You Can’t Rely Only on a Visionary

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My clients are always giving me business books. Actually, not just clients; I have random people send me business books. Sometimes, they’re books that validate the ideas I use in my consulting, but more often, they contain “new” ideas that resonated with an owner-advisor.

It’s sweet that my clients think of me, but I have to admit, I’m not crazy about the books. I guess validation is nice, but I don’t really need it for strategies I know work in advisory firms, and most “new” ideas are just repackaged old ideas that we already use or have found not to work in the advisory world.

When one of my prospective clients recently sent me a copy of “Traction” by Gino Wickman, I welcomed it with an eye roll. Still, I brought it along on a business trip — but only to put me to sleep on the plane. Imagine my surprise when, upon seeing the book in my hand, the guy sitting next to me started telling me how “Traction” has changed the way he runs his business and how much more successful he is as a result.

After talking with him for half the flight, I felt compelled to give it a read. Not only did “Traction” validate our approach to creating great employees, it gave me valuable insights into the dynamics of a great firm, which not only has helped my business, but when translated into the roles in advisory firms, will help independent advisors as well.

There are a lot of “Strategic Coach” ideas in “Traction” (in fact, Dan Sullivan wrote a blurb for the front cover), but for me, and I suspect for most advisors, Wickman’s big insight comes in Chapter 4, titled “The People Connection.” In it, Wickman focuses on “putting the right people in the right seats,” a concept he credits to Jim Collins’ “Good to Great.” Wickman’s contribution comes in spelling out exactly what this means in a business context: “The right people are the ones who share your company’s core values. They fit and thrive in your culture. They are people you enjoy being around and who make your organization a better place to be.”

To understand this concept in an advisory firm context, owner-advisors first have to have core values, or perhaps more accurately, have to articulate their core values in a way their employees can understand and relate to. As I’ve written before, this is far easier for independent advisory firms than many other businesses. Virtually every firm founder that I’ve met started their business to serve their clients better than they could in a more corporate setting or, in some cases, even another advisory firm.

Financial advisors make a dramatic, tangible impact in the lives of their clients. OK, maybe it isn’t curing cancer, but providing for one’s family, sending children to college, caring for elderly parents and funding a comfortable, enjoyable, healthy retirement are all right up at the top of most folks’ priorities. Working in a business that makes these things happen is a core value that many people can buy into. When owner-advisors take the time to spell out exactly why they do what they do, it’s not hard to find employees who buy into their core values.

“The right seat,” according to Wickman, “means that each of your employees is operating within his or her area of greatest skill and passion inside of your organization, and that the roles and responsibilities expected of each person fit with his or her ‘unique ability’ [taken from Strategic Coach].”

Notice here that he’s not just talking about the right person for each job, but that each job is spelled out in such detail that the employee and everyone else knows exactly what each job is and what’s expected of that employee.

This is a particularly important point for growing advisory firms that typically start out with a few employees, each doing some of everything depending on what’s needed at the time. While this organized chaos may work for a time, it’s a long way from getting the most out of each employee—or out of the team as a whole. Wickman put it this way: “A hazy structure may have gotten you to where you are, but it will not take you any further.”

So far, these ideas have been taken from others’ work, albeit with Wickman’s talent for clear explanations. The next step—how to create “the right seats”—is his unique insight (and the one that changed my perspective). To do this, he’s created what he calls an accountability chart, which is sort of an organizational chart on steroids. Here’s how he explains it: “The accountability chart starts with a fundamental belief that there are only three major functions in any business, and those three functions make every organization run, regardless of whether it’s a startup business or the largest company in the world.”

Wickman’s three functions are sales and marketing, operations and finance. He may be right in a general sense, but I’ve found that when it comes to advisory firms with, say, less than $1 billion in AUM, it’s more helpful to lump “finance” in with “operations,” which also includes back-office and clerical functions. Then, break out the two “advisory” functions—advice and client experience, and investment ­management—creating four key functions.

Next in Wickman’s accountability chart, these key functions are managed by two positions: an “integrator” who manages the key functions, and a “visionary,” which he calls his “greatest discovery.” Here’s how Wickman describes these visionaries: “They are typically very creative. They’re great solvers of big ugly problems (not the little practical ones), and are fantastic with important clients, vendors, suppliers and banking relationships. The visionary typically has 10 new ideas a week; nine of them might not be so great, but one usually is, and it’s that one idea that keeps the organization growing.”

This concept of visionary was my biggest takeaway as well: It helped me better understand the dynamics in my business and advisory businesses as well. In advisory firms, the founding owner (or one of the founding owners) is often the visionary. They understand personal finance, and more importantly, they understand their clients: what they need and what they want. That’s why they tend to be good rainmakers as well as good advisors. It’s also why they started their businesses: to create a firm that can fulfill their vision of how clients should be serviced.

What most independent advisors are not good at is building a business that will fulfill their vision. That’s why they hire us, and if they grow large enough, ultimately need to hire an in-house “integrator” to take the business to the next level. In fact, 80% of firms I’ve worked with don’t have an integrator. The 20% that do have owners with both visionary and integrator skills are my easiest clients. Essentially, all they’re looking for is validation.

As their firms grow, the role of the visionary (while never unimportant) becomes less important, while the role of the “integrator,” the manager of the business, becomes more important. An increasing portion of revenues comes from existing clients, as client service and client experience becomes more important than bringing in new clients, and managing costs becomes the biggest factor in the bottom line. Consequently, this transition becomes the biggest challenge for most owner-advisors.

This is not an easy realization for most founding owners to accept. Yet it’s essential if they want their businesses to grow, not beyond their vision, but beyond their ability—and if they want to create value in a business that someone will pay for. What’s more, it’s essential for an internal succession. The heads of three key divisions in an advisory firm—sales, operations, advisory or investment management—plus the integrator and the visionary make up the leadership team. Ownership in the firm needs to be transferred to one or more of these leaders in a way that will continue to provide a balance of vision and management, while maintaining harmony and cooperation among the firm’s leaders.

The visionary component of the leadership team is the hardest to replace, perhaps even more so for those owner-advisors who have both visionary and integrator skills. Some firms attempt to move ahead without it, either managing the firm by committee or elevating the firm integrator to the managing partner role.

Without a visionary to provide a clear direction for firm growth and find creative solutions for problems when they inevitably come up, the growth of the business will be severely hampered. While the independent advisory industry wrestles with its succession from the baby boom generation of owner-advisors, I suspect its biggest challenge will be finding—or developing—the next generation of visionaries.


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