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Practice Management > Building Your Business

Aligning With Your Message

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When asked about their most valuable asset, advisory firm leaders typically laud their organization’s people. Certainly this messaging connects with the market, but are you sure this professed priority aligns with the realities of your firm? Do your own people see the image you portray?

Recently I participated in a meeting during which the partners praised their team, saying that they are the primary reason clients choose the firm. Based on the body language of some of the younger employees, I could see that this statement touched a nerve.

One of the millennial employees finally gathered up her courage to say, “If it’s true that your people are your greatest asset, then what are you doing to demonstrate to us how much you value that investment?” This brave question rendered the room silent until one of the partners asked her to explain.

Nervously, she went on to say that although she is happy at the firm, she often feels that the partners are interested only in how she supports them and not in her career development. She expressed her desire for dialogue around areas they think she should work on, and for encouragement to develop new skills or get exposure to other parts of the business. This employee described how she and her contemporaries share the same passion for excellence as the partners — and truly love working with clients — but know that the firm will not be the final stop on their trip to fulfillment.

I’m paraphrasing here, but this sums up her point of view. Leaders should take heed. The future of your enterprise depends on satisfied employees who wish to move the firm forward. This episode highlights some important tips for leaders: First, never use a positioning statement that does not resonate with your entire staff. Second, never invoke the quality of your people without demonstrating how you tend to their lives, their work and their careers. Finally, if you discover an internal disconnect regarding your culture, take inventory and then take action to resolve the conflict.

The need to create a unified firm culture relates to one of the greatest challenges facing advisory firms today: the shortage of talented new professionals. According to Cerulli Associates, our country currently has roughly 40,000 fewer financial professionals in all channels than existed in 2008. Add to this the rising average age of advisors and something must be done.

Financial services has characterized the human capital crisis as a “talent shortage,” but truth be told we also face a management deficit. Our industry struggles to recruit, retain and develop talent, and this difficulty cannot be attributed solely to our profession’s reputation as an undesirable place of work. This stigma contributes to the problem but remember, except for the big banks, insurance companies and brokerage firms, most financial advice is delivered through small businesses that operate as registered investment advisory firms or through affiliation with independent contractor broker-dealers.

Cerulli Associates reports that since 2008, the captive wirehouse brokerage world has seen its market share drop from a high of 42% to 36% today. As a result, the big firms have been trading senior experienced people amongst themselves instead of focusing on recruiting new talent. Meanwhile, as reported by Meridian-IQ, 744 new RIA firms opened in the past year. The relatively small size of most new firms means they often lack a human capital executive to develop a system for recruiting talent and developing careers. So not only are people shying away from the profession, but big firms are not hiring new people and small firms face management challenges.

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The talent problem in financial services has reached a crisis point. The oversupply of clients and scarcity of people providing financial advice also presents an opportunity, however. Firms seeking to capture talented employees have the chance to position themselves as the employer of choice. This can be done on a local or a national level and it can be aligned with your messaging. To maximize this opportunity, advisory firms must begin with a tough self-examination:

  • What will it take to make our people feel engaged?

  • What will it take for our staff to agree that people are our differentiator?

  • What compels people to join our firm?

  • What compels them to stay?

In a way, it’s like developing a strategy to attract and retain clients, but with an inward focus on creating capacity, business continuity and growth. What an epiphany to realize that your best employee is more valuable to you than your best client!

As with investing, a bull market for talent camouflages many sins. Our current environment necessitates the development of a true differentiator in the talent wars. Leaders need to define and manage to three key areas within their firm: the nature of the work itself, the nature of the worker filling each role and the nature of the workplace.

Nature of the work. Advisory firms commonly write job descriptions in terms of function and duties. Rarely do they include an indication of what success in the role looks like. Define exactly what personal qualities and aptitudes are needed to perform the job effectively. Many leaders like to blame younger generations for lacking a strong work ethic, but the truth is that the best firms are having no difficulty maximizing the potential of Generations X and Y.

Nature of the worker. Once you have a clear idea of the nature of the work, you should be able to identify the optimal characteristics of the person filling that job. If the role is repetitive and routine, for example, it will appeal to a focused type rather than to a multitasker. If the role requires on-the-spot judgments and responses, such as in client service, your job process must allow for more autonomy than control.

Nature of the workplace. Finally, create an environment in which motivated people will flourish by minimizing the distractions, or what some human resource people call “dissatisfiers.” Having matched the right people to the right jobs, you want to help them focus on their work without frustrations such as poorly performing technology, a bad boss, a toxic work environment or even abusive clients.

With these important defining factors in place, ensure that your vision for the business aligns with that of the people you count on to execute the plan. Be clear about what you value as an organization. Craft a statement of cultural values that includes phrases like passion, intellectual curiosity, lifelong learning, leading by example, accountability and respect.

A statement of cultural values by itself is not sufficient. You must institute a method of evaluation based on the qualities you expect, both for employees and partners. Upstream evaluations of how the partners in a firm treat others provide excellent teachable moments for even the most seasoned founder. I have yet to meet a person who has achieved perfection in all aspects of his or her life. Extending the human capital plan to the top demonstrates the firm’s total commitment to its people.

The decision to work with a firm usually hinges on the client’s strong personal connection with the advisor. Likewise, prospective employees wish to connect with the leader’s vision and statement of value. To attract talent to the firm, leaders must reinforce their commitment to their people with a concrete plan and consistent behavior. Together, leaders, veteran advisors and new employees can invest in the future success of the business.