Fifteen years ago, I realized that the next step in the evolution of the emerging independent advisory business was for senior advisors to leverage themselves first, with both clerical and skilled staff, and then, with additional professionals. And I built my consulting business around helping owner-advisors better integrate and manage their growing “human capital.” 

Four years ago, my (now) partner, Kristen Luke (founder of Wealth Management Marketing) and I both realized that to go to the next level, advisory firms needed to integrate their marketing efforts with their overall business management: last year, we merged our firms and rebranded as Kaleido Inc., so that we could offer integrated business consulting, as well. 

Today, in our client firms (and throughout the industry), we’re seeing what we believe is the next phase in advisory firm growth: supporting employee innovation. That is, evolving firms that can respond to changing client needs and new markets, by enabling innovation from the ground up—rather than from the top down.

In our work, we’ve seen that as many advisory firms have grown dramatically, their owner-advisors have morphed from “hands-on” managers into essentially “corporate” executives, who are largely detached from day-to-day operations of their firms. And yet they continue to make decisions as if they were still in the trenches: they assume they know what’s going on, when they really don’t. 

This disconnect results in many “bad” decisions, which reduce operational efficiency and ignore significant business opportunities. It also stifles innovation within a firm that would have led to even more efficient operations and identified new ways to grow the business. This is a particularly big problem with firms that have opened (or acquired) new offices, in new locations: where cultural, client, and business climate differences may require different client services, target clients and/or marketing strategies. 

Consequently, we believe that the challenge for growing advisory firms today is to transfer the source of innovation from the owner-advisor(s) to the employees themselves. Here’s how we help owner-advisors to make this transition within their businesses: 

1) Hire for talent, train for skill.
The key to building a firm that can innovate is to hire people who can innovate. I know, this sounds pretty obvious, but believe me, it’s not easy to do. Firm owners tend to hire people to “solve” a specific problem: people with “experience” in the back office, or asset management or client service. But often this experience doesn’t translate well into an advisory firm. We find that firms do better to hire bright, personable, motivated people—and training them to do a specific job. (Think football coaches who draft/recruit the best athletes.)  It may take a little longer to “bring them up to speed.” But when you do, you’ll not only have an employee who will do a good job: they’ll make your firm better, too.

2) Give employees the tools they need to excel at their jobs.
As I’ve written many times before, nothing communicates a lack of seriousness about an employee’s job than failing to give them the tools to do it well. Great employees take their jobs seriously. If the firm owner doesn’t, they won’t either. 

3) Let them work their way.
First, if you need to micromanage employees, you’ve hired the wrong people. Second, if you’re micromanaging your people, you’re not doing your job. Third, the goal here is to have all your employees succeed at their jobs—and find better ways to do those jobs. If you expect them to do their jobs the way you’d do them, you’ll just have an army of clones, not innovators. The firm is not there to tell employees what to do: it’s to support them and motivate them and to reap the benefits of their skills—and innovation. 

4) Listen hard to employee feedback.
Owners who aren’t on the front lines anymore need to listen to employees who are. They’ll tell you when your bad ideas aren’t working and why. They’ll also tell you what is working, and where you should invest more time and resources. This is why you hired good employees: so make the most of them. If you’re not going to listen to them, you might as well hire bad ones. 

5) Let multiple offices define themselves.
Don’t be afraid of subcultures: different places are usually different. Let your people be who they are, and let them adapt your business to their circumstances. What works in New York City probably isn’t going to work in Atlanta. So listen to your people, and support them to do it their way: if it doesn’t work, let them try something else—until they get it right. 

6) Keep marketing flexible.
In today’s world, it’s important for independent advisory firms to have a comprehensive strategy, and a good plan to implement it. But don’t think the strategy and plan are etched in stone: all marketing is a work in progress. Some things will work, others won’t, depending on timing and location and if you have more than one. Firms need to be on top of this, and make adjustments when and where needed. Your employees are usually the best source of this feedback, too. 

7) Focus on culture.
The real job of “corporate” management is to set the culture of the business, and ensure that it permeates the whole business, including the brand and the experience of the clients. The brand is about who you are, what you do, and why you do it. Every employee should be thoroughly trained in your corporate culture, and expected to buy into it. It’s what you’re really “selling” and what your clients can expect from everyone at your firm.

A decade ago, the success of many advisory firms was undermined by high turnover among their younger professionals. The industry has largely solved this problem through better training, and support and clear career paths and succession plans.

We believe that in coming years, advisory firm success will increasingly depend on their ability to attract and retain highly talented employees at all levels. Firms that inspire their employees to drive innovation will be the most successful.