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How to Make Owner-Advisors' Lives Less Lonely at the Top

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In his January 2015 Investment Advisor column, Stop Blaming Millennials for Bad Management, Mark Tibergien makes this observation: “I am beginning to think that the financial advisory business is suffering not from a talent shortage, but from a management shortage.”

The Pershing Advisor Solutions CEO goes on to explain: “My epiphany about the root cause of this shortage occurred over several months of conferences and client meetings at which I perceived an almost universal aversion to the employee recruitment and development process. Firm owners expressed enthusiasm for attracting and serving clients — and dread for handling employee issues, especially those related to ‘challenging employees’.” 

Mark is referring of course to the situation that has existed since the beginning of the independent advisory industry. The vast majority of owner-advisors are well-trained in personal finance, but have very little training or experience in business management. But with that said, we believe that this “management problem” also has been magnified in recent years by the sky-rocketing growth of many firms: and the changing roles of owner-advisors that this growth has created.

Almost all of today’s owner-advisors began their careers as advisors: working directly with clients, doing most of the “rainmaking,” and generating a large portion—if not all— of their firm’s revenues. It was an attractive position being “The Man” or “The Woman,” with virtually everyone else in the firm as their supporting cast: and many consider(ed) it “living the dream.” 

But as their firms have grown, many of these owners find themselves cast in a new role: that of CEO, with responsibility to run the firm and manage the revenue generators, rather than actually generating the revenues themselves. And while most firm owners find it nice to have a larger firm and make more money (in many cases, a lot more money), we find that many of these owners are also somewhat uncomfortable with their new role. They have a hard time making the transition from the lead revenue generator to being the leader of the biggest cost center. 

The question these owners are wrestling with—whether they know it or not—is how to continue adding value to their firm. Or rather, adding enough value to justify their significantly increased compensation.

Of course, some never figure it out, but we find that sooner or later, the successful owners realize that instead of being “The Man,” their new job is to support the “Men” and “Women” who are now generating the firm’s revenues.

Put another way, these owners come to realize that their continued success, and that of their businesses, now depends upon their employees—and that their job is to increase their employees’ success. 

This support can take many forms, depending on the circumstances and the people involved. At a minimum, it involves allowing employees to do their jobs their way, and providing the tools and training to succeed. You also need to provide a clear vision of what the firm is and where it’s going and compensation that allows employees to directly participate in the firm’s success. That yields a sense of teamwork and purpose—that we’re all in this together—and that what they’re doing matters to the firm and its clients. 

But often overlooked are less tangible forms of management that, if anything, can be even more important to employee morale and motivation.

For instance, “really listening” to their subordinates, is a skill that many owner-advisors struggle with,  especially when they are new to the role of CEO. I think that’s because it’s hard for most of us to come to grips with the fact that “it’s not all about me,” especially if has been all about ‘me’ until recently. 

To get the most out of people, you have to do more than “tell them what to do.” You have to help them figure out what to do.

This falls under the category of mentoring, in which you’re helping employees to “become” better, rather than just “doing” better. When you listen to people, you’re communicating that their ideas matter, that they can not only succeed in their jobs, but that they can help improve the business, too. You’re also telling them that you trust them, and their judgment, and that they’re building a sense of ownership in their jobs—and in their firm. 

Finally, we find that the best advisor CEOs also listen to their employees’ goals and dreams.

When you realize that your success depends on the success of your people, you suddenly want them to be working for more than a paycheck. Where do they want to go in life? Can their job, and their firm, take them there? When the answer is “yes” to both questions, it becomes part of a successful CEO’s job to support their employees’ dreams, and to help each employee reach them. 

It’s true that being CEO of your firm doesn’t have the same kind of ego trip an advisor gets when the firm is all about them, and some advisors just want to work with clients. So if that’s what you’re really looking for, then we suggest that you stick with a one- or two-advisor firm and a few support staffers. 

But if you want the benefits and the culture of a larger firm and the feeling of helping more clients than you could on your own, you need to make the transition from “star player” to “coach,” both externally and internally. That’s how firm owners can solve Mark Tibergien’s “management shortage.” 


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