These days, with the stock market rising to record levels while advisors face margin compression and increased competition from robo-advisors and breakaway brokers, more firm owners than ever are reaching out to business consultants for help. Yet in my experience, many of those firms won’t get the help they need — or maximize the help they get — for one simple reason: Their owners aren’t ready to work with a consultant.
Over all these years working with owners of advisory firms, I can usually tell within the first two prospect meetings whether an owner-advisor is ready to take advice. If they aren’t, I know that I’ll just be wasting my time and their money. I’ve learned that building successful advisory firms requires three things: the drive to create the business you want, the humility to admit that you don’t know everything, and the confidence that you can do it. Then nothing can stop you.
Without those three traits, firm owners are prone to making mistakes that make it nearly impossible for a business consultant to help them reach their goals. Here are six of the most common roadblocks that I’ve seen owner-advisors run into.
1. Assuming they know what the problem is. “We need an organizational chart,” or “a compensation plan,” or “a succession plan,” or “new technology,” etc. If I had $10 for every time an initial client meeting started this way, I could launch my own custodial platform. There seems to be a part of the human psyche that takes great comfort from knowing the reason for our failures or shortcomings. The problem is that nine times out of 10, thinking that we know what the problem is prevents us from finding out what the real problem is.
I’m not saying that you shouldn’t have ideas about what your firm needs (heck, you’re going to have them anyway), but to get the best results from working with a business consultant, keep your ideas to yourself — at least at first. Let the consultant do her or his own evaluation of where your business is and what it needs to be more successful. Then listen to the assessment and, most importantly, the reasoning behind it. If you’re not convinced your consultant is on the right track, at that point you can reveal your theories and have a discussion about which vision makes the most sense. However, you’ll need to check your ego at the door: Good business consultants will have seen hundreds of firms like yours and, most likely, the dismal results of solutions just like yours.
2. Wanting the consultant to validate them. In my experience, this is the motivation of the majority of firm owners who are not ready to take business advice. Deep down, whether they admit it or not, they are looking for someone to say, “Wow, what a great firm. It’s hard to believe that it isn’t more successful, but I’m sure it will be if you just keep on doing what you’re doing.”
Now, come on back from Fantasy Island. Sure, it’s possible that a consultant will say that about some of the things you’re doing. But, honestly, if it were true across the board, you wouldn’t be looking for a consultant, would you?
The truth is that independent advisory firms are relatively simple small businesses, and their owners tend to face the same challenges and try the same solutions. It’s not that business consultants are any smarter than advisors are, it’s that we’ve seen these same challenges and solutions and outcomes over and over, hundreds of times. We have a pretty good idea that when you are facing X and you do Y, you’ll get Z.
The most successful firm owners set their egos aside and benefit from their consultant’s experience. No, we’re not right all of the time — some firms, with some owners, in some markets really are different — but we have a much better chance of finding a successful solution than trying one that’s consistently failed in many other cases.