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The Four People Advisors Need on Their Team Before Trouble Starts

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I recently did a workshop for owner-advisors who want to take their businesses to $1 billion in assets under management at the Bob Veres Insider’s Forum in Nashville. We don’t have room here for all of my presentation, but there is one part of it that I suggest for all owner-advisors, regardless of the size of their firms or their goals: Create a team of your own advisors. No, I don’t mean the ones your hire to serve your clients. I mean the ones you hire for yourself.  

I know from long experience that you’re probably not going to listen to this advice, so I’ll target most of this blog toward Gen Xers and millennials, who I’ve found to be more receptive. But older advisors should still listen because your businesses are usually larger, which means you’ll benefit the most from this advice.

(Related: Help Wanted: Mistakes Owner-Advisors Make With Business Consultants)

Before we get to the team you need, let’s talk about why I think you need it. We’ve all heard the saying “it’s lonely at the top,” but most of us seem to think that’s some kind of joke, intended to make the rest of us feel better about not being at the top. The reality is that it’s no joke. Whether you’re running a three-person shop or Fidelity Investments, you have to make hard decisions that are often unpopular with some, or even all, of your employees.

While it’s better if your employees like you, they aren’t your friends, and you can’t treat them as such. They have their roles, and you have yours. It’s important that you don’t send messages that make them confused about that. What’s more, as advisory businesses grow, the top job tends to get more and more lonely, as your decisions have a greater impact.

Now, don’t get me wrong here; it’s always important for a business owner to get as much feedback as possible from her or his employees — and equally important is to truly listen to them. They are on the front lines and you are not. Usually, the only way you’ll know what’s really going on in your firm — good and bad — is when your employees tell you.

At the same time, you have to keep in mind that their perspective is often not (read: rarely) entirely objective. As with all of us, their views of reality can become skewed by a host of factors: rivalries, aspirations for advancement, jealousies, competitiveness, self-preservation, insecurities, etc.

All of this means that while employee feedback is essential, it’s rarely impartial. And running a successful business requires both impartial and objective information and judgment. To get this, CEOs of the largest corporations have teams of advisors who work directly for them. I’ve read that when they change jobs, these CEOs are far more likely to take their team of advisors with them than any of their employees. They are that important.

While most owner-advisors don’t need a Fortune 500 entourage, I believe they benefit greatly from a team of their own advisors. I recommend that owners create relationships with professionals in the following fields, and have them familiarize themselves with the business, so they are readily available when a need arises and for regular planning meetings. Advisors can either pay them on retainer or hourly as needs arise. Here are the players I recommend for most owner-advisors:

Attorney. Every independent advisory business needs to work with a compliance firm, and I recommend that the owner put one of the senior partners on his or her personal team. In a growing advisory business, issues involving securities laws and regulations frequently arise. I’ve found that getting competent legal input during the planning stage, rather than after the fact, saves loads of time and money.

Accountant. The same goes for accounting. Legal, tax and business issues can arise from new initiatives and unexpected events. It’s far better to have a plan to deal with them ahead of time or, when that isn’t possible, to have someone familiar with the firm on call for emergencies.

Financial Advisor. Yes, I know this is a new concept for many advisors. But the simple truth is that you need a financial advisor of your own, and it shouldn’t be one of your junior partners (who may be unwilling to tell you things you don’t want — but need — to hear). I can’t tell you how many advisory businesses I’ve come across that are struggling because their owner’s personal finances are out of control. 

(Related: 4 Reasons Why Advisors Need Financial Advisors)

Business Consultant. Yes, I have a conflict of interest here, but that doesn’t mean you don’t need one. As with the other team members, the earlier you bring in a business consultant to look at your plans, the less time and money you’ll waste on projects that had little or no chance of success.

It shouldn’t come as a big surprise that owner-advisors who view professional experts as people to call when they get into trouble tend to get into a lot of trouble. A far better strategy is to consult with experts before you get into trouble to help you avoid it. When did Noah build his ark? Before the flood.

— Read The Terrible Twos: The Key Decision Point for Advisory Business Growth on ThinkAdvisor.


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