Many independent advisory businesses and their owners are riding high these days: The stock market is up, which means that for lots of advisors their asset levels and business results are, too.
But as we all know, this market has been going up since 2008 —and that’s a long bull market.
I’m not saying that the market is going to take a nose dive in the coming year: I don’t know what the market will do, and neither does anyone else.
But I do know that if history is any guide, it will go down eventually. When it does, we’ll most likely see tough times for independent advisory firms, and tough times call for sound leadership.
This weekly blog aims to help advisory firm owners and those who would like to become advisory firm owners someday—all of whom likely will face market-related and/or other challenges in 2018. And one of the major mistakes they tend to make repeatedly—and can correct—are “listening too much” and “not listening enough.”
That may sound confusing. Perhaps it would be more accurate to say that advisory firm owners tend to take criticism too much to heart.
Consequently, they often quit listening to employees, clients, and/or others who might give them valuable information.
Here are suggestions for being a better leader/business owner in difficult and other times:
1. Try not to be driven by fear.
Everyone has fears; it’s part of being human. Most of us are of afraid of change, being wrong, being alone, letting people get too close, failure, success, looking bad, etc. The list could go on.
To be a successful business owner, it’s important not to let these fears drive your thinking.
To be a leader of any kind is to set yourself up for criticism — it just comes with the territory when you sit in the big chair.
Some people won’t like some of the decisions you make. Others, won’t like the fact that you didn’t make some decisions.
Often it will seem that you can’t win, but that’s only true if you believe that “winning” is not getting criticized.
As a business owner, your success is running a successful business. How you define that “success” is up to you: whether it’s helping your clients, mentoring young advisors, supporting your ideal lifestyle, or any combination of these goals.
Focus on what’s important to you, and don’t worry so much about what other people say about you.
2. Don’t shut people out.
Business owners who are overly sensitive to criticism tend to shut other people out. That is, they stop listening to most other people. You can see why this is a mistake. Ironically, in an industry that is based on transparency, many business owners cut themselves off from their employees.
Other people are the best source of information about your business. When you stop listening, you’ve cut yourself off from your primary source for finding out what you don’t know — but need to know
That means to be truly successful, you’re going to have to listen to your critics, no matter how painful. And, perhaps even harder, you need to determine — as objectively as you can — whether any part of their criticism is valid.
Of it is, you need to determine how to make changes and then forge ahead.
One of my younger CEO clients recently spent time listening to his custodian’s practice management department and reported back to me that he felt overly criticized by the session. Perhaps they were a bit harsh, but there was also good stuff in their advice.
I told him to be more curious than defensive, so we could objectively sort out what would be good for his business, and what wouldn’t.
3. Be humble.
With a booming bull market, many advisory owners get an enlarged ego. They may be earning more, have a bigger company and feel like they’re riding on top of the world.
There’s nothing wrong with being proud of one’s success, but the wise sort out how much of this is due to their efforts and how much comes down to luck.
I remember just after the 2008 market crash, hearing one firm owner admit: “We all thought we were Olympians, but found we were simply running downhill.”
The best firms today are preparing for a downturn: Getting more efficient, increasing reserves, and beefing up sales are actions to prepare for a downturn.
Ernest Hemingway wrote, “The best way to find out if you can trust somebody is to trust them.”
As a leader, you have to trust yourself. Trust that you know what you’re doing. Not everyone is a natural leader, but most people can be good leaders if they can learn to be more curious than afraid.