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By 
January 23, 2019 at 08:06 PM
As independent advisory firms get bigger and bigger, the transition from a solo business to an ensemble firm is often left out of the conversation, which is unfortunate.
Solo firms still comprise the majority of independent firms, and the transition from solo to ensemble is probably the most difficult challenge that firm owners will face in their careers.
That’s not to say that creating an ensemble business from a solo practice is difficult. Basically, you just add another professional advisor or two, and work on getting more referrals from existing clients by serving them very well.
The real problems of transitioning to an ensemble come from the owner advisor. What some solo firm owners don’t realize when they start adding other professionals is that their role as owner changes — dramatically. Failing to prepare for, and be comfortable with, those changes can lead to serious problems.
What to Expect
The first challenge that solo owners can face stems from their expectations. Typically, solo advisors start to think about adding more advisors when they are attracting more clients than they can handle by themselves.
At this point, they’ve usually maxed out their time and are looking to share their workload, so they can spend less time in the office and start taking vacations again.
These are worthy goals, but they aren’t realistic. It’s true that adding new advisors will increase the firm’s capacity to work with more clients, but the owner now has to manage those new professionals. And while firm owners may increase total revenues over time, chances are they won’t gain much more “free” time.
Another major change that comes from adding professionals is a “loss of control.” And this loss is not an illusion.
A solo firm owner with support staff knows what’s going on with every client, with the firm’s employees and with its income and expenses. This leads to the feeling of being “in control” and to having a sense of security for the business..
By bringing on another professional or two, that equation changes — and so do those feelings. Suddenly, the flow of information and communication shifts. And the owner has to make more of an effort to stay on top of what’s going on in the business.
Feelings That Count
Not only does this take up more of their time, but owners typically start to feel a loss of control, coupled with a sense that their success depends a bit less on their own efforts and more on what other people in the firm are doing. This can lead to feelings of insecurity in one’s business.
