Let’s talk about the power of multi-advisor practices in the wealth management industry — also referred to as “ensemble practices,” based on the work of Philip Palaveev. You can chart the course and issues many practices encounter to a lesson learned from the legendary classic rock bands and artists of our time.
Ensemble practices can allow you to increase scale, efficiency and talent when done correctly. Ensemble teams are not new, but they have become more important over the years to help gain growth and leverage resources.
To build an ensemble practice, you need philosophically matched “band members” who embrace a vision larger than themselves, will accept mutual accountability, and expand your act. Keep in mind, as your team grows, you may face internal communication challenges without proper systems — which causes internal strife.
How your practice comes together and operates can predict whether your band stays together or has shake-ups along the way.
Legendary Teams and Rock Bands
Ensembles — whether bands or firms — require a common vision and agreements that must be in alignment, otherwise you may only have a few hits. Some bands have stayed together for decades, many with their original members, and some break up over misaligned philosophies, disagreements, money, outside influences or ego.
When advisors align, share a practice manager, assistant or paraplanner, what happens if there are creative differences over time?
When a musical band released a 12-inch vinyl LP album, there was a finite number of songs that could fit on the physical release. For bands that had multiple prolific songwriters, this meant that not every artist’s full work would make the album. This caused challenges within some bands and many artists would release solo albums to have their art showcased — a disruption in some cases. Further, some band members wanted to experiment with new sounds over time. This was not always agreed upon by other members who did not want change.
There is a similar situation in many advisory practices. There is a finite number of initiatives that can be implemented at any given time based on capacity, budgets or client needs. It can cause resentment when some advisors or staff members want to make changes and their ideas are not considered. Some of these changes are proposed without any input as to what the firm’s clients or niche market really wants. When you align practices under a shared firm, the goal is something larger than yourself. You are partners; the vision of the business and the needs of the clients are overarching.
If an advisor tries to unilaterally makes changes to workflows to fit their needs, your shared assistant may get frustrated balancing each advisor’s requests. Your paraplanner may have to constantly modify their systems to accommodate each adviser’s changing methods.
In the beginning, most advisory teams come together in full alignment. It is over time that market trends, evolving clients, revenues or new technologies cause some team members to question the vision. If some members want to make changes, how do you overcome the conflict?
Remember, It’s About the Client
One consideration is to always have the pulse of the firm’s clients and niche markets. You have to consider what is best for the firm and agree that the firm exists to serve the clients. If your team is continuously interviewing clients on ways to elevate the overall experience, the clients’ input helps decisions become clear. If you are listening to prospective clients and staying abreast of trends in your niche market, this will help dictate your direction. It is hard to debate what the majority of clients want. This can be a baseline for common ground.
Let’s be clear. There is a strong benefit to having different skill sets and points of view in an ensemble practice. It brings new ideas, creativity, and different approaches or strategies to planning. The issue comes if too many songwriters can no longer agree on common ground. It can create resistance to new ideas or a lack of regard for another team member’s point of view. In cases like these, one of the songwriters or band members may leave to pursue a solo career. If you keep pace with what the firm’s clients want, this may help balance internal competition. From there it comes down to conflict resolution.
What happens if band members do not show up for practice? Meaning, if the advisors or staff miss weekly team meetings that are necessary for communication and client triage (aka “rehearsals”). An advisor may feel it is fine to occasionally skip, but your staff may rely on these meetings to keep everything organized and help them prepare for the week.
This is not all about the advisor; there are plenty of instances where some staff members do not share the same client service spirit or do not pay attention to the finer details. Some may lack an engaging attitude with clients or do not appreciate that acquiring and retaining clients are the livelihood of the practice. It is everyone’s job to enhance the client experience; you cannot disappoint your fans.
Ethics and Egos
What happens if greed or lack of personal ethics come into play? If your team is successful and growing at a rate consistent with goals, it is important to make sure your most valuable band members are equitably compensated for their contributions, potentially above the standard.
There are too many instances where bands fell apart because members were not given their fair share — be it money, ownership, or simple appreciation and respect. You might not have climbed the charts without them, and it is no fun to go it alone when you lose your best people. Perhaps their role can be replaced, but nothing tops the original lineup.
What happens if egos go to excess? When a band member disregards the reasons why you came together in the first place — to make great music together for the fans — then members might go their separate ways to capture that spirit elsewhere. In some cases, parting ways with a team member due to ego extremes may be appropriate to deliver a quality experience for clients. Don’t let a member of your team get away with inappropriate behavior as it may damage the firm’s long-term reputation.
This also applies to bringing on a junior partner. If you convince a strong junior associate to align their practice with you in the hopes of them becoming a successor or partner, yet you never come through on the activities required, they may leave to join another firm. This is where human resource management, written agreements and personal accountability are critical.
There have been tragic instances where an iconic band lost a member due to disability, death or outside influences. This is where a written business continuation plan for advisory teams is critical. This should include contingency plans for cybersecurity threats, natural disasters, buy-sell and succession agreements, personal health crisis, family leave, and dissolution agreements, to name a few. The more you can document your workflows and processes, the better prepared you will be for emergencies and the future growth and expansion of your business.
The great bands of our time were not without internal conflict or challenges; all great relationships have challenges. Your team can be affected by any of these circumstances, but if you still hold true to your philosophies, the band can continue.
Consider the enduring legacies of The Who and Def Leppard, to name just a few. The Who lost Keith Moon to an untimely death. As difficult as that was, they carried on, evolved, and are still selling out shows today. Def Leppard’s drummer, Rick Allen, lost his arm in an accident in 1984 and both he and the band persevered. Allen learned to play with his foot through customized equipment, and the band rallied around him in support. He was able to return and perform, and the band had one of its most creative and successful periods. The band is still captivating crowds and on Friday was inducted into the Rock and Roll Hall of Fame.
Bands lose members and can face significant challenges, but they can continue to play for decades if they keep up their peer network, their purpose and their focus on the fans.
Look at The Rolling Stones, ZZ Top, Pat Benatar, U2 and Golden Earring — again, to name a few. These are some of the most influential rock bands of our time who are still playing today. For all of these bands, it is about the music, their fans, and a higher purpose. When you consider all of the changes in the recording industry, and the challenges iconic bands have faced, hearing them play for 30, 40, even 50 years, is truly remarkable and inspiring.
It Is About the Client Experience
In today’s digital environment, it is more important than ever to focus on an engaging client experience. Recording artists have had to adapt to different revenue sources as a result of streaming services. Artists have to focus on touring, songwriting, production, publishing, and other business ventures as a primary means of revenue.
As a shared practice, you need to adapt to the way clients want to be served and what makes them comfortable. Fans can purchase almost any song they want via downloads, including live performances, but they still want to see their favorite artists perform “live” and in-person. It is the same in the wealth management industry. Clients desire a deeply engaging “live” relationship with an advisor, regardless of their age or generation.
Lessons to consider when forming your team include agreeing on a core vision and planning philosophy, agreeing on a partnership agreement and contract (with good legal review!), having regularly structured team rehearsals and meetings, common workflows, systems and processes. You need to hire people who match the firm’s values and work ethic. Above all, you need to stay tuned in to what your clients want. Conduct regular interviews with your clients on what they value and additional things they would like to experience. Ask them what would make them more comfortable in your work together.
You don’t always have to reinvent yourself to stay relevant — but you can be open to new ideas that could help you cross over into other opportunities. Your classic catalog of comprehensive planning, fiduciary ethics and service will stand the test of time. Think of Earth, Wind & Fire, Lynyrd Skynyrd, Stevie Wonder, Stevie Nicks, Chaka Khan and so many more enduring artists. They are beloved by their fans and have brought indelible moments in people’s lives through music. Keep your focus on your fans, hire band members who believe in your mission, and every time your audience shows up, give them a personal, engaging experience.