If independent advisors want to build “an enduring business with enterprise value, they have to figure out how to build a business where they’re less relevant.”
So says Penny Phillips, president and co-founder of 16-month-old tuck-in Journey Strategic Wealth, in an interview with ThinkAdvisor.
The consequences of failing to do that will shorten the firm’s life span, at least, she says.
Indeed, the advisor “will get to a place where they run out of capacity and the business is no longer sustainable with them as the primary revenue generator,” she argues.
Phillips, best known for her career as an advisor coach and consultant, and owner of Thrivos Consulting, shifted focus in January 2021, when she launched Journey with partners Michael Brown and Brian Flynn. Damian LoBasso became a founding partner as well.
The RIA’s mission is to provide hands-on practice management support to successful advisors of all channels who are seeking independence, thus freeing them to “do what they do best.”
In the interview, Phillips discusses how being an effective leader means getting rid of “belief systems” such as “I’m a terrible manager.”
Noting that wirehouses and other large firms “aren’t moving fast enough to keep up with the evolving consumer,” she argues that sending LinkedIn direct messages to “hundreds of people a day to try to land an appointment” is “an archaic way of [trying to] build your business.
“It’s no different from what cold calling was decades ago,” she adds.
Working “behind the scenes,” as she puts it, Summit, New Jersey-based Journey operates as a tuck-in with a twist: Though partner advisors become W-2 employees, they have the option of keeping 100% of their business. The payout is 50%-65%.
Journey funds and manages the advisor’s business, providing comprehensive services ranging from compliance to marketing.
In addition to Journey, Phillips, 34, retains ownership of Thrivos, though the actual coaching is handled by four others.
Never a financial advisor, Phillips nevertheless made “a major decision” a few years back “to stop the consulting and instead build a firm that [she] thought advisors were looking for, and approached a couple of partners,” the industry speaker says.
Brown’s 40-year book of business became “the anchor firm,” Phillips says.
She has also written a number of practice management training programs on helping advisors prepare for working with wealthy next-generation clients.
ThinkAdvisor recently interviewed Phillips, who was speaking by phone from Whitestone, New York. She says the ideal for an independent advisory is that “collectively everybody is responsible for its success or failure.”
Here are highlights of our interview.
THINKADVISOR: You’ve said that some best practices that have been around in the industry for years aren’t effective. Such as?
PENNY PHILLIPS: Advisors have been taught to build in a very hierarchical way: The advisor is the main person — the producer, the decision-maker. We’ve taught them to hire people underneath them to process paperwork.
So when you [come] up in an enterprise and incentivized as an individual contributor, every success is all about you.
But when you’re running an enterprise, it has to be not about you. You can’t have sole responsibility for the business.
You need other people to generate revenue and to be decision-makers because one day you’re going to retire and, theoretically, your business is going to endure.
[The idea is]: “I’m running an enterprise and collectively everybody is responsible for its success or failure.”
But what inevitably ends up happening is that [the advisor] will get to a place where they run out of capacity and the business is no longer sustainable with them as the primary revenue generator and decision-maker.
Then they have to figure out how to build a business where they’re less relevant, and that’s a very difficult concept and one that they have a lot of trouble being successful at.
If advisors want to build an enduring business with enterprise value, they have to think differently about how they build their team.
What’s another ineffective “best practice”?
There are so many concepts that are no longer relevant based on how the business has evolved — something as simple as cold calling or asking for referrals and introductions.
You’re going to be far more successful if you’re doing things like speaking the language that the consumer speaks by understanding the psychographic profile of your client versus asking everybody for an introduction at the end of a review meeting.
Is social media an effective marketing tool?
Firms aren’t moving fast enough to keep up with the evolving consumer.
I’ve noticed that even some of the bigger firms are training their advisors to send LinkedIn direct messages to hundreds of people a day to try to land an appointment.
That’s such an archaic way of [trying to] build your business.
It’s highly impersonal. It’s clear that the message being sent is canned. We’re at a point now where these almost feel intrusive.
For a random person to say, “Hey, can I take you out for coffee because I want to see if you can benefit from my services” is no different from what cold calling was decades ago. It’s just a variation.
What’s an updated, improved way?
Your effort is much better spent creating authentic content that’s reflective of the type of value you bring to people and putting that out [consistently] — whether it be via a blog or video — and allowing people to come to you at the moment they actually need your services.
You’ve said that as a leader, an advisor needs to evolve as a “thinker.” How do they become thinkers if they aren’t already thinkers?
This is arguably the most important part of coaching: Practice management as a discipline is 85% behavioral change and 15% concept.
Oh, we can teach advisors how to be business owners with a paint-by-numbers approach. But the truth is, to be effective at leading and running an organization, you have to shift many belief systems that you’ve hung on to for a long time.