Solving the Advisory Firm Turnover Problem

Are you a leader or a boss?

Some believe that great leaders have all the answers. They know what should be done. They lay out the vision. They direct those around them to perform tasks to accomplish their goals.

This is what I will call the “boss” model of leadership. But I’ve never seen it work. Nobody has all the answers, and nobody knows everything that should be done.

The boss model puts unrealistic pressures and expectations on the leader who ultimately stands alone as either a winner or a loser. It also denies the boss the benefit of the knowledge, expertise, and perspectives of those charged with executing the plan.

Instead, this bit of wisdom, attributed to legendary Chinese philosopher Lao Tzu, circa 450 B.C., comes closer to the mark:

The wicked leader is he who the people despise,

The good leader is he who the people revere,

When a great leader leads, people say “we did it ourselves.”

A leader is best when people barely know he exists.

This is a model of empowerment. It recognizes that the world is complex, and the odds of success are magnified through the collective wisdom and action of a team.

Futurist Joel Arthur Baker said:

Vision without action is merely a dream.

Action without vision just passes the time.

Vision with action can change the world.

Is it too much to expect that your firm can change the world? I don’t think so. In fact, defining how your firm will change the world and getting buy-in from your team can change working at your firm from a job to a passionately held mission.

If you view the world this way, it transforms the primary job of a leader into:

• creating a shared vision of the firm’s purpose;
• facilitating agreement on desired goals and outcomes;
• encouraging team members and removing obstacles from their path; and
• ensuring communication among team members so they feel connected to the mission.

The focus is not on you as the boss. It is on co-creating the mission and generating enthusiasm and fulfillment among your team members.

Creating the team

The world of wealth management is too complex for one person to master all aspects of it. You should build a team that includes experts in six distinct areas. These are:

• Creating the deliverables (this includes portfolios, financial plans, estate plans, etc.);
• Designing and creating the client experience;
• Operations;
• Marketing;
• Sales; and
• Technology.

These areas overlap to some extent, and actions in one area will have ripple effects in others. So, it is important that team members responsible for each area communicate frequently and participate in decision making – particularly regarding new initiatives.

Team members can have expertise in more than one area. For example, you may have an advisor who is excellent at meeting with clients and who is also an expert at building portfolios or developing financial plans.

But the more roles a team member plays, the more stressed and the less efficient they are likely to be. At smaller firms it is almost always necessary for team members to oversee multiple functions. But working toward alleviating this situation should be a goal.

The team does not need to consist solely of full-time employees. The use of part-time team members and outsourced service providers can offer cost-effective solutions.

You are building a team, not a roster of experts. Each team member must be able to interact well with the other team members. A talented prima donna or a brilliant scrooge is not worth the trouble and should be avoided at all costs.

On the other hand, you do not want a team full of people who all think alike and see the world the same way. Groupthink stifles creativity and denies the team the benefit of differing perspectives. Healthy disagreements are necessary for good decision making.

The clients we serve see the world differently. If you don’t have a diversity of opinion represented on your team, you will fall short in addressing the needs and preferences of your target market. Value those who see the world through a different lens.

Listen – no, really listen

Bringing together a group of people with diverse opinions and perspectives carries an important obligation. You need to listen to what each person says and consider it, even if their viewpoints differ from your own.

Accept the fact that you don’t know everything, and you don’t have all the answers, even if it feels in your gut like you do. Keep an open mind, especially if the contrary view comes from someone with true expertise in the area you are discussing. The contrary views you are hearing may be representative of the views of people in your target market.

The plans you create are never perfect and the world in which they were made starts changing the moment they are complete. Those on the frontline will detect these imperfections and changes before you do. Listen and adjust.

If you find this hard to do, conduct a little experiment. Choose a topic where the stakes are not all that high. Set your own opinion aside and go with the recommendation of a team member whose views differ from your own and see what happens. Then do it again. And again.

You will learn to trust the opinions of your teammates. There are often many paths to a good outcome, even if you only saw one of them.

This is liberating. You don’t always have to be the person with the answer.

If a teammate’s idea does not produce a good outcome, do not ridicule the person or respond with an “I-told-you-so” reaction. The team owns all outcomes. Use the negative outcome as a learning experience and collectively discuss how you will do things differently in the future.

Questions, not commands

Once you learn to trust your teammates, get out of the way. There is nothing more empowering to a person than being given the freedom to do their job. There is nothing more demoralizing than having someone look over your shoulder while you are trying to do your job.

This doesn’t mean that there is no accountability. Everyone must know their responsibilities and what goals they are charged with accomplishing. But if they achieve them, they should be given leeway in how they do so, even if their approach is different from yours.

Of course, if you think there is a better way to do something, that is a fair topic for discussion. But rather than barking orders, ask questions. You might discover there is a good reason your teammate is doing their job in a manner that looked suboptimal to you.

By asking questions, you can guide your teammate to your point of view without generating the defensiveness that often comes when a command is issued. If done artfully, the new way of doing things can seem like your teammate’s own idea, not yours.

Decision making

Problems and unmade decisions are obstacles to progress. Make it a practice at your firm to identify and resolve problems quickly. I once heard it put this way:

If you have to swallow a frog, swallow it quickly.

If you have to swallow two frogs, swallow the big one first.

Encourage teammates to raise issues that create friction or reduce their efficiency. Make problem identification and resolution a regular agenda item so problems don’t fester.

Ensure that teammates who raise issues that need resolution can do so in a penalty-free environment. Labeling a teammate as “negative” or a “troublemaker” simply because they identify issues that need resolution is a sure way to bury problems and lose team members.

Make decisions with dispatch. Gather all necessary data and input, of course, but don’t let decisions linger. Clearly and broadly communicate the decision.

This allows teammates to move forward confidently, knowing the firm’s direction. Unmade or fuzzily communicated decisions are prickly little roadblocks to progress.

Communication is the life blood of any organization

Good and frequent communication within an organization has three benefits. It provides context so that teammates know what is happening around them. It provides information that will help them make decisions and do their jobs better. It makes teammates feel included.

Some people are naturally fearful of broadly sharing information, especially if it might be viewed as negative news.

This fear is misplaced.

Negative news gets out eventually. If it looks in retrospect like you were trying to hide bad news, your credibility and perceived trustworthiness are harmed far more than any damage that might have been done by disclosure of the news.

If your teammates understand and have internalized your firm’s mission, they will rise to the occasion and help resolve whatever difficulty or problem you were inclined to withhold.

Finally, there is no better way to engender trust among your teammates than to include them in the conversation and trust them with important news impacting your firm.

Every team member doesn’t need to be informed about every development. That would be distracting and counterproductive. A balance must be struck. But communication lubricates the machine, empowers team members, and binds them to the cause. It truly is the life blood of a successful organization.

To each their own

There is no one right way to manage a firm or interact with team members. Everyone must develop their own style based on their unique skills, perspectives, and proclivities.

But as your advisory firm grows, be conscious of how you manage that growth and build a team to support it. Firms do not grow naturally like that beautiful tree in your backyard.

Growing a firm and building a strong team is never a smooth process. There are always bumps and unpleasant surprises along the way. But the perspectives I have shared should lay the groundwork for a smoother growth path at your firm.

Scott MacKillop is CEO of First Ascent Asset Management, a subsidiary of GeoWealth, LLC. First Ascent is a TAMP that provides services to financial advisors and their clients on a flat-fee basis. He is an ambassador for the Institute for the Fiduciary Standard and a 48-year veteran of the financial services industry. He can be reached at [email protected].

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