WealthManagement Magazine

Team Building: Avoid the Pitfalls

Plot your path carefully when forming a team. Obstacles include poor leadership, money squabbles and miscommunication. You can't help but notice the industry's not-so-subtle move toward broker teams. Lots of reps tout working in partnerships, and firms brag about their high-visibility, high-producing specialty teams. But forming a workable team can be tricky business. There are plenty of pitfalls

Plot your path carefully when forming a team. Obstacles include poor leadership, money squabbles and miscommunication.

You can't help but notice the industry's not-so-subtle move toward broker teams.

Lots of reps tout working in partnerships, and firms brag about their high-visibility, high-producing specialty teams.

But forming a workable team can be tricky business. There are plenty of pitfalls reps may encounter on the way.

Just ask Charles Andriole, a Prudential Securities rep in New Haven, Conn. Andriole leads the four-member Andriole Investment Management Group, operating within Prudential for 10 years. He says the failure rate of quickly established teams is quite high.

Half of the haphazard teams eventually don't work out, and as many as 75% are not high-functioning teams, Andriole says. There are a myriad of things that can go wrong, from simple ego conflicts to flat-out business failure.

While still an advocate of teams, Andriole says many problems begin with the team leader's lack of leadership.

Some senior advisers see the formation of a team as a way to slow down, to spend more time golfing and then to exit the business, Andriole says. In the meantime, they use their younger team members as indentured servants.

That's all wrong.

It takes a different skill-set to be a team leader, says Andriole, who trains other Prudential brokers to lead teams. He says leaders must have the ability to:

  1. Develop a collaborative environment;

  2. Offer a clear vision that every team member believes in;

  3. Build others' confidence;

  4. Demonstrate competence; and

  5. Manage performance.

Many so-called team leaders lack those traits, and their teams have no continuity, Andriole says. The frustration and risks associated with low-functioning teams can be disastrous.

Larry Palmer, a Denver-based Salomon Smith Barney rep, has seen a disastrous team or two. But thankfully, not his own. He is one of three managing partners in a 14-member investment group that includes other junior brokers and assistants.

Palmer says teams collapse because brokers move together too quickly or don't change their mindsets. Some reps jump into partnerships because they don't like certain elements of their jobs. They think if they team with someone else, they will be able to concentrate on only what they want to, he says. There's no due diligence and, in a short time, everything goes wrong.

Another problem occurs when brokers think a team is business as usual. You have to make a complete paradigm shift, Palmer says. It's no longer me and I. It is now us and we. You have to realize that somebody does something better than you, and a lot of people in this business can't accept that.

Money, Leadership Key Problems

Nor can many brokers accept the sticky issues surrounding compensation. Nagging questions of who gets how much and for what can cause a team to veer off-track. As far as team members go, compensation will always be the issue, Andriole says.

To prevent problems, Andriole's group establishes individual annual rolling hurdles, but then aligns everyone together. Each member must make a commitment to the team because we live and die by the same sword one [production] number, from which each team member's partnership share is derived, he says.

However, Andriole says compensation can be adjusted to reflect a person's value overall. One member on our team is an expert with technology, he says. His contribution to the bottom-line production number isn't that significant, but his contribution to the team is. We all need him. His partnership share should reflect that.

Structuring pay is critical, and so is the structure of the team hierarchy. Broker consultant Richard Hunter, CEO of the Hunter Group within the Creative Management Group in Atlanta, says many teams fail because they pick the wrong arrangement. The my book, your book, our book team never works out, he says. The brokers don't focus on the our book, and it never takes off.

And Hunter advises against a balanced marriage. I never encourage equals to go together, he says. That is where the dark side of teams really comes out. Someone has to be the boss. Before you start any team, there has to be a senior member.

Finally, you can't just plant a team and expect it to live. Teams require continual care and attention if they are to thrive. It is important that team leaders sit down annually to re-evaluate their goals and, if necessary, rearrange their long-term goals, says Matt Oechsli of The Oechsli Institute in Greensboro, N.C.

Witness what happened to a highly successful East Coast Alex. Brown & Sons team. For years, the team did just about everything right, growing assets under management to almost $1 billion.

But the two brokers running the team eventually split. I didn't want to work 70 hours a week anymore; he did, one of the reps says. Our personalities changed, and we had different goals. We just had different motivations. So it ended.

Oechsli diagnoses the problem this way: Poor communication killed that team. They simply grew apart.

Teams have many moving parts that can cause problems. Be aware of the following squeaky wheels before you form or participate in a team.

I've seen every one of these break up a team, says Matt Oechsli of The Oechsli Institute in Greensboro, N.C. He provides this list of breaking points and preventive solutions:

A hasty marriage Spend time courting the idea of a team and the individual team members. This ensures that you are forming the team for the right reasons and with the right people.

Hidden agendas Be honest with yourself. For example, don't join because you're waiting for the other guy to retire. And probe your potential partner's reasons.

Conflicting goals One partner wants to work less while the other wants to produce $10 million. Determine ahead of time that you and other team members want to go in the same direction.

Multiple production numbers Avoid this business model. It has the makings for a severe conflict of interest.

No partnership agreement Save the handshakes for after you sign a written, explicit and legally sound partnership document. You must legitimize your team structure for any eventuality, such as a partner backing out or dying.

A poor or nonexistent business plan Make sure you have a detailed, well-reasoned plan for business operations and development. Having no plan is a blueprint for disaster.

Lack of policies and procedures Give your team some structure and guidelines with a written manual. Every tight ship needs one.

Unclear delegation Spell out duties in written job descriptions. Without them, confusion could reign.

Uneven work ethic Set out clear expectations of the commitment required of all team members. You never want to have to ask, Who's pulling all the weight here?

Poor communication Embrace frequent and direct communication. If you don't, things will fall through the cracks.

Ego conflicts If you're not the boss of the team, check your ego at the door. If you are, make sure everyone knows of your authority gently.

Personality conflicts Choose to work only with people you like. You can't work with someone if he or she rubs you the wrong way.

Lack of trust Operate with integrity from the very beginning. It's an example team members will follow and appreciate.

Money squabbles Agree on all money points at the outset, including the specifics of how the production will be divided and who gets what part of the bonus.

No attention to detail Prevent dropped balls by holding everyone accountable for duties spelled out in team documents, manuals and job descriptions. Encourage communication.

No goals Establish a business review process whereby you measure team performance against benchmarks or goals. If you wing it, you can't get where you want.

Registered Representative welcomes your comments on this story. Contact Editor in Chief Dan Jamieson at [email protected] or call our editorial department at 800/621-0720.

TAGS: Archive
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish