To borrow from an old joke, ask five advisors why they get out of bed in the morning and you’re liable to hear six different answers. Yet most advisors will say it’s to serve clients by making their financial lives better, while earning a fair wage for themselves. For next-generation advisors who are in line to inherit a book of business from a senior advisor, there is often another reason—that is, to continue to build and shape the legacy that will be left to them, and to do so in a way that feels authentic, value-additive and entirely their own.
I share this insight not just from the perspective of a recruiter but also as a next-gen team member myself. When I made the decision to join Diamond Consultants, a business my mother, Mindy Diamond, started over two decades ago, it was not without consternation and anxiety. I was, after all, leaving behind the world of corporate America—a world that actually served me incredibly well when I started my career, at Merrill Lynch and Morgan Stanley.
Prior to making the leap to our family business, I struggled often with a dilemma common to next-gen businesspeople. On the one hand, I was excited about growing something that we owned and thrilled to work with my nearest and dearest. On the other hand, I worried about the complex interpersonal dynamics that would be at play. What if our personalities clashed in a professional setting? Worse yet, what if my performance did not meet expectations? What if I failed?
The resulting angst is shared by many next-gen advisors we speak with—particularly those going into the family business.
It’s a blessing to be given the opportunity to one day inherit a book of business, but it also presents a unique set of personal and professional challenges—which mirrors my own experience as a next-gen family business member.
Here are five of the common concerns next-gen advisors often have and some solutions I learned along my own journey:
1. “My vision for the business is very different from that of my senior advisor.”
This is probably the most critical and fundamental gap to address for all multigenerational teams. There are many flavors of this same issue. For example: “My dad grew up in a wirehouse, but I have visions of being an entrepreneur” or, “My mother was transactional, and we have totally different ideas of what it means to be a financial advisor.”
The reality is that in the near term, the senior advisor has the right to continue running their business as they see fit. But as the next-gen inheritor, don’t allow that to intimidate you. Find your own voice because it will need to grow louder as the senior advisor nears retirement.
Likewise, learn to embrace the parts you feel comfortable with and work hard to put your own imprimatur on things that can be changed.
2. “In the past, our personalities have clashed.”
This one is more personal than professional, but no less important. The key is to find a healthy level of respect and balance. Personal boundaries are essential: That is, both parties must understand that a day in the office is not the same as gathering for Thanksgiving dinner (although some might say there should be some boundaries set for holidays as well).
One additional strategy I use is to mentally “take myself out” of any situations that may seem combative. For example, if someone else (not related by blood) had given me the same comments or feedback, would I still have reacted as I did?
3. “I’m not sure what it will be like working with my parent.”
The new power dynamic definitely requires an adjustment period—particularly when working with a family member or someone you may have developed a close relationship with. Again, identifying boundaries is critical. For instance, while personal conversations are OK from time to time, I find it easier when I don’t have to toggle repeatedly between wearing the “family” (or friend) hat and the “business” hat. And definitely, for me, there’s no “mom” or “dad” talk during the workday.
4. “I’m ready to take on a significant leadership role, but my senior advisor is not yet ready to cede control.”
Many next-gen advisors struggle to determine the point at which they no longer need or want to take a back seat to their senior advisor. But what if the senior advisor does not agree with that same timeline?
It’s fair and reasonable to ask for some clarity around timing. How much longer does the senior advisor plan to work? Identify whether they intend to slowly wind down toward retirement or walk away completely—and when. In the meantime, find a solution that appeases both parties, particularly around roles. Perhaps the junior advisor manages investments and oversees sourcing new business, while the senior advisor acts as relationship manager for existing clients.
5. “What if clients don’t take me seriously? I don’t want to be just some kid who my father hired.”
Particularly for younger next-gen advisors, this is a major cause of anxiety. Yet, you might be surprised by how little other people care about age—as long as you add value and own your turf. The best solution: Exude confidence and demonstrate competence. While a next-gen may lack time in the business, there’s value to having a fresh point of view; plus, bringing new energy to the table and going above and beyond can be a real game changer for the business overall.
While much ink has been spilled discussing the gift of book inheritance, comparatively little has been said about the personal and professional hurdles that come along with it. The path for next-gen financial advisors can be wrought with some potential pitfalls, but if walked with confidence and flexibility, it can also be immensely rewarding. That is, the joy and satisfaction that comes with creating, fostering, and eventually inheriting a legacy is incomparable. But no one said it would be easy.
Jason Diamond is vice president, senior consultant of Diamond Consultants—a nationally recognized recruiting and consulting firm based in Morristown, N.J., that focuses on serving financial advisors, independent business owners and financial services firms.