Call me cynical, but anytime I hear a company say it has a “great culture,” my immediate response is: prove it!
We recently engaged a market strategy firm to determine what factors were compelling financial advisory practices to join our firm, especially given our exclusive 1099 membership model. The overwhelming response from current and prospective advisors, as well as industry observers, was culture. In particular, they emphasized the impact of membership in a community of the highest-caliber financial advisors. Earlier, when we asked our advisors to rank culture, support and economics, they overwhelmingly responded that our culture was a key component of their decision to join and stay with our firm.
Once again, my feedback was: prove it!
A few days ago, I found my proof, and it helped crystallize the results of our studies in my mind. One of the principals of a financial advisory practice at my firm said to me, “It’s March, and we are having a record year in terms of net new assets. We are doing things for our clients that we could never do at our prior firm. We have brought in over $100 million just this year, and by the end of this year, we will have doubled our business since we joined in the third quarter of 2012.”
How did this practice manage such noteworthy accomplishments? The team developed a unique solution for a corporate client that was interested in offering financial planning as a benefit for highly compensated executives. As a result, they solved a company-wide challenge and had a positive impact on a large number of the client’s employees and their families. But most impressive of all, this team transparently shared all of their work with the other financial advisory practices at our firm.
At least two other financial advisory practices have successfully implemented the financial planning offering as a result of the shared intellectual capital. In the team’s own words, “We derive satisfaction not only from our success, but from the success of the other members of our community. We are a close knit group.”
According to a study conducted by Miller Heiman, collaboration increases the efficacy of business development efforts. Specifically, collaborators achieve 15% better growth on average and enhanced effectiveness in pursuing large opportunities. The study proves that collaboration is not just good for culture, but critical for enhanced growth.
Conversely, a friend of mine from a previous firm recently called me and shared that he regrets the move he and his team made a few years ago. As they were evaluating a move to independence, they focused most of their time and energy on economics; a small portion of their time was devoted to reviewing their new firm’s technology platform, which they assumed was reasonable, and very little effort was devoted to evaluating culture. I can understand why culture was discounted—they came from an environment where the culture was once a strength, but had deteriorated into a weakness by the time they left. So, like many of us, they became cynical on culture. And yet, because they did not give proper weight to culture when making their decision, they now feel stuck and are realizing the opportunity cost of being on a proverbial island, away from intellectual capital and innovative thinking.
As I look back at our industry’s history and listen to other commentators, I realize that culture has always been the decisive factor for driving success at financial advisory firms. And, most importantly, great culture is built by advisors, for advisors. It is never developed by a corporate management team sitting around a table; it is always driven by practitioners, and in particular, top quality advisors focused on delivering non-conflicting advice and superior client service. Since success attracts success, where the top-performing financial advisory practices are succeeding, other top performers follow. With a culture dedicated to sharing that success, the results can be exponential.
So, the next time someone tells you his or her firm has a special culture, speak to the advisors and look carefully at their results—and whether or not those results are generated with the help of a collaborative culture. Prove it.