“You should focus relentlessly on something you’re good at doing, but before that you must think hard about whether it will be valuable in the future.”
― Peter Thiel, Zero to One: Notes on Startups, or How to Build the Future
Wealth management continues to be in a constant state of evolution. From the vernacular used to describe the professionals that provide advice to the tools and technology producing deliverables for the end consumer—everything is being examined, modified and ultimately made more functional. Massive leaps forward (in any industry) occur when the status quo is challenged. A truly great idea is often ridiculed when first proposed. It takes great courage by entrepreneurs to change/challenge both their thinking, as well as the thinking of the masses. Operating within that framework, I believe that it is time to reframe some of the common beliefs surrounding entrepreneurship in the wealth management space.
1. “Shiny object syndrome is a bad thing vs. Following a methodical process to determine if the shiny object may be very valuable to the business”
A few days ago, randomly I asked my wife the following question, “What if the shiny objects a business owner was searching for were diamonds?” Shiny object syndrome is typically used to describe a process by which business owners fall into a trap of chasing distractions—that they do not focus on the foundational elements of the business required to drive scale and efficiency. However, if a process is employed to determine the value of new ideas and concepts, then shiny objects may not be a bad thing. Why would one want to stifle an owner’s creativity and thirst for innovation? Assuming a solid foundation is in place, shiny objects (especially if diamonds) may not be a terrible thing to pursue.
2. “Technology drives scale and efficiency vs. Properly deployed technology drives scale and efficiency”
GoldenEye 007 is considered one of the best video games of all time and pushed the boundaries of split screen multi-player shooters (I understand this personally from all the hours we played at Pierce House during college). Arguably, the best weapon in the game is the Golden Gun. From time to time, as my mind drifts back to all the time spent playing that game, I think about how “technology” as a broad category can be related to the Golden Gun.
Although somewhat of a stretch in terms of the connection (I really wanted to use an allusion to GoldenEye 007 for some time), the rationale is relatively simple. Business owners have the propensity to throw technology at a challenge they are facing before taking the time to truly diagnose the root cause of their issues. Their assumption is based on faulty logic that “technology” will solve their issues. This is often compounded by the fact that their haste in product selection leads to tools that “don’t speak to each other.”
I am a big believer in the 10X theory. If a change to technology will not lead to an improvement of 10X in some area of the business, then don’t do it. Innovation happens so frequently that if you don’t get that type of incremental improvement now, there likely will be something that will get you to that state of improvement in the near term. Understanding the connectivity between your product selection and your entire technology ecosystem is incredibly important. Finally, helping employees to understand the benefits to a new approach and why they should be excited about its deployment is important from a cultural perspective.
3. “Culture eats strategy for breakfast vs. A well-designed hiring, training (both initial and ongoing) plan helps to implement leadership’s vision for the business”
In one of his most famous quotes, management consultant Peter Drucker highlighted the importance of culture to the success of a business. While a critical component to employee satisfaction and motivation, culture is often seen as either something nebulous or something that “just happens” organically.
Like most important concepts, culture isn’t something that should be left to chance. This is of particular importance to wealth management entrepreneurs as some may leave traditional financial institutions to begin businesses. All business owners (to the best of their ability) should create defined processes and procedures for hiring and training employees. These employees should understand and embody the core values and mission of the founders. Very specific key performance indicators (KPIs) and regularly scheduled review meetings can assist with proper alignment of activities and tasks. Ultimately, founders should aspire to be very prescriptive on how they foster the culture of their organization.
In conclusion, by reframing some common beliefs, wealth management entrepreneurs have the ability to create some truly differentiated offerings. In an industry that is constantly disrupted, mental elasticity is incredibly important. It’s also something that needs to be practiced consistently. In my experience, our most successful business partners are the ones that are constantly looking to learn, grow, and improve.
Austin Philbin is Dynasty Financial Partners' chief administrative officer.