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The Real Work of Financial Advisory Firm Leaders

All advisory firm leaders are called to work on their businesses as well as in them.

For many years now, one of the leading lights in our profession, former Pershing Advisor Solutions CEO Mark Tibergien, has been urging advisors to address one of the industry's greatest opportunities: effecting the professionalization of its management. In other words, it’s incumbent upon advisory firm executives to invest their time, energy and focus on the “how” and “why” of their firms, not just the “what.”

Yet, on the whole, this wisdom tends to be most reflected in the firms that are approaching or have achieved scale. Could failing to pursue this opportunity explain why the vast majority of advisory firms are not growing organically in a consistent way nor are they approaching scale? I think so. The following question is inescapable for all firms and their leaders:

What are you doing today to create a better version of your firm that’ll not only compete more successfully and serve more impactfully, but that also will be more intergenerationally sustainable as well?

A clearly defined and refined cultural, client, talent and technology strategy are all critical components of such a focus. If you’re an advisory firm executive, can you summarize each of the foregoing in a paragraph so that the members of your firm understand where you’re headed and why? More importantly, if you were to ask your firm colleagues, could they articulate the strategies and how these relate to the way that they fulfill their roles both today and into the future?

This is very much the work of professional management in the advisory space, so let’s explore a few of these domains to identify both the opportunities to be leveraged and the pitfalls to be avoided.

Let’s start with your firm’s cultural strategy: to wit, do you actually have one? Are you clear on the major ways in which your firm must evolve as an organization in order for it to realize its future ambitions? (And before those of you in smaller firms or even single advisor firms attempt to bypass this question, realize that it’s just as relevant to you: the smaller the organization, the more important clarity of culture is, as the margin for error due to the lack of scale and resources is narrower.)

It's important to ask and expand on questions like "What is the ethos of the organization now and how must this evolve in the next five to ten years?" to refine a cultural strategy. For example, how will your firm serve the different generations: boomers, Gen Xers, millennials and, now, Gen Zers who’re entering our workforce? Further, what are the specific steps that you as an advisory firm executive are taking to get from where you are to where you want and need to be culturally? 

That said, your firm’s culture can’t be divorced from its client strategy, so what is your client strategy and how will this evolve in the next decade? And lest you be tempted to respond with the standard “we’re going to keep doing what we’ve always done,” take a moment to reflect on the evolution of your firm and realize that due to technological innovation, the collective advancement of the skills of you and your associates have developed and a host of other factors, you’re likely serving clients differently and better than you were five or ten years ago. Now, the question is, what does this service commitment look like over the next five to 10 years?

Further, what’s your talent strategy? After all, it’s the people of your firm will have to serve those clients differently and better, so what’s your plan to develop them to do so? For example, what strengths can you leverage even more impactfully going forward, as well as what either (current or future) weaknesses or gaps in service do you need to address in order to enable your continuing—and, hopefully, expanding—success?

Not to complicate this too much, but what impact do you expect technology to have on the preceding strategies? Your answers to this question will be critical components of your firm’s overall technology strategy.

And speaking of technology, now that one of our key learnings from the unfortunate pandemic to which we’ve been exposed for a year and a half now is that our firms can operate virtually, what (if any) impact does this have on your firm’s geographic strategy?

Which brings us back to the reality that, irrespective of size, as business guru Michael Gerber has observed in his classic book, The E-Myth Revisited, all advisory firm leaders are called to work on their businesses as well as in them, and the former more so and the latter less so as they grow and achieve scale. It doesn’t matter whether you want to fill this strategic leadership role or to have someone else do it, but, whatever the size your firm, someone(s) must serve in this way.

Let’s explore this using the following example: If you’d like your firm to be intergenerationally sustainable, it’s clear that you’ll have to develop relationships with successive generations of your client families as well as to develop the talent to do so (as well as to develop the talent to lead your firm through this continuously iterative process). Simply put, who’s doing what about this at this very moment to make it happen? If you’re not clear on who’s doing it and exactly what they’re doing, then you need to refocus on the development of your firm and close this gap.

Among the ways that you’ll have to do so is to figure out how a firm that serves multiple generations of a client family has to evolve its culture to attract, cultivate and deploy multiple generations of talent aligned with the firm’s mission, vision and values.

Now add the overlay that this can be done in a geographically distributed way and you realize that this responsibility is more significant than it may appear initially: it’s one thing to cultivate and evolve a firm’s culture when everyone works in the same shared space, but it’s quite another when this community is geographically dispersed and some meaningful portion of its associates have never worked in a headquarters office (if there even is one).

In part, then, this challenge will require diversity, equity, inclusion and belonging leadership skills—which are one of numerous important areas of expertise required of successful executive leaders—in order to deal effectively with the different backgrounds, experiences, generational attributes, etc., of your growing (and possibly geographically broadening) team.

If this all seems like (more) work, it is: it’s the real work of building an intergenerationally sustainable financial advisory firm, which requires proactive professional leadership. No, you don’t have to do this, but if you’re an advisory firm leader, you have to find and/or cultivate someone(s) who will. The realization of your aspiration for your firm, client families and colleagues depends on it.

Walter K. Booker is the chief operating officer of MarketCounsel, a business and regulatory compliance consultancy for investment advisors.

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