“Good enough” is a phrase I often hear from advisors when they are describing life at their firm and why they stay. Not exactly a ringing endorsement!
Is good enough really “enough”—or is there something else stopping these advisors from moving?
It’s true that moving is disruptive and that if the “pain” of staying doesn’t exceed the pain of leaving, an advisor will typically choose to stay the course.
But sometimes the pain is significant and yet an advisor still stays with their firm. Why?
“Good Enough” Is the Enemy of Great.
Jim Collins said it best in the must-read bestseller Good to Great: Why Some Companies Make the Leap ... and Others Don’t, “Good is the enemy of great.”
We often find that the pull of inertia, the natural resistance to change that lives within all of us, combined with a lack of clarity on one’s goals, keeps advisors from reaching their full potential.
To gain that clarity and break the ties of inertia, start by asking yourself these five questions:
1. Just How Frustrated Are You?
While we all know that there is no perfect firm and that minor frustrations are a fact of life, it’s important to step back occasionally to determine if all the minor annoyances are starting to add up to something major.
The key is in assessing the impact of the frustrations. For example, a frustration for many advisors is the ever-increasing bureaucracy at their firm—that takes more time away from client-facing activities and eventually acts as a drag on growth. For others, it’s the constant pressure to cross-sell, beyond what an advisor feels is right—resulting in a sense of incongruence between the firm’s goals and the advisor’s. The key is to define and list the frustrations, then evaluate the impact of each issue both individually and in aggregate. This will allow an advisor to really determine if the frustrations are meaningfully impacting the business or are minor issues that can be overcome.
2. Are You Unsure if Clients Will Follow?
The reality is that fears regarding client portability are often unfounded. Advisors that make well-considered moves typically transition 90% of the assets they want to move in the first year. Many even end up at levels exceeding 100% of their prebreak assets, with clients consolidating assets held away.
The loyalty clients have to a trusted advisor cannot be underestimated. That, combined with careful due diligence to ensure that a move is truly better for clients, is essential to a successful move.
3. Do You Believe There Is Nothing Better Out There?
Sometimes outdated information and misconceptions keep advisors in their seats. So, it’s important to get an up-to-date view of the industry landscape and understand the options that are available today.
For example, the wirehouses once had a clear advantage in terms of offering the most-advanced technology and sophisticated investment platforms in the business. Now the playing field has been leveled. New boutiques, regional firms and top independent offerings have closed the gap via smart investment and innovation, commoditizing these resources, and sometimes surpassing wirehouse capabilities. It’s an evolution of the landscape that surprises many wirehouse advisors who perform due diligence—that is, learning that their current firm no longer holds a competitive edge.
4. Do You Stay Because Retirement Is on the Horizon?
In an effort to retain an aging advisor population, most firms have enhanced their retiring advisor sunset programs. This is great for advisors who believe that the current firm is the right home for their clients and team, and those who are comfortable with what the future at the firm may hold.
That said, these enhanced sunset agreements are getting longer, and the restrictions on the retiring advisor and team tighter—so much so that we are witnessing a wave of next-generation advisors bringing senior advisors to the table to perform due diligence, before signing on to the agreement.
For retiring advisors who decide the current firm isn’t the right legacy, there is the opportunity to move the business, earn a transition deal and then get paid again through the new firm’s sunset program. For entrepreneurial-minded advisors, going independent and selling the business to the team or an investor at retirement can be a very lucrative and tax-efficient exit strategy.
5. Are You Happy?
Happiness is an underrated—but important—part of the equation.
For many advisors, the firm they work for is unrecognizable from the firm that they joined. Industry consolidation, buyouts and bank ownership have changed firm cultures, making them feel big, bureaucratic and impersonal. And for many advisors, although they can slog through and continue to successfully service clients and grow the business, all the fun is gone.
This doesn’t have to be the price of doing business in today’s environment. Given the number of high-quality options that are available, it is absolutely possible to make a move that ups the happiness quotient for the advisor—and is also better for the business and clients.
Accepting good enough can sometimes mean that inertia has taken hold, but often advisors accept the status quo because there are other things they value more. The potential to acquire a book of business, the ease and familiarity of life at their firm or a smooth glide path to retirement might be more important than going for great.
Gaining clarity is key to breaking free from inertia and helping to identify that good may, in fact, may not be enough—and that great is not only better but is absolutely possible.
Wendy Leung is a senior consultant with Diamond Consultants, a wealth management recruiting firm.