We all want to grow our practices. A thriving practice tells us we succeeded (a) in helping clients manage their finances and (b) in building a business that supports our own personal and financial goals. We love our work: it is challenging and fulfilling. Yet our conversations with more than 100 emerging independent advisors around the country indicate that the work we love often becomes all consuming. Indeed, our hard work allows us to meet our clients’ needs, but it is preventing us from achieving our own personal and financial goals. But that does not have to be the case. Advisors have a choice and many of those who have paused long enough to consider and make that choice have found greater success.
One of the most fascinating aspects of a career in financial planning is that you experience so many different tasks during an average day on the job. Boredom is not a term you will hear used among planners. We are very fortunate to be consistently challenged to use both our right and left brain functions to the best of our ability. I am a firm believer that this is one of the key reasons so many CFP’s are so passionate and satisfied about the work they engage in. While this is a plus for many people, properly managing through these activities is absolutely critical to a successful outcome.
Busy and challenged often does not translate into success. Over the last year, we interviewed more than 100 emerging independent financial advisors around the country. Among the most common complaints was that the work they love has become all consuming – they are productivity challenged as they scramble from one project to the next in an attempt to stay one step ahead. Yes, even though the work is varied, challenging and fulfilling, only a minority of advisors have built the practices they always dreamed about.
That’s not to say that the other advisors are any less determined to grow their firms. Quite the contrary, many had quite lofty goals. Few of them, however, had addressed their productivity challenges. Most said they didn’t have time to think about it. Do you ever wonder why so many firms never seem to break through and accomplish the success they dreamed of while a few firms control the vast majority of managed assets? Luck, by the way has little to do with it.
Our experience over more than twenty years in this business plus conversations with more than 100 independent advisors over the last year leads us to the conclusion that advisors fit one of three basic profiles in terms of their inability to grow their practices.
- Business Development is Hard. Advisors in this category say they want to grow, but complain that they are just too busy to spend the time needed to build and execute a sales and marketing plan. When you peel back the layers of the onion, however, you realize this advisor is using his/her day-to-day activities as an excuse to avoid the personally painful process of business development. The sales process regularly results in dead ends, and, worse, rejection. So they remain focused on self-affirming day to day activities and remain frustrated their business does not grow.
- Productivity Constrained. Advisors in this category are comfortable with business development but are truly caught up in the daily challenges of running a successful practice. In order to free their time for business development, these advisors need to hire staff to assume those activities, train those staff and release control to them. Such an investment of time and release of control is never an easy decision. It is always hard to spend the money ahead of the curve when there are so many doubts about the future. This was a particular challenge for me, as CEO of Pinnacle Advisory Group: I have been exceptionally cautious about hiring due to my bottom-line focus. Fortunately, my partners were always there to coach me through the process — as it was, of course, the right thing to do. Without the courage to invest in the business and release control, these advisors also remain frustrated that their firms do not grow or their dreams are not realized.
- Customer Centric. Advisors in this category are intensely customer focused and hold no pretension that they are so smart that only they can deliver their clients suitable financial planning or investment services. Nor do they fancy themselves the world’s greatest business owners. But they are exceptionally effective at developing personal relationships, making complex concepts understandable and servicing client needs. This group possesses the firepower to build a business, but is at risk of choking on the day-to-day issues.
Each of these advisors exhibit different strengths and weaknesses but all face the same growth challenge: there is not enough time in the day to effectively do everything required of a financial planner, investment manager and small business owner by themselves and, as a consequence, they are not meeting their own personal and financial goals. So what are their options?
- Merge. Emerging firms simply do not have the resources to do everything effectively and may choose to merge with a larger firm where there are greater resources and more specialization to handle the myriad of tasks associated with financial planning, investment management and running a small business.
- Partner / In-source. Another option is to find partners/employees with complementary strengths and weaknesses and pursue greater leverage via an appropriate division of labor. While this is easier said than done, it is possible and our success at Pinnacle Advisory Group is living proof.
- Outsource. For those unwilling to lose either control or independence, there are now an amazing array of outsourcing opportunities for investment management, financial planning, operations, compliance and just about everything else conceivable. While this may be a difficult decision for our type one or two advisors to accept, it may be the best way to grow the firm. For the type three advisor, a comprehensive outsource option would be an outstanding solution.
Your future is your choice. Your success is not a function of how good an advisor you are or even how hard you work. In our experience most advisors have both of those items covered. The difference between the firms that have realized their goals and those still frustrated with their progress is the strategic choice they made to pause, learn how to achieve the leverage/time they need for business development and the courage to take the necessary steps. There is more information and assistance today than even just five years ago. Make sure you spend the quiet time you need to carefully plan your vision and then execute your plan with a vengeance!