Your firm’s succession plan is designed to gradually transition ownership, leadership, and growth responsibilities to the next generation of advisors. The goal is sustainability of the firm, and it is accomplished through a plan that coordinates the changing roles of the founder(s) and the successor team over many years.
Selling equity in the business in a series of steps or “Tranches” gives both the founder and the next generation of owners the time to wisely manage the transition and to prepare for the changes to come. The transfer of ownership from the founders (G1s), to the second and third generation of owners (G2s and G3s), starts with Tranche 1. Tranche 1 is usually a sale of 10% to 20% of ownership to the next generation. Tranche 1 is often called the incubator stage and allows for all parties to test the waters and to prepare the business structure for the journey ahead.
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Topics:
Succession Planning,
Business Growth,
Next Generation,
Building Your Team
In my work in years past, I became a professional traveler. I spent a lot of time in airports, and I got to talk to many of the pilots. Airline pilots are adventurous souls who enjoy finding ways to go faster, fly higher, and see things from a level that others cannot. They are also very methodical and go about everything with a checklist mentality, a clear purpose, and as much knowledge on the subject matter as they can muster. I find a lot of our entrepreneurial advisors to be cut from the same cloth. The goal of building something bigger, stronger, and better, helping clients better understand the financial world, and then sharing what they’ve built with others is woven into the very fabric of their being. Entrepreneurs like to improve and grow, and they like to do things right.
Growth, of course, can mean many things. You might want to grow your top line revenue and assets under management. Maybe you’re looking to hire and build your team in order to improve the client experience. Perhaps you want to acquire a practice, or two, to quickly grow revenue, assets, the client base, and your own income. But, just like a pilot who wants to go faster and fly higher, eventually you’re going to need a larger plane, a stronger engine and airframe, even additional skills that maybe you don’t currently have–or don’t necessarily have a passion for developing.
Over time, we’ve seen that independent advisors don’t naturally build large, profitable, sustainable businesses. The ambition might be there, and recurring, fee-based revenue certainly helps the cause, but the skill sets that prompt most independent advisors to hang out their own shingle and start gathering clients who trust you with their financial goals and assets are different than what it takes to run an organization of professionals and create scale. For these reasons and others, this is still more an industry of book builders than it is of business builders.
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Topics:
Compensation,
Succession Planning,
Organizational Structure,
Business Growth,
Entity Structure,
Sustainability,
Building Your Team
Sparking that next phase of growth might be harder than expected. For firms moving from sole proprietor to a practice, growth may come easy – but only to a certain point. When a plateau hits, where should advisors look to dig in and overcome? Benchmarking, alongside a deep understanding of business growth and value drivers, is where firms can stand apart from the pack.
If you are ready to grow your financial advisory business and wondering, “Why haven’t I grown faster?” this may be the blog post for you.
Read on for our best tips on diagnosing and overcoming growth inhibitors.
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Topics:
Business Growth,
Building Your Team,
Client Relationships,
Business Operations,
Key Insights
Whether you’re looking for seasoned talent or up-and-coming professionals to fill out your team, a winning recruitment strategy is built with intention. It's not just about the role you need to fill, but also about identifying the type of person who best aligns with your business’s culture and future growth goals.
What is the reason for adding this person to the team? Is it simply a matter of capacity? Or are there some other opportunities you can seize in the process? Recruiting the right person can also address your goals to:
- Expand your service offerings
- Diversify your client base
- Create improved operational efficiencies
- Secure continuity of client service
- Prepare for succession of business ownership
Understanding which of these align with your existing business plan will help you to tailor role descriptions and find the very best person. Setting the table for success requires vocalizing the right words, expectations and opportunities to your new hire at the outset. Additionally, this focus will help you to communicate what you can offer to attract your ideal candidate.
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Topics:
Compensation,
Business Growth,
Culture,
Talent Recruitment,
Building Your Team,
Equity Pathways
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Editor’s Note: We originally posted this article by Colleen Jordan Hallinan in 2018. Since then, the need for business owners to focus on building the right team in order to grow and establish sustainability has only increased. And so, five years later, Colleen’s guidance on nurturing your team, evolving your own role, and adjusting your mindset to cultivate a stronger, more capable group of professionals is just as relevant.
Successful, ambitious, and conscientious advisors ask questions like: How do I create next-level growth? What will it take to build a firm that delivers an extraordinary experience to my clients and their families? How am I going to achieve my own next-level life?
The answer starts with another strategic question: What has to happen to give you the freedom to focus on precisely those aspirations?
Your catalyst for growth in all three areas lies in the talents of your team. Make your A players your #1 priority and you’ll have an alchemy that expands your available time and transforms exhaustion and obstacles into more space and energy.
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But it doesn’t come without a cost. The cost is personal sacrifice of current habits, beliefs, ego, and behavior, plus an investment of more time now to blend together the ingredients for that alchemy. Your results will come from your ability to:
- let go and stay focused on the big picture,
- place yourself in service to your team, and
- treat them like your best clients.
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Topics:
Succession Planning,
Business Growth,
Next Generation,
Sustainability,
Building Your Team
Business growth is a never-ending, and ever-changing objective of all business owners; financial planners included. While the lingering social effects of the pandemic and the challenges of upscaling during the Great Resignation/ Reshuffle can make the task-at-hand seem insurmountable, there are still tangible ways that you can steer the course of your enterprise. Here are a few tips to help grow your financial planning business.
1. Invest in Human Capital
Most advisors have built their business from nothing into their single most valuable asset. Finding talent can be a challenge these days, especially with unemployment settling into lows not seen in over 50 years. Data from FP Transition's Valuation Database has indicated that businesses with multiple professionals accumulate assets at a higher rate than sole practitioners. As your business matures, it is imperative to invest in the next generation of talent, to keep the engine running while you begin to enjoy the reward for what you’ve built.
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Topics:
Acquisition,
Multi-Generational Ownership,
Business Growth,
Tip of the Week,
Revenue Strength,
Enterprise Strength,
Business Value,
Buying & Selling,
Next Generation,
Talent Recruitment,
Building Your Team,
Client Trust,
Business Operations,
Trends
Finding and recruiting talented professionals can be time consuming and intimidating. In this industry, online job boards like Indeed and Monster are not all that relevant. There are many other - better - places to locate up-and-coming talent. Whether you’re looking to recruit experienced advisory professionals, or fresh, new graduates, the following are 11 places for sourcing the best talent.
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Topics:
Multi-Generational Ownership,
Organizational Structure,
Culture,
Tip of the Week,
Next Generation,
Talent Recruitment,
Sustainability,
Building Your Team
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As an owner of a successful financial advisory business, you understand that the team you’ve built is vital to that success. Taking the next step and giving your top talent the opportunity to become owners can increase your growth and ensure that the business will continue to be successful–for generations to come.
Assembling this successor team and committing to a long-term partnership are important and weighty decisions. How will you know who will make a good partner? What traits and behaviors suggest that someone will make a successful owner? Much of that depends on your own values and priorities as the majority owner of your firm.
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Topics:
Succession Planning,
Next Generation,
Sustainability,
Building Your Team
The term “synthetic equity” refers to a set of compensation tools that is commonly used to provide key employees some of the economic benefits of ownership without actual stock changing hands. While existing owners may benefit from synthetic equity by capitalizing on employee performance without relinquishing ownership, there are key benefits to next-generation advisors, too.
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Topics:
Compensation,
Succession Planning,
Next Generation,
Sustainability,
Building Your Team
It’s hard to keep secrets in a small office. The rooms are tight, the walls are thin, and it’s just a matter of time before everyone knows everyone else’s business. Even when an owner has quietly decided to sell their practice, they should assume that staff members will eventually find out (if they haven’t already). In our experience, it’s best that employees hear the news from someone they trust: the owner.
Prospective sellers are often reluctant to speak to staff members about their exit plans because they aren’t sure how the selling process will pan out and they don’t know how the staff will feel about the change. While it’s important to be sure of your decision before announcing your plan, looping your staff into the process can increase your success and can even help shape the structure of your sale.
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Topics:
Selling Your Practice,
Deal Structure,
Buying & Selling,
Building Your Team,
"Buying, Selling, and Valuing Financial Practices"
