TRANSITION TALK

The Four Greatest Opportunities for Financial Advisors

Posted by FP Transitions on Jul 16, 2020 7:27:21 AM

Four Opportunities for Financial Advisors

Today’s Independent financial advisors face an endless array of challenges and opportunities. Identifying challenges before they arise is key for finding solutions and developing strategies for tackling the issues that present the greatest opportunities for improvement and growth.

The four biggest opportunities are:

  • Balancing Growth and Profitability
  • Recruiting and Retaining Talent
  • Creating Business Sustainability
  • Growth Through Mergers and Acquisitions

Balancing Growth and Profitability

Growth and profitability are inextricably linked and balancing the two within a single practice is the difference between building a one-generational practice and a multi-generational, sustainable enterprise.

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Topics: Compensation, Succession Planning, Acquisition, Business Growth, Mergers, Talent Recruitment, Sustainability, Enterprise

Monitoring the Health of Your Business with Annual Checkups

Posted by Mike McKennon on May 28, 2020 10:57:46 AM

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Completing an annual valuation on your business is the financial service industry equivalent of undergoing your annual physical. I’ll turn 55 this year and I have resigned myself to the fact that prescription medications have officially become their own food group and an annual physical is no longer optional. My annual pilgrimage happens to take place in the spring tucked neatly amongst the sporadic appointments to see specialists for knees, elbows, near sightedness, far sightedness, rotator cuffs and something about my lumbar.

Now, the key word here is annual. If I had my cholesterol checked 10 years ago and then never again how am I going to know if what I am doing is working? An annual examination provides a historical record of your overall health including your vital signs enabling you to make changes in order to perform at your best. The good news is that, unlike my annual physical, your valuation results should get better as your business matures.

Your business is a living, breathing entity. Just like the investments you make on behalf of your clients, it needs to be nurtured, protected, and developed in order to realize its maximum value. It’s important that your valuation be updated annually. The monetary value of your practice is just one of many pieces of information to be gleaned from a professional business valuation.

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Topics: Acquisition, Business Growth, Business Value, Exit Planning, Continuity, Benchmarking

Synthetic Equity

Posted by FP Transitions on May 6, 2020 10:43:48 AM

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Equity-based compensation provides an excellent solution for practice owners who need a reward system that goes beyond the traditional salary/bonus structure and shares the economic value of equity, but not equity itself. 

A critical element in the success of any small business is its ability to recruit, reward, and retain talented advisors and support staff. To this end, equity compensation is often used to achieve these goals. Synthetic equity is a tool set that can provide ownership-level benefits without buying or selling actual stock in an advisory business.

To be clear, the process of transforming a single-owner practice into a sustainable business generally relies on equity. Equity, or stock, is what next-generation advisors invest in, and over time and with hard work benefit from, above and beyond what compensation alone can provide. Equity is the shareholder value created in a business managed from a bottom-line up perspective with a focus on earnings or profits as the ultimate financial goal. Equity is a powerful building and motivational tool, but with the opportunities come obligations. Because of these obligations, buying or selling equity isn’t the only way to offer key employees ownership-like benefits, nor is it always the best option.

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Topics: Succession Planning, Equity, Multi-Generational Ownership, Business Growth, Talent Recruitment

Virtual Meetings : Looking Your Best

Posted by Alex Moan on Apr 13, 2020 10:22:15 AM

Virtual meetings are becoming the new normal. Taking a few moments to arrange your visible workspace, leverage what have at home to improve lighting, and frame yourself onscreen can do wonders for looking your best through virtual communications. Our Video Marketing Specialist, Alex Moan shares some tips in the video below. 

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Topics: Education, Business Growth, Culture, Client Relationships

Controlling What You Can, Learning From What You Can’t

Posted by Marcus Hagood on Apr 1, 2020 4:44:25 PM

Controlling What You Can, Learning From What You Can’t

“Instead of focusing on the circumstances that you cannot change—focus strongly and powerfully on the circumstances that you can.” –Joy Page

One of my favorite movies of all time is Casablanca. This 1942 American romantic drama is revered for its cinematic quality, lead characters, fantastic writing, and pervasive theme song “As Time Goes By.” It is set in a time of war, upheaval, and great uncertainty; in fact, the movie is the perfect foil for the underlying message that we control our fate through direct action. There are many scenes that highlight that message, but Joy Page was a part of one particular scene that foreshadows the ending of the movie and reinforces her thoughts as expressed above.

In this scene, Humphrey Bogart, playing the lead character Rick Blaine, tells the husband of a newly-wed Romanian couple to make a bet on the roulette table at Rick’s Café Américain casino. To summate the plot line, earlier in the movie, Rick had turned down helping the newly-wed wife played by Joy Page citing that he helps no one to avoid the suspicion of the Vichy police.

As the plot line continues, Rick has a change of heart and whispers in the husband’s ear to make a risky bet on the rigged roulette table. With a little help, the husband wins enough money to buy a passage out of Casablanca for himself and his new wife. The action that Rick takes in this scene foreshadows his later actions that free Victor Laszlo and his wife, Ilsa Lund, from the Germans and Vichy Police in Casablanca. The rest is cinematic history.

In times of uncertainty, it is always wise to focus on what you directly control, as pointed out by Ms. Page’s quote. Whether we look at current politics, markets, regulation, news, or the current state of the financial services industry, there have been (and always will be) many events outside of your control as a practice owner that affect your work. How do you deal with this constant noise? Recognize it for what it is and focus on the things you can control with direct action.

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Topics: Commentary, Organizational Structure, Business Growth, Continuity, Talent Recruitment, Sustainability

Continuity Now : Don't Leave Your Business Unprotected

Posted by Lisa Cordial and Mike McKennon on Mar 26, 2020 12:27:00 PM

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Ongoing developments with COVID-19 have prompted a number of advisors to contact us and make sure their death and disability continuity plans are up to date. It’s worth noting that only about 30% of advisors have any type of formal, written death and disability agreement in place. That leaves 70% with little to no protection for their business and clients.

What is Continuity Planning?

Business Continuity Planning is required by most regulatory organizations in the financial services industry. The common objective is preserving client service and asset management continuity in the event of natural disaster, national emergency, or exit of the licensed principal. Death or disability agreements provide a contingency plan that ensures a seamless transfer of control and responsibility for the business in the event of an owner’s unplanned and abrupt departure.

In the wake of COVID-19, we’ve seen many of these operational contingencies enacted by advisory firms nationwide, and that the preparation for a sudden exit is equally as crucial. Highly transmittable and difficult to predict respiratory viruses aside, you never know when an unexpected event will prevent you from performing your role as owner and advisor.

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Topics: Commentary, Business Growth, Industry News, Continuity Partner Matching, Continuity

Be a Resource in Times of Uncertainty

Posted by Brad Bueermann on Mar 24, 2020 1:44:34 PM

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The last few weeks have been eerie. The markets are fluctuating, schools are closed, streets are deserted. The Portland area had a run of 65-degree sunny days followed by two days of snow. Our office is down to a skeleton crew, and the rest of the staff are working from home.

At the beginning of March staying away from the coronavirus seemed as simple as keeping anyone sick at home. Now the ambiguity of who might be carrying the virus has sparked fear of the unknown and driving us to make drastic, unprecedented changes in our lifestyles to protect those at highest risk for severe infection. The situation and preventative measures seem to change daily and vary state to state.

But, this, too, shall pass, and we are all trying to stay productive and maintain perspective on the current situation. Twelve years ago, we experienced a similar market shock. Though the circumstances and drivers are different now, the way the industry adapts and manages investor uncertainty to find our way to the other side of this, as innovators and entrepreneurs, we will have to think similarly.

Be a Resource

The biggest piece of advice I can give to advisors who expect to make it through is this: be a resource.

Be a resource for your clients and their communities. They’re all searching for guidance right now. Even if you can’t give them concrete answers, you can give them context. Nobody can predict exactly what is going to happen in the next few months, but you can support your community by sharing your knowledge of the financial system.  

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Topics: Commentary, Business Growth, Industry News, Client Relationships

News Roundup: Expert Tips for Working Remotely

Posted by FP Transitions on Mar 18, 2020 10:27:52 AM

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Things have been changing for years, more and more people work from home and do so productively. Gone are the days, for many industries, where being in an office is a requirement. As technology continues to improve and online communications have become a daily occurrence, full-time employees around the country have had more freedom and flexibility, often able to work from any location.

Businesses around the world are asking employees to work from home in an effort to curb the spread of COVID-19. This is an excellent policy for public health, but how do you work from home without sacrificing productivity and client satisfaction? We've culled the internet and found helpful advice from people who know how to do it right.

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Topics: Business Growth, Industry News, Leadership

Create a Schedule : Tips for Working from Home with Kids

Posted by Elise Rogers on Mar 17, 2020 4:26:00 PM

Create a Schedule - Working From Home with Kids

With school closures across the country and many parents working from home, we asked a seasoned, work-from-home pro, our Marketing Director Elise Rogers, how she’s adapting to working remotely with her three boys full time. Below she shares a tool she’s created to keep her oldest son productively engaged and everyone else on task.

This new change in my family’s lives is causing my managerial mentality to go into over-drive, and like any manager, I am tackling this new homeschool lifestyle with a plan.

I have three kids (12, 2 ½ and 7 months old) and while my husband and I are tag-teaming the little ones, we want to be sure my oldest son is engaged and completing his online learning and not spending all his time watching TV or playing video games for the next month or more. Here is some insight I have gathered from creating this process for my own family.

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Topics: Business Growth, Industry News, Leadership

Structuring Ownership Compensation

Posted by Stuart Smith, JD on Mar 11, 2020 8:52:42 AM

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Professionals working in the independent financial services industry tend to organize their business the same way as other professional service providers. Whether a dentist, lawyer, or wealth advisor, chances are that the firm owner is both a full-time employee and an active manager of the business as well as a shareholder. We are often asked in our consulting work about this dual role; shareholder and employee, and the interplay between them, particularly as it relates to compensation strategies. For example, should employees be rewarded with stock, or the opportunity to buy stock for achieving certain targets? Or, now that I am an owner, shouldn’t I get a raise?  

There are no simple answers to these questions, but context should help to understand the thought process required to make informed decisions when these issues inevitably arise.

Salary vs. Profit Share

At a first level, ownership and pay are distinct concepts with unique rules, purposes, benefits and risks. These concepts represent the division between the return an investor receives on the capital put at risk and the reward received by an employee for the work that is performed. This division should be simple, self-evident and unbending, but the reality in a small business is often far different. The smaller the company, the harder it is to maintain a distinction between ownership returns and compensation. In the most basic model, a one owner company, the black and white lines dividing a return on investment and wages for work often disappear completely.

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Topics: Compensation, Business Growth, Enterprise

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