There comes a point for many wealth management businesses where they find that though they have grown successfully over the years and increased their value leaps and bounds, they are a unable to move the needle in the increments they’re used to. The same strategies just aren’t as effective as they once were.
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Topics: Compensation, Business Growth, Culture, Client Experience
One of the most difficult challenges for independent advisory businesses is finding and retaining the professionals they need to service a growing client base and perpetuate sustainability. The talent pool is extremely competitive, especially in the financial services industry. The value of a strong team and integrated business is ever increasing, and the number of new advisors coming into the profession is still relatively low. To be successful in building the right team, you’ll need to be strategic in your efforts and focus on the people that best align with your business priorities and your plans for growth.
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Topics: Compensation, Organizational Structure, Business Growth, Next Generation, Talent Recruitment, Sustainability, Wealth Management, Business Operations
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
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
Last month our M&A Director James Fisher, JD and CEO Brad Bueermann delivered our 2021 Mid-Year Market Update and explored marketplace activity for the first half of 2021.
We all know that 2020 was a truly unique year on all fronts. The financial services M&A marketplace was no exception (as we discussed back in January). The effects of 2020 have carried over into 2021 and have impacted transactions in some unexpected ways–and have potentially changed deal term norms from here on out.
Our full Mid-Year Market Update presentation was close to 60 minutes, including a live Q&A session, and covered up-to-date transaction data and trends, realities of today's industry, qualities of successful buyers, and common acquisition misconceptions.
To focus in on some of the most important highlights from the session, Craig Strauser sat down with James Fisher, JD to discuss them further. Watch their chat below.
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Topics: Compensation, Business Growth, Sustainability, Enterprise
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We know it’s common to focus on getting a new client by sharing just enough information to win the sale. Often, that comes down to a quick diagnosis based on what the salesperson wants to sell, rather than what the client truly needs.
We don’t do it that way.
Through our Consulting services, we guide clients through discovery and then implementation, similar to the financial planning process that advisors provide.
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Topics: Compensation, Business Growth, Sustainability, Enterprise
With all of the modern tools for practice valuations and Equity Management Solutions® available, some financial advisors still choose to use revenue splits, or a revenue-sharing arrangement, as a makeshift succession plan. For a practice owner, this can be a poor and shortsighted business decision for several reasons, including:
- Unfavorable tax implications.
- Potential asset and client disputes.
- Reduced business value.
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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability
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
There are two ways to make money from a financial services business: wages and profit distributions. But, there are four ways to build wealth from the same model:
- Wages (including bonuses)
- Profit distributions
- Equity income selling equity
- Equity value, or stock appreciation
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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability
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