Nourishing successful employees will help you business to succeed.
This profession has been under attack of late for
not creating enough opportunity for junior advisors. It is true that
there is room for the profession to mature in its ability to develop
people and create leverageable, transferable businesses.
But where are advisors expected to attain the skills
to manage and develop people? When you were getting licensed,
designated or certified in this profession-studying for your Series 7,
your CFP, your CPA, your CFA or your ChFC-how many of you took a class
on how to manage people and create opportunity for them? As you gather
required CE credits year after year, how much content is available on
being a better manager of people, or of your business in general?
These subjects are not even credited as CE by the
CFP Board. Hopefully, financial advisors nonetheless will take it upon
themselves to build the skills that will grow their business and
sustain their profession. Nothing is more important-to the older
generation of advisors, the younger generation of advisors, and most
important, to the clients they serve.
As we work with advisors around the country who own
and manage businesses, many of them want to build teams, they want to
manage their staff better, and they want to create opportunities. Many,
however, lack the fundamental understanding of what it takes to be a
good boss and a good manager of people. Of the 1,200 advisors we have
worked with over the years, I've come across only a handful that enjoy
and excel at this role. But learning from those who do this well (and
even from those who don't), we can gather lessons that apply across the
profession.
1. Don't just write job descriptions for people;
define the desired outcomes. Define expected performance and
exceptional performance for each role. Too few employees of advisory
firms can answer these questions and distinguish between expected
performance and exceptional performance for their own role. What they
describe as exceptional performance-"show up on time, don't make a lot
of trade errors"-most of us would think of as expected performance. But
in the absence of great coaching and defined performance levels, many
employees struggle to know if they are doing well, and what "well" even
looks like.
Don't just say that a paraplanner "is responsible
for gathering and inputting data and generating financial plans for
clients." Explain the role you expect them to play in client meetings
and how you expect that role to change over time. Do you expect them to
help identify additional opportunities with clients? Do you expect them
to identify inconsistencies between a client's plan and stated goals?
What do you expect them to learn in the process? Do you expect them to
build their analytical and presentation skills by presenting on client
issues and technical issues to colleagues in staff meetings? Do you
expect them to contribute to the firm's reputation by getting involved
in the profession or in your local community?
Think hard about each position in your organization: "What kind of
performance in this job would just be meeting my expectations?" "What
kind of performance in this job would I really consider exceptional?"
2. Delegate good work and delegate work well. Give
good instructions, and be available to coach someone through a task the
first time it's been delegated to them. Don't snatch it back if they
aren't doing it the way you would have done it. Recognize that the
third time you delegate a task it might save you time, but the first
couple of times you are making an investment.
3. Don't hire junior staff to work with clients you
don't value as a business. Instead of firing bad clients-those who are
too small, not profitable or outside of the firm's target market-many
firms are considering hiring a junior person to take on those clients.
If the junior advisor has any skill, in a couple of years they are
stuck with a full load of small clients, their capacity is tapped and
their ability to grow is limited. The clients that aren't good enough
for you aren't good enough for them either. You've solved your personal
capacity problem by dumping it on a junior advisor, creating the same
burden for them. Instead, always focus on the clients you want as a
firm. When you are nearing capacity, hire a junior person to work with
the firm's target clients in a support role until they are ready to
take a lead role in some of those smaller, but target, client
relationships. But don't hire a junior person to justify making a bad
business decision to keep clients you shouldn't.
4. Elevate your employees to your clients and to
other professionals. Introduce everyone that works for you as your
"colleague" and no one as your "peon." Share credit generously and
blame sparingly. If something is a success, credit your staff (even if
they had little to do with it); if something is a flop, take
responsibility (even if you had little to do with it). Never make your
staff look bad in front of a client, even if they've done something
wrong. Wait until the client is gone to coach your staff on how they
could improve.
5. Use your compensation plan as a communication
tool. Relate increases in base salaries to increases in roles and
responsibilities and relate incentive compensation to superior
individual and company performance. Tie each employee's incentive
compensation to 1) personal performance and achievement of personal
goals, and 2) the firm's performance and achievement of business goals.
6. Teach employees about business management.
Hoarding knowledge and information doesn't put you in a position of
power; it puts you in a position of risk. No one ever learned so much
about running an advisory firm from their employer that they took that
knowledge and left to start their own firm. More often, they leave
because of a lack of that knowledge; they have no idea what it takes,
the risks involved, the appropriate returns on risk, the complexities
involved in managing staff, finances, clients, compliance, vendors,
benefits. We shame young advisors for not understanding the uphill
climb that most advisors suffered to build and manage their business,
but we also don't educate them on what running a business is all about.
Don't educate them to intimidate them, educate them to involve them.
Hopefully someday soon the licensing/certifying bodies will recognize
that clients need advisors who can run viable, sustainable businesses
that survive to serve them just as much as they need them to deliver
competent, ethical advice.
7. Share financial information. At a summary level,
share revenue, gross margin, operating expenses and operating profit
margin. Describe what margins you are targeting as a business and where
you are focusing to make improvements to get there. Don't be
embarrassed about your bottom line and how much (or how little) money
you are taking home. If you are paying people fairly and they are
participating when they and the firm do well, you shouldn't worry about
questions like "Where does the rest of that money go?" Employees should
understand there are financial benefits of ownership-this is the
owner(s)' return on investment. In fact, if the owners are taking home
more, this demonstrates the appeal of being a partner over being an
employee, for those willing to work to earn this status and willing to
take the risk of ownership.
8. Recognize their success enhances your success; it
doesn't detract from it. As much as it may hurt the ego, the more
irrelevant you become to your business, the better your life and the
more valuable your business. It's good for your staff, it's good for
your clients, it's good for your business, it's good for you. To put
yourself in that situation, you need to build people who are as good or
better than you and who are as successful or more so. Live in an
abundance mentality, not a scarcity one; there is enough credit, fame
and success to go around-push as much of it as you can in the direction
of your staff.
9. Demonstrate to people that you care what they
think. This doesn't mean you will implement all their suggestions, or
act on all of their complaints, but it means you will listen and you
will value their input and their perspective. Don't be afraid that
communication will validate you are doing something wrong. Ask staff
for their input and their ideas on how to address the challenges.
10. Ask people what they need from you and how you
are performing in your role as a manager. Have employees perform
upstream evaluations on you and anyone else they work for. If you don't
think they will share feedback candidly, ask a third party you trust to
collect responses anonymously and compile them for you. Ask staff to
rate you and other managers on issues like:
Is technically proficient,
provides good advice, and is able to answer my technical questions.
Demonstrates a passion for excellence in his or her work.
Provides noticeably superior service to our clients.
Delegates challenging work that is appropriate for my level of experience.
Includes me in meetings with clients in an appropriate way.
Promotes me to clients and other professionals as a respected colleague.
Helps me to develop my skills by providing opportunities for growth and challenge.
Conducts productive and timely performance evaluation meetings.
Makes time to be accessible when I have suggestions, questions, or problems.
Listens attentively and is interested in my opinions and thoughts.
Gives me recognition for my contributions and efforts.
Understands that it is important for me to maintain balance in my life.
Treats people with respect.
Ask: What do you most like about working with this
individual? What suggestions do you have that you believe could improve
your working relationship?
If running a financial advisory practice and
managing people were easy, everybody would be bosses and nobody would
be employees. But like all good things, success in managing people
requires work. There are recruiting strategies to be considered, career
paths to be developed, compensation plans to be designed. But at the
root of it all, learn to be a good boss to the people you have. Their
success and happiness will enhance yours.
Rebecca Pomering is a principal in
Moss Adams LLP and consults with financial advisory practices on
matters related to strategy, compensation, organizational design and
financial management. She is co-author with Mark Tibergien of Practice
Made Perfect.