Think of a continuum, with solo on the far left and enterprise on the far right. Between the two ends are multiadvisor offices (a.k.a. silos) and ensembles. As one moves from solo to multiadvisor office to ensemble to enterprise, one would expect more consistency and formality in the business and more need for compromise from the advisors who are part of the organization.
A solo firm has just one professional. All the other organizations described have multiple professionals. (Here, the word professional refers to advisors with client management responsibilities who also have business development responsibilities.)
A multiadvisor office is called a silo. Frequently, multiple advisors share space but little else. These situations require minimal compromise, since they involve several advisors doing their own things their own way.
Ensembles and enterprises are more formal and more structured. The more components of a sophisticated business the advisors share-the firm's name, clients, marketing efforts, investment strategy, technology, profits and so forth-the more the advisors need to compromise. In an enterprise, for example, one would expect to see consistency in the business vision, the way work is done, investment products and management, career development within the firm, succession planning, and revenue sharing, to name a few similarities.
Where Are You Along The Continuum?
You may want to consider the following 15 questions, which will help you determine where you are in the solo-to-enterprise continuum.
1. Do you share space? In order to convey a professional image, advisors may share office space. Other than renegotiating the lease or communicating with the landlord, there is little need for such advisors to confer with each other. Yet some decisions, such as who signs the lease or where the coffeemaker goes, can be too much collaboration for some.
2. Do you share office expenses? In addition to rent, two or more advisors might also share fax, copy and scanning equipment, as well as office supplies.
3. Do you share a DBA (i.e., doing business as) name? Rather than have three or four names on the door, some advisors "merge" and operate under one name. A shared DBA name also promotes an image to the public of a more established organization.
4. Do you share staff? The receptionist is the easiest staffer to share. But as advisors move down the continuum, they may also share customer service assistants, paraplanners or other advisors who serve smaller clients.
5. Do you target the same clients? To help describe your client base, start by determining your average revenue gleaned per household. Assume that Advisor A has 100 households he sees twice a year (200 appointments) and Advisor B has 300 households, half of which he sees twice a year and half of which he sees once a year (450 appointments). The difference is 250 appointments per year. All require preparation and follow-up, and they should prompt a discussion at the firm about the fair and equitable use of shared human resources.