In the past 30 years, there has been a gradual evolution of the financial advisory profession: from a cottage industry, where advisors hung out a shingle and worked from their homes, to more formal organizations with professional offices, business structures and models, and even dedicated management.
Regardless of what the size of a firm is, however, its organization also needs to evolve. It’s something every entrepreneur should think about. Specifically, does your firm’s organization align with its strategic approach?

Is There A Disconnect?
When you think about the history of your firm, was there ever a period when the organization was out of sync with its vision and mission—and did it matter?
I can think of what’s probably a common example for advisories. About eight years ago, many firms experienced challenges because they were not designed to align with the emerging technology of the day. Specifically, many of their tenured employees (especially employees of a certain age) lagged in their knowledge of technology. Today, many of those “older” employees have either caught up to learn it or have been replaced or shifted to other roles. Firms have learned that tech knowledge is not optional—for any employee of any age.

There are many other circumstances that may require a shift in an organization’s design: if a new client base is targeted, if the firm’s vision is rearticulated, if new technology emerges or if the service model transitions from predominately in-person review meetings to predominately technology-aided meetings. It is vital to account for these shifts. When things get off-kilter between a firm’s vision or strategy and the internal structure it has built to deliver services to clients, the disconnect can result in inefficiency, higher costs, lower morale, a negative effect on culture and, ultimately, a diminished future.

Evolution Of The ‘Typical’ Firm
As advisor firms have grown and changed, how have they addressed the issue of design? Historically, entrepreneurs in our industry casually unrolled an organization via daily decisions, without the necessary foresight or planning.

Let’s rewind through 20 years of a “typical” firm.

It most likely began with a solo advisor who, when busy enough, hired an assistant to help out as a “juggler” who acted as a receptionist, completed paperwork and did other various things. As the firm grew, a second assistant was hired to do the same thing as the first. By the third hire, a division of labor began: One employee would be the receptionist and the other two would do client service work.

As growth continued, perhaps the advisor hired a paraplanner to support meeting prep and investment management. Continued growth brought the introduction of an additional advisor. From there, growth evolved to include a marketing support person, a technology support person or some other specialty position. If the organization continued to prosper, the addition of more financial advisors and support staff evolved. Sound familiar?

More recently, we have seen the addition of dedicated middle management to oversee support staff. As more advisors have been added to firms, more partnerships have emerged, as have leadership positions such as the CEO and CFO in super ensembles. This evolution has worked! Growth has sparked hiring, which has led to more growth, and so on and so on. The industry has provided an attractive option for those who worked hard and prospered. But it’s still shifting.

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