On June 14, 2022, our firm, Accredited Investors Wealth Management, will again host the “Be Our Guest” program at our offices in Minneapolis, where a $1,500 donation to the Foundation for Financial Planning will get you behind the scenes at our firm in its 35th anniversary year.
Our formal program shows all the aspects of how we deliver wealth management to the 600 families for whom we manage almost $3.5 billion, as well as how we run our business. All our 55 employees will be available to you for any questions you have about the business. We limit the program to 20 attendees so everyone can have all their questions addressed. In the past, firms of all sizes have benefited from the exchange.
It has been two years since our last program and much has changed. Here are some things we will be covering that you can think about for your own practices.
The Entrepreneurial Operating System, Or EOS
The biggest change we’ve made in our business is to implement an “entrepreneurial operating system” for our executive committee. This idea is described in Gino Wickman’s book Traction: Get a Grip on Your Business—a system that helps you run your business rather than have the business run you. The system has many components, but I’ll share some of the ones that have had the greatest effect on our organization:
1. Holding “Level 10” meetings. Our executive committee is made up of six people who meet every Wednesday morning from 7:30 to 9:00 to go over our financials and ratios, progress we are making on our quarterly objectives, client or staff issues, firm-wide messages we need to communicate, and then whatever other issues that need to be addressed (or parking lot issues that we now have time to cover). Anyone who knows me would never expect me to agree to weekly meetings, much less ones that go for 90 minutes, but these have transformed our organization. We speak a common language and have more clarity about what we need to do.
2. Identifying, discussing and solving problems. As we go through the issues, the entrepreneurial operating system helps us identify, discuss and solve one issue before we move on to the next. We used to spend a lot of time trying to solve multiple things simultaneously without realizing we were doing so. For example, when understanding family billing, we may have looked at lineage, privacy, types of accounts, the size of the relationships, etc. Before we had the operating system, chaos would ensue as we brought up each of these items in our discussion and never solved any of them. Now we make sure we correctly identify the issue we need to resolve before identifying the next piece. While this sounds obvious, it can be hard to do. The entrepreneurial operating system has given us the discipline to manage this.
3. Having a vision/traction organizer. This one is the mother lode. It means identifying our core values, core focus, 10-year targets, our marketing strategy, our three-year picture and our one-year plan. We broke these down so that the things we work on align with what our stated objectives are. Like most entrepreneurs, we used to get excited by shiny objects: some new or interesting way to market or organize without regard to how it fit into our long-term objectives. I cannot begin to tell you how much wasted effort would have been saved if we used this process years ago.
To create this operating system, we worked with a facilitator to help us get started on the process. It is not something we could have done on our own.
Succession Planning
I believe this system helped pave the way for our succession plan. At the Be Our Guest event, we will share with you what transpired. Accredited’s president, Wil Heupel, and I have been selling the firm to internal shareholders over the last few years. We set up outside bank financing to finance the purchase of our shares. But succession planning is far more than constructing an orderly model for share sales. For founders like us, it involves understanding where we needed to step in, step up or step out. It meant coming to grips with the fact that not only were we celebrating the firm’s 35th anniversary, but we were 35 years older. It meant that if we wanted the firm to stay independent, we needed to pass the torch while still being seated by the fire. In other words, we needed an orderly transition of leadership while Wil and I could stay involved at both the firm and client level.
In well-run firms, succession planning should be subtle, not splashy. Every person involved gave up something in order to gain long-term benefits for the firm.
Business Development
One of the major changes at our firm came when we developed a better strategy for business growth. Our managing director Becky Krieger took the lead on this effort, and the results have been incredible. We have a firm growth committee that meets twice a month to give status updates and share ideas about growth opportunities—identifying who at the firm can speak with influential outsiders and have a better understanding of who may become a good fit as a client. For example, in one meeting we discussed one of our clients whose company was bought by private equity, and we developed a strategy for working with his colleagues who shared in the liquidity event. We are not a firm that pays for production; all clients are clients of the firm, not any individual in it. We offer firm-wide profit-sharing rather than production bonuses. But our firm’s growth is a key ingredient in creating sustainability so that people who work in it can have a career path that’s exciting for them.
We’ve also created a new policy about admitting clients. We’re a comprehensive planning firm that does asset management, and we still charge based on assets under management. Our minimum relationship is $2 million. But now we have a formal policy for someone who doesn’t meet the minimum to come aboard if they are following a path that will allow them to reach our account minimums within a certain period. These clients come to an executive committee that decides on their eligibility. The committee has also allowed us to refer potential clients who are not ideal fits for us to other planning firms and thus fulfill our deeper desire to help anyone who needs it.
Hiring
We have managed to hire some excellent people during the Covid-19 pandemic, even though they are not coming into the office. Our hiring practices have significantly evolved over the last few years, and that’s helped us with our success rate in finding people who are good fits for their roles in the organization.
We have two people leading this hiring comprehensive process—Jeremy Heckman and Megan Olson. Potential employees meet with Jeremy and Megan, as well as several other staff members. If everyone is comfortable, we move forward by sending them to an industrial psychologist who does extensive testing for competencies and cultural fit. Many prospective hires end up getting weeded out by the psychologist. Think about that. In order to get to the psychologist, they would have had to meet with several staff members who gave them the OK. If they get rejected by the psychologist, we have created another level of safety.
I say safety because bad hires are bad for the business. Studies show that by adding this step, success improves from less than 40% to 67%. It’s still far from perfect, but each incremental improvement in the process saves our time, money and reputation.
The people we do hire go through their report with the psychologist to understand the areas where they may struggle. That report also helps us understand the things we need to pay attention to and provide coaching.
Covid
I don’t want to say that we were ready for a pandemic, but in many ways we were prepared for remote work. All of our employees had laptops at their workstations, which eased the change to work from home.
Still, the pandemic taught us a lot. The most important thing we learned was that we needed to constantly communicate. Most people like certainty, and a pandemic provides none. We pushed back our office’s reopening and had to adjust the way client meetings worked. We had to be flexible for employees who struggled with childcare and needed to be sensitive to those managing the impossible task of schooling their kids while trying to do their jobs. We had to help those who were isolated try to feel like a part of the company. One of the things that helped the most is that our managing director Brian Martin, one of the people helping us put the Entrepreneurial Operating System in place, hosted a Zoom meeting twice a month called “Ask Me Anything,” in which he would go over our plans and address whatever issues anyone may have had.
We are creating a service-from-anywhere approach for our business where most employees are not required to work full time in the office. We are going to continue to test various ideas to see how they work, but it will be important to be able to adapt as things change.
I hope you can join us June 14 for what I guarantee will be a great day for you and raise money for a great cause. We are excited to host you and share with you things that we believe can meaningfully impact your business.
For more information, please reach out to Barb Schiel, our executive administration and facilities manager, at [email protected].
Ross Levin is the chief executive officer and founder of Accredited Investors Wealth Management in Edina, Minn.