Using this construct, many financial advisory organizations are likely practices or collaborations, not businesses, though that’s not to say that one form is better than another. Well-run practices may be far better positioned to offer services than poorly run, burdened businesses, for instance.
Still, being a business has its advantages. Advisors in a business are less likely to be pulled in multiple directions. Businesses may also benefit from efficiency and scale and, in turn, greater financial strength. They are better able to attract, develop and retain top talent, offer broader services, invest in better technology, access better third-party services and stimulate faster growth.
Enterprise
Some of the rhetoric within the industry suggests that the evolutionary spectrum of financial advisory organizations ends with the business stage. Yet, for those who seek it, there is something beyond being a business. Advisors have been nebulously thinking and talking about it for years, though they often don’t define or describe it holistically. They tend to use terms like “innovation,” “succession planning,” and even “sustainability,” but, in the aggregate, what they really are getting at is what may be the final stage of evolution: enterprise. An enterprise:
1. Is a business;
2. That is not overly reliant or dependent on any one person or small group of people; and
3. That can be sustained over time by new generations—in its offerings, functions and ownership.
Enterprises are meant to survive—and thrive—beyond their current group of employees, which means they are less dependent on individual people and instead propelled by what those people do and how they do it as a group.
Enterprises are in a state of constant renewal and need to evolve through constant innovation. Such evolution is central to their long-term survival, as no organization can remain static and expect to survive the test of time.
Importantly, enterprises need more than just succession plans. They must create perpetual, continuous succession processes to ensure transitions to the next generation and future ones.