RIA owners and executives who earn the most in good times should be willing to suffer the most pain in the type of bad times the nation is now experiencing, according to DeVoe & Company executives.
“There should be a reverse hierarchy in down times,” said Tim Kochis, special advisor at DeVoe & Company, a business strategy consulting firm and investment bank. “The top people who reap the greatest rewards during successful times should be the first to suffer the pain in a reversal.”
Vic Esclamado, managing director at DeVoe, added, “In this crisis, owners should be taking the hit financially as [RIA] revenues are declining. Travel and meal expenses should be cut. Salaries can be cut, but you want to avoid that” if possible, he said.
Kochis and Esclamado discussed how to lead an RIA during a time of crisis on a webinar yesterday.
Some advisors may be getting push back now from clients because of the fees they are paying while their portfolios are shrinking. Advisors are responding by expanding services beyond reporting returns or lack of them, Esclamado said.
“People realize the value that advisors provide. The current situation is not going to change that,” Kochis added.
Providing strong leadership for a firm is more important today then every before, Kochis said.
“Leadership is a willingness to make decisions and accept consequences even with the uncertainty” of the current challenges, he said. “Good leaders accept the possibility of failure. Be humble. Acknowledge that you don’t know everything” when talking with staff. “You are the leader, but you are not doing this alone. Acknowledge the support of others.”
Esclamado said firm leaders should spend time with team members, even though it will be done virtually. “You have built a relationship with staff members. This is a time to be present for them.”
“Share your plan of action with the team members as you move forward, and tell the staff the truth. Authenticity is the key,” he added. “Make staff members a part of the solution” to the current challenges. “The more you can share and build trust,” the stronger you will come out of this, he said.