Have you ever examined your current firm with the proverbial magnifying glass? That is, really assess it the same way you might if you were starting your career from square one.
Even advisors who are completely confident that they will never make a move would be wise to think about their current firm through a critical lens, be open-minded, and be willing to challenge the status quo…particularly when things are going perfectly well.
There’s one given in life: Things change—and they do so quickly in big brokerages. Therefore, it’s wise for advisors to think proactively and strategically about their businesses to avoid being caught off-guard and then scrambling to figure out a Plan B.
Plus, the path to success is often not linear. Periodically taking the time to ensure that you’re on course or that your goals haven’t changed will affirm that you’re well-aligned with achieving success.
So, what strategies can advisors use to set themselves up for success before any potential headwinds?
1. Think Years Ahead
Consider teaming and succession agreements, including firm retire-in-place/sunset deals. And think about these things through a short-, medium-, and long-term lens. The ability to inherit a book is great, but if it ties you to the firm for seven years, can you live with that? You may not need a successor today, but it’s imperative to think about your next-gen years before you’re ready to retire. There is no better example of “digging the well” before the need.
2. Periodic Education
Advisors who make a transition don’t have a choice: they must address why they chose their firm head-on with every single one of their clients. But advisors who have been with one firm for most, or all, of their careers run the risk of allowing inertia to take hold, opting for the status quo for reasons other than proactive and strategic business planning. So, how do you know if your firm continues to be the best place for you to run your business? By periodically conducting due diligence on your firm. This is not to suggest that all advisors should make a move. It is to advise that if you have never at least taken the time to get educated about the landscape, including where your current firm fits within it, you may be doing yourself a disservice.
3. Simplify Everything … To the Extent Possible
There is no “right” way to run a wealth management business. But generally, a simple and clean book is preferable to an overly complex one. Why? For one, simplicity often means faster asset transitions if the book ever needs to be transferred out of the firm. It’s no secret that big firms like complexity. It makes the firm a more indispensable component of the advisor-client relationship.
Additionally, complexity often leads to sticky client assets. Make no mistake: clients often have complex financial needs that require complex solutions. But next time you buy that proprietary SMA, ask yourself if the liquid ETF might work just as well.
4. Protect Yourself
We live in a world of zero-tolerance compliance and risk management. Gone are the days when an advisor might be warned with a “slap on the wrist.” That means every single employee advisor is vulnerable: You are one wrong move away from being placed on heightened supervision or, worse, terminated. That’s not a scare tactic but a stern warning: Be buttoned up and above board in everything you do. There may not be a microscope on you now, but it may be turned on down the road, either because of a compliance issue or because you are pursuing a change. Be rigorous when documenting notes about all client interactions. Be a model corporate citizen. And act as if your firm can see and hear everything you do. (Odds are, they probably can!)
All of these tactics serve the same ultimate purpose: to allow advisors to be proactive and thoughtful about every single thing they do in or around their business. Said another way, they are strategies that advisors can use to maintain agency over their business lives. Every advisor should have the right to choose their next move thoughtfully based on what is best for their business and their clients. Whether a change is in the cards or not, advisors who prepare in advance for any and all scenarios that might come down the pike are doing their team, their clients, and themselves a great service—and will never be thirsty.
Jason Diamond is Vice President, Senior Consultant of Diamond Consultants—a nationally-recognized recruiting and consulting firm based in Morristown, N.J. that focuses on serving financial advisors, independent business owners and financial services firms.
