For a firm to grow, it’s imperative that its leaders understand the direction in which they want to take the business, and that their decisions and behaviors flow consistently from that understanding. In fact, having consulted for advisor firms for nearly 20 years, I can say that consistent leadership behaviors are the single biggest predictor of growth.
But, at times, advisor firm leaders can behave as erratically as the stock market. They continually shift their attention from one project to another in a quest to spur growth or to correct problems that are perceived as threats to growth. In doing so, leaders focus excessively on a single positive event—“We just landed a doctor client, let’s do a marketing push for doctors!”—or on negative event—“We lost a client, let’s figure out why and make sure it doesn’t happen again!” In such cases, the leaders are allowing emotion to drive their actions, rather than making sound business decisions based on broader goals.
This phenomenon, which is called miswanting, translates into distractions and interruptions in the business’s growth cycle. The antidote to miswanting, and the path to meeting your firm’s growth potential, lies in improving the leadership skills of the person running the firm. This means making a mindset shift that may be tricky: Moving your focus from tasks within the business to a focus on your behaviors and actions.
That RIA firm leaders get lost in the little stuff is understandable. The typical leader spends their time putting out one fire after another. A team member may be out because of a family crisis, leaving duties to be handled. A client might be threatening to leave the firm. There’s always something to do.
Contributing to the problem is the fact that most advisory firms are small and have limited resources. Remember, the U.S. Small Business Administration defines small businesses as those with revenues as high as $40 million and employment up to 1,500. The vast majority of RIA firms fit that description, and most lack the luxury of dedicated teams for each business area.
But without the discipline to focus on the big picture, sometimes at the expense of the day-to-day issues, it’s very difficult for firms to lay the groundwork that will take their growth to the next level. I encourage advisory firm leaders to balance their leadership efforts and their finite attention and energy across five core levers of growth:
Client Service. Most RIA firms aren’t in business to sell investments, life insurance or any of the other things we think of as financial products. The product they sell is their client service experience. Client service comprises financial advice, investment management advice, planning advice and general financial advice and guidance. Since client experience is advisors’ product, the consistency of that experience is the single most critical function of creating and sustaining growth.
Operations. The ability to repeat the client experience hinges on a firm’s operational processes. Operations encompasses all the backstage work that underlies the client experience, whether that’s the wealth management process, the financial planning process or other processes. It’s behind everything from client interactions—whether via email, phone, a website or a client portal—to employees’ training and experience of working at the firm.
Human Capital. Human capital is a distinct area from training employees to carrying out the operational processes that underly the client experience. Human capital is concerned with the compensation and incentive structures, benefit programs and partnership incentives that help retain talented employees and give an advisory firm an advantage in hiring new
