Many successful advisors who are attempting to build a sustainable business with enterprise value
are operating on a team basis. Among the top reasons they are drawn to a team model is to help:
- Overcome growth and scale limitations of solo models
Simple physics dictates that each advisor and full time equivalent has a finite capacity – so, additional staff can help overcome growth and scale limitations.
- Improve quality and consistency of client service
As the business grows in number of clients, assets and complexity, having a team with clearly defined roles aimed at delivering excellent client service can improve the quality and consistency of the client experience.
- Manage keyperson and succession risk
Many advisors also look to their team as a potential source for a successor. Also, firms with teams typically have documented processes in place, reducing the risk of important tasks and information falling between the cracks if a team members chooses to leave the firm.
However, teams aren’t a cure-all. Whether you’re creating a new team, inheriting a team or already have a team in place, bear in mind that:
- Teams themselves do not create business growth.
Rather, business growth creates the need for a team that can support further growth. Using the analogy of the chicken and the egg – business growth is the chicken and the team is the egg.
- Dysfunctional teams are an impediment to growth.
Staffing costs are typically the single largest line item on an advisory firm’s income statement. If that expense is going to team members who aren’t aligned and hence aren’t helping the firm reach its full potential, growth is hampered.
So, what distinguishes exceptional teams?
Effective teams stem from deliberate planning and on-going leadership from the top. These firms typically have a value proposition
that is supported by a workflow
that is reinforced by clear roles
and responsibilities filled by qualified team members
who are motivated by appropriate incentives
For advisors seeking to create a team – whether by using existing staff or hiring new staff – considerations should include
- What is motivating you to create a team? What business problem do you expect will be solved by the formation of a team? (Are your expectations realistic? Is the creation of a team the right answer?)
- What are the workflows and processes required for the team to solve the business problem?
- What are the resources, capabilities, and strengths of existing team members? If there are overlapping strengths, can they resources be reoriented to complementary specialist roles? Which roles remain unfilled?
The bottom line
Many of the most successful advisory firms are using a team approach to help them overcome growth and scale limitations of the solo model, improve quality and consistency of client experience and address key-person and succession risks. It takes time, planning and diligence to create an effective team but it can be very rewarding for the business, team members and clients.