12 Keys to Building an Enduring Firm

If building an enduring business – one that cares for future generations (of both clients and advisors) – is important to you, then now’s the time to start planning. But what exactly does it take to build an enduring, sustainable wealth management business?

It’s a complex undertaking that involves positioning your business to effectively serve future generations of clients, investing in human capital and cultivating future leaders and owners of the business – as well as building a firm culture that will endure long after you step away.

Embracing your role as advisor CEO and stepping back enough from day-to-day duties to engage in long-term strategic planning and focusing on aligning personnel, technology, and marketing decisions with clear and achievable goals requires a major shift in mindset and perspective. But in order for your business to be durable, sustainable, and enduring, it’s a shift that needs to begin today by focusing on the following essential areas:

1. CULTURE – enduring firms set the right tone at the top of the organization around empathy, transparency, purpose, vision, and mission. We call it ‘leaving a set of tracks.’ What are the guiding principles that you want to impart to the next generation of leaders? How do you create a culture of inclusivity and diversity of thought?
   
2. PEOPLE – people will either stay with your firm or leave based on four key factors in order of importance: the nature of the work, the nature of the workplace, the nature of the relationship with their team members and boss, and lastly, money. Having professional development plans in place matters. Having career tracks for potential future leaders matters. Empowering employees to continuously improve matters. And hire strategically, looking for people who will be change agents for the organization.
   
3. LEADERSHIP – in order to truly professionalize your firm, you need people who are willing to and experienced at helping others grow. You need pathways for professionals to become partners and pathways for partners to become owners. And you need to set guiding principles for the next generation of leaders.
   
4. VALUE CREATION – becoming the preferred provider to your markets is all about focusing on the client and looking for new ways to create value. You need to institutionalize your client advising so that the business has a brand of its own aside from you personally. And you’ve got to continually innovate – looking for new solutions and technologies; and staying up-to-date on the latest developments and strategies.
   
5. COMPETITION – enduring firms recognize what the potential threats in the marketplace are, and always act as if the competition is coming. Who are your competitors and how do you stack up? Not just on a local and regional basis, but against national competitors too.
   
6. GROWTH – there are essentially three ways to grow intentionally and profitably: organic growth (harvesting additional revenues from existing relationships); inorganic growth (getting out in the marketplace and generating new clients); and acquisitive growth via M&A. Everyone who’s an owner or partner in the firm needs to be focused on some aspect of growth. Commit to building capacity in advance of need.
   
7. FOCUS – narrow your focus and place strategic bets on the areas you see as most likely to help grow your firm, grow your people, and grow your enterprise value. Rather than trying to tackle too much, go deeper on the two or three areas that present the best opportunities.
   
8. LISTEN – advisors who successfully build enduring firms are inevitably great listeners. They listen to the brutal facts of reality both internally and externally. They’re tuned into the issues around their business like margin compression, attracting and retaining the right talent, etc. Listen for issues and listen for opportunities. Constantly ask questions of your team and your clients to gain information and insights.
   
9. TECHNOLOGY – consistently create structures where you’re evaluating ALL of your technology and be open to change when something incrementally better comes along. This past year is a great example. Firms that were agile enough and flexible enough to quickly transition to meeting platforms like Zoom and adopt productivity tools like Slack and Microsoft Teams had a clear competitive advantage.
   
10. BRAND – the best in the business know how to tell their story in a quick, clear, and compelling way. What does you marketing and messaging machine look like? Take time to get better at framing your firm.
    
11. FINANCIAL SECURITY – know your P&L inside and out. It’s a math problem worth solving. Profit targets, growth targets, enterprise value metrics. Build a dashboard that allows you to track these and other metrics more easily. Build solid pro forma spreadsheets for the next three years to better project the firm’s financial future.
12. SUCCESSION – every enduring firm has a strong succession planning strategy. They establish a never-ending secession and leadership transition planning process. Don’t hold on too tight to the reins. When you focus on creating value for others, you in turn drive and grow the value of the enterprise. Bring as many partners as possible into the firm that can help you grow the business and who want to be great leaders.

Creating an enterprise that’s more scalable, productive, profitable, and sustainable is a complex and multi-faceted endeavor. But even small, incremental improvements in a few of these areas will begin to yield positive results and cumulatively (over time) help your legacy endure for generations.

Coaching Questions from this article:

1. What is your business’ noble purpose? Beyond making a good living for yourself and your team, what are you trying to meaningfully accomplish by running your firm?
2. What are the guiding principles that you want to impart to the next generation of leaders? How might you create a culture of greater inclusivity and diversity of thought?
3. If you could change three things about the way your business is currently run, what would those three things be?
4. In thinking about the future leaders of your firm after you’ve walked away, what can you start doing now to better prepare them to be successful leaders?