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7 Key Considerations for Advisors Committed to Building Enduring Firms

By Ray Sclafani | January 21, 2022

Building an enduring business. For most of us, it’s one of the most important goals we have—to establish a firm that will care for future generations of both clients and advisors. But what exactly does it take to build an enduring, sustainable, and durable 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.

Simply put, it’s not something that magically happens overnight. It takes dedication, a willingness to engage in long-term strategic planning, and a commitment to invest time and resources on team development, technology and marketing—with clear and achievable goals.

As you begin 2022, take some time to review the following and assess your firm’s progress on each front and think about various actions you might take to positively move the needle. Over the coming weeks, we’ll focus more deeply on some of these issues—taking a deeper dive to get ahead of the curve.

7 Key Considerations to Build an Enduring Firm 

  1. If you’re not already recruiting on a regular basis, you need to start doing soWe all know that labor costs are soaring. We’re witnessing it day in and day out as talented advisors suddenly find themselves able to negotiate a NYC-level salary while living in Kansas City thanks to the growing acceptance of working remotely in a post-COVID world! Now more than ever, recruiting talent must become an ongoing effort—not limited to capacity restraints.

  2. Talent retention needs to become a greater focus of the firm— in light of the ‘great resignation’ and during this day and age of incredible mobility, valuable talent can walk away from your firm if you’re not continuously recruiting them. You need to start thinking about your team differently, and begin a process of continuous re-recruitment. Tech leaders are paving the way. Apple recently awarded $180K (in the form of stock options that vest over 4 years) to all senior executives to incentivize them to stay with the firm. To a lesser extent, advisory leaders may want to consider similar retention measures.
  3. Evaluate all the compensation structures of your team members—make sure they’re aligned not just with your 2022 objectives, but with where you’re going as a firm 3-5 years down the road.
  4. Pay more attention to your digital marketing—building an enterprise brand requires paying more attention to your content marketing. While some advisors already do this, many others view it as a waste of time. But those advisors who are actively engaged in communicating who their ideal client is, who they’re built to serve, and what their value creation is through digital methods to regularly publish their works—they’re actually winning; and winning big!
  5. Now’s a good time to look at your firm’s operating agreement—does it still reflect where you’re headed as a business? Make sure it aligns with what you want for your next generation talent in terms of career-pathing. Every member of your firm should not only have a clear set of goals and objectives and key results for the year, but also personal objectives around their own development to further advance their skill set and become more valuable to your clients 3-5 years down the road. You’ll find that the more they’re connected to a career path, and the more their compensation is aligned with what they’re expected to achieve this year, and the more they’re clear about the vision of the firm…the higher your probability of retaining them and helping them develop.
  6. Don’t underestimate the need to communicate your 5-year plan and vision—make sure everyone on the team understands where the business is headed and their expected role in that future firm. Ideally, invite team members to play a role in helping shape the plan.
  7. Margin compression may creep into your P&L this year—these days, I’m hearing from advisors pretty consistently about the rapid rise in costs they’re experiencing. Now’s a great time to take apart your P&L to look at those operating expenses. Be really honest about how confident you actually are with your budget. Are you investing money wisely to train and develop your people? Are you making smart investments with your marketing dollars? Are you investing in technology with a long-term vision in mind? 

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’s 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?

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Topics: Organizing Priorities enterprise value Enduring Firm

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