Recently, I found myself coaching a group of firm founders and controlling owners – all of them grappling with one extremely critical question:
Am I the right person to continue in the CEO role as our firm continues to grow and evolve?
Each of these individuals had assumed the CEO role by default. As their firms steadily expanded and became increasingly complex, the day-to-day responsibilities required to run the business efficiently and effectively demanded increasingly sophisticated CEO-like skills. And many had reached a significant inflection and decision point: was it time to hand over the reins to a professional CEO, or should they lean into and develop those necessary skills themselves?
Wealth management firm founders often face this pivotal crossroads. At ClientWise, we call it The CEO Dilemma—a decision point of whether to stay on as CEO or step aside to allow new leadership for the firm’s continued growth. This challenge mirrors something you likely have heard of, called the Innovator’s Dilemma, which is a management book about innovation written by Harvard Business School professor Clayton M. Christensen, in 1997. Christensen describes how successful companies can fail by focusing too much on sustaining their current products and customers, making them vulnerable to disruptive innovations that target emerging markets or new customer needs. This dilemma is also tied to the concept of creative destruction—the idea that old models must give way to allow for innovation. Founders must balance their fiduciary responsibility to build a firm that endures while recognizing that they may not be the CEO to lead it into the future. Should I stay or step aside for the firm’s long-term success? The CEO Dilemma.
It's a common predicament for many firm leaders, as shifting from being a successful founder and financial advisor to becoming an adept CEO takes considerable work. And the duties of a CEO are often far removed from the reason many advisors got into the business in the first place—to work directly with clients in solving wealth challenges.
Liz Nesvold is the Vice Chair at Emigrant Bank and has extensive experience in deal consulting and M&A work within the wealth management industry. She’s played a key role in numerous high-profile transactions, offering strategic insights and leadership that have shaped the growth and success of many well-known firms.
I recently asked her at what level a firm leader considers hiring professional CEO management or choosing to step up into that role. She suggested that while $10 million in revenue is often a good benchmark, it's more of a directional call. When you have an expanding business model, strong organic growth, and plans for M&A, it becomes crucial to focus on who are in the key leadership roles. However, this also depends on the founder's timeline and their existing skill sets, so the decision should be tailored to those factors as well.
Perhaps now’s a good time to assess whether you have the skills, bandwidth, and desire to continue as CEO. For larger firms, bringing on board a professional CEO may be the most effective way to position the business for sustainable long-term growth.
The Step-Down Challenge
Most advisor entrepreneurs start out in the profession by doing everything – from finding and advising clients to hiring and firing staff and managing payroll. Over time, this jack-of-all-trades mindset gets deeply hardwired, creating a tendency to take on more and more.
This assessment will help determine the time required to train and develop (or hire) the right person or people to step up and take the reins. By stepping down from specific responsibilities, you allow others to step up, fostering leadership development and enabling the firm to function without relying on any single individual.
It’s a process that creates space for an essential evolution – from independence to interdependence.
The Emotional Journey of Stepping Down
Stepping down from the CEO role can be an emotionally complex decision for any founder. Many have built their firms from the ground up, with their identity and self-worth often profoundly tied to the business's success. Even from day-to-day operations, stepping away can bring up feelings of loss, uncertainty, or fear. Will the firm still thrive without you? How will you find fulfillment in your next chapter?
These are valid concerns, and it’s important to acknowledge that stepping aside from being CEO is not just a strategic decision but an emotional one. Founders may feel deeply attached to their firms, often considering them their "life's work." The challenge is to separate personal identity from professional roles and recognize that stepping down from a leadership position does not diminish one's contribution or legacy. In fact, it can be a sign of growth—both personally and for the firm.
Reflecting on what you genuinely want in your role beyond the CEO title can help guide this decision. Consider the aspects of the business that bring you the most joy and fulfillment, and envision what your next chapter might look like. How will you continue to add value in new and different ways?
The Role of External Advisors and Coaches
External advisors or coaches can be critical in this emotionally charged transition period. An outside perspective can be invaluable in helping you separate emotion from logic and think strategically about the best path forward. A good business coach can guide you through identifying your personal goals, assessing your readiness to transition, and pinpointing the skills needed to grow into or step aside from the CEO role.
Executive coaches, especially those at ClientWise, are trained to help founders work through the emotional challenges of relinquishing control. They can provide a safe space to explore the fears, identify any limiting beliefs, and create strategies for a successful transition. Whether developing the necessary skills to evolve into a professional CEO or finding fulfillment in a different role within or outside the firm, a real coach can help you confidently navigate these uncertainties.
External advisors can also assist in identifying a potential successor, whether internally or externally; helping ensure your firm is positioned for continued success. This external support can be instrumental in fostering a mindset shift—from viewing stepping down as a loss to perceiving it as an opportunity for the firm’s next growth stage and your personal evolution.
Introducing Interdependence
To build a genuinely sustainable firm, however, you must commit to shifting from being the lone decision-maker to fostering an environment where the team works interdependently. And interdependence requires a great deal of mutual reliance – with each team member assuming responsibility for not only their individual tasks but also the collective outcomes of the business.
When you embrace this concept of interdependence, you foster a culture where everyone contributes to decision-making, problem-solving, and innovation. A necessary shift that both relieves pressure on you as the leader and empowers your team to grow and take ownership of the firm’s success.
Fostering Next-Generation Leaders
As a founder or CEO, one of your most important tasks is to build a team that can eventually take on the responsibilities you currently handle. This means delegating responsibilities and committing to developing your team’s leadership skills, fostering collaboration, and encouraging accountability.
Leaders who embrace interdependence create a culture where team members rely on one another, trust one another, support each other, and work towards common goals. By stepping down from specific responsibilities and allowing others to step up, you create an environment where the firm can thrive without dependence on any individual. This is why the Step-Down Challenge I referenced earlier is so important to take on at least annually.
When teams operate in an interdependent manner, leadership naturally becomes distributed. Team members can take on leadership roles, contribute to decision-making, and demonstrate their capabilities in ways that might not be possible at a more hierarchical or independent firm. It creates a fertile ground for leadership development. As team members work collaboratively toward shared goals, they learn to:
Lead by example
Collaborate to solve problems and make decisions
Take initiative and innovate
Creating Professional Development Plans
By regularly reviewing and updating these plans, you’ll ensure that team members are growing in ways that contribute to the firm’s success while also preparing them to take on greater leadership responsibilities.
Ultimately, your goal should be to build a firm that will endure far beyond your tenure as CEO—not just for the long-term sustainability of the business but also to ensure a fiduciary continuity of care for current and future clients. Whether you continue in the CEO role or hand the reins over to a professional, embracing interdependence and building a robust and capable team will benefit all parties.
COACHING QUESTIONS
Here are some open-ended, future-oriented coaching questions for the article "Should You Stay or Step Aside? When Founders Face the CEO Dilemma:
As you think about the growth and complexity of your firm, what specific indicators tell you it may be time to consider transitioning out of the CEO role? How will this impact the firm in the next 3-5 years?
What skills or leadership qualities do you need to develop if you choose to remain in the CEO role? How would mastering these skills reshape your vision for the firm's future?
Which key responsibilities do you find most challenging to delegate, and what are the possible long-term effects of holding onto them? How might delegating these tasks influence the firm’s growth and leadership development?
If you were to step down from the CEO role, what would you want the firm to look like one year later? How do you imagine the team would evolve in their roles and responsibilities?
What opportunities exist in your firm for emerging leaders to step up and demonstrate their leadership ability? How could you create an environment encouraging this growth over the next few years?
What steps can you take to shift your team from dependence on you to fostering a culture of interdependence? How would this shift benefit the firm’s long-term success and innovation?
How do you envision the firm thriving beyond your tenure as CEO? What key factors must be in place to ensure a seamless transition and sustainable success?
How can you incorporate professional development plans into the fabric of your firm to support continuous growth? How will this investment in your team influence your firm's future leadership and culture?
These questions are designed to help founders and CEOs consider deeply the future of their firm, their leadership, and the development of their team as they decide whether to stay or step aside as CEOs. Suppose you decide to embrace growth as your firm’s CEO. In that case, it’s essential to craft a comprehensive professional development plan, actively seek ongoing feedback from trusted colleagues and executive coaches, and fully commit to stepping into the role of a visionary leader ready to evolve alongside your firm's expanding needs.
About ClientWise LLC
ClientWise is the premier business and executive coaching firm working exclusively with financial professionals. We specialize in helping clients optimize growth and maximize revenue by engaging as a knowledgeable partner in accomplishing specific and significant business results. Our full-service coaching program empowers financial advisors, wholesalers, managers and executives to enhance performance through customized, action-oriented solutions based on each client’s specific vision and situation.
Our certified coaches are members of the International Coach Federation (ICF). They adhere to ICF’s strict code of ethics and have the experience and insight to work with you on the unique challenges and opportunities you face each day.
Drawing from an in-depth knowledge of the financial industry, ClientWise’s mission is to professionally develop industry leaders and consistently raise the bar for industry service, commitment and integrity. Simply put, our singular focus is to help you get clear, get focused, and get results.