Have you ever examined your current firm with the proverbial magnifying glass? That is, evaluate it the same way you would if you were starting your career from scratch.
Even advisors who are absolutely sure they will never make a move would be wise to think about their current firm through a critical lens, be open-minded, and be willing to challenge the status quo…especially when things go well
There's one clue in life: Things change — and they do so quickly at big brokerages. Therefore, it is wise for advisors to think proactively and strategically about their businesses to avoid being caught off guard and then try to figure out a Plan B.
Plus, the path to success is often not linear. Taking time periodically to make sure you're on track or that your goals haven't changed will affirm that you're in tune with achieving success.
So what strategies can advisors use to set themselves up for success ahead of any potential headwinds?
1. Think years ahead
Consider team and succession arrangements, including firm retirement/sunset arrangements. And think about these things through a short-, medium-, and long-term lens. The ability to inherit a book is great, but if it ties you to the firm for seven years, can you live with that? You may not need a successor today, but it is imperative to think about your next generation years before you are ready to retire. There is no better example of “digging the well” before the need.
2. Periodic education
Advisers making a transition don't have a choice: they must address why they chose their firm directly with each of their clients. But advisors who have been with one firm for most or all of their careers run the risk of letting inertia set in, choosing the status quo for reasons other than proactive and strategic business planning. So how do you know if your firm is still the best place for you to run your business? By periodically performing due diligence on your firm. This does not mean that all advisers should make a move. Be advised that if you've never taken the time to at least educate yourself about the landscape, including where your current firm fits within it, you may be doing yourself a disservice.
3. Simplify everything … To the extent possible
There is no “right” way to run a wealth management business. But in general, a simple and clean book is preferable to an overly complicated book. Why? For one, simplicity often means faster transitions of assets if the book ever needs to be transferred outside the firm. It's no secret that big firms love complexity. This makes the firm a more indispensable component of the advisor-client relationship.
Additionally, complexity often leads to sticky customer assets. Make no mistake: clients often have complex financial needs that require complex solutions. But the next time you buy that proprietary SMA, ask yourself if the liquid ETF could work just as well.
4. Protect yourself
We live in a world of zero tolerance compliance and risk management. Gone are the days when an advisor can be warned with a “slap on the wrist”. That means every single employee counselor is vulnerable: You're one wrong step away from being placed on heightened supervision or, worse, being fired. This is not a scare tactic, but a stark warning: Be grounded and above board in everything you do. There might not be a microscope for you right now, but it might be on down the road, either because of a compatibility issue or because you're chasing a change. Be rigorous in documenting notes on all customer interactions. Become a model corporate citizen. And act as if your firm can see and hear everything you do. (Chances are, they probably can!)
All of these tactics serve the same ultimate goal: to allow advisors to be proactive and thoughtful about everything they do in or around their business. In other words, they are strategies that advisors can use to maintain agency throughout their business life. Every advisor should have the right to choose their next move carefully, based on what is best for their business and clients. Whether change is in the cards or not, advisors who prepare in advance for any scenario that might go down are doing their team, their clients, and themselves a great service—and they'll never go thirsty.
Jason Diamond is Vice President, Senior Consultant of Diamond Consultants – a nationally recognized recruiting and consulting firm based in Morristown, NJ that focuses on serving financial advisors, independent business owners and financial services firms.