Developing the “Perfect Team” for a Wealth Management Practice
The Wealth Management industry has undergone phenomenal change over the last 30 years. For many of you, like me, careers typically began as a sole practitioner. Nothing wrong with that, and if you’re still in the business today, you have obviously found a way to be successful and have likely achieved many of your goals. Relationships were built with clients, referrals were made, and for the most part you survived the peaks and valleys of our business through all this evolutionary change.
Our clients were also impacted by this change. The advisor-client relationship model has led us down a path where clients are more demanding, and rising wealth has created a need for deeper relationships, and the need for more complex solutions.
The answer of course has been: you need to build or be on a team. Not so fast, my friend! Sometimes what appears to be the right answer could be right by conclusion but wrong by execution. Let me give you a few examples:
Your team is dysfunctional! Clients and team members are not feeling the benefits.
Your team is unhappy! What works great for the team lead does not flow equitably to all team members.
Your team is inefficient! You keep adding bodies but the workload never seems to improve.
Your team has major gaps! Your process was built to manage the past but is not properly structured for the future.
Your team lacks engaged leadership! Not all great Financial Advisors are wired to be great managers and leaders of teams.
There are a host of other issues. Building a great team is both challenging and complicated. And let’s be honest, there aren’t a lot of exceptional playbooks out there. There is a reason for that. All teams are unique, all teams are different, and all teams have rosters of talent that have varied skill sets and talent. It’s no different when you compare teams in Wealth Management to Professional Sports teams. Every general manager in sports wants to win a championship and they construct their teams every year with that goal in mind. Like you, they invest, add talent, coach others to improve, make adjustments, modify processes and thoughtfully try to create better outcomes. Just like in Wealth Management, some succeed while others fail to get the results they desire.
What Makes a Great Team?
There are, however, teams that get it right. Clients are happy, business growth is exceptional, assets flow in, referrals come in frequently, and team members are enthusiastic and fully engaged. Why? What are they doing and how are their results so much better? How are they dodging the typical team pitfalls? To be clear, there is no such thing as the “Perfect Team”. All teams must navigate the stresses of our industry, the unknowns of the markets, with the pressure that puts on everyone to absorb the good with the bad without collateral damage. To be sure, well-constructed and optimal teams do this well, and tend to expand and grow their business while others struggle to effectively dig out during difficult times.
In an effort to shed some light on team effectiveness, it’s helpful to examine what exceptional teams consistently do to create better outcomes. Are there repeatable processes they follow? How do they plan? How do they execute? What’s their communication process? By studying patterns and attributes of successful teams it becomes easier to mirror, adopt and adapt parts of their model and fuse it with your own processes to enhance what you’re doing today. The goal here is not cloning, as that would be impossible. Creating awareness of best practices, implementing some of these attributes thoughtfully over time, and strategically investing time and resources in evolving your practice to augment your probability of success is the best path forward.
Let’s start by highlighting some of these attributes:
Core Attributes of Exceptional Teams
They are intentional and focused on improving their practice.
Simply said, it doesn’t just happen. Hoping things get better is not a strategy for success. You must decide that changing certain aspects of your practice periodically is essential in this business. Products change, technology changes, competition improves, markets shift, and client preferences are always in flux. Business planning must become a ritual. Annual business reviews are not optional for great teams. Review results, client successes, performance, goal achievement, and very thorough self-assessment is imperative. This annual review should include all team members and should be an honest dialogue of all the issues that teams face. It should be reflective of the past without ignoring the future. Things change frequently and teams should adjust accordingly.
Great teams are willing to honestly assess their strengths and weaknesses.
This is often the hardest part. What clients were underserved? What team members excelled? What are our gaps? What could we have done better or different? What makes us unique and better than our competitors? Just because you had a great year doesn’t mean you excelled. How much better could you have been? We often measure ourselves around basic metrics like revenue growth, asset growth, new business development or relative success among our peers. Many of those measurements are controlled by headwinds or tailwinds of the market and are not a true measure of success. The most elite teams go beyond that: they measure capacity for success vs. actual results. What were you capable of achieving and did you fully optimize the opportunity?
Exceptional teams have a “high trust” culture.
How important is trust on teams? Whether you are a 2 person team or a 20 person team, “trust” is the most important factor in developing true success. Without trust, winning doesn’t matter. Clients must trust, partners must trust, but most importantly, your team brand must resonate trust among others that judge you. The best bonding agent in life and business is undeniable trust. When you have it you know it, and when you don’t, it’s impossible to enjoy success knowing there is the big “hanging chad” in the background. Trust is present or it’s not. It can be developed but only when you identify the root cause for the gap.
The best teams have clear and concise expectations on team roles, responsibility and accountability.
Who does what and why? Unclear expectations lead to sub-optimal output. Who is responsible for new business development? Who is accountable for incredible client service? Who leads the team? Who is responsible for the planning and investment process? Because teams are generally assembled over time, and because of team mergers or talent acquisitions, this important assignment of responsibilities to the right people can often become a cloudy and confusing assembly of redundant or disparate way things get done. Clearly defined roles with ownership and accountability is the best way to measure and reward successful outcomes. When roles are undefined and assigned to multiple people, it opens the door to mediocrity and hiding behind team results.
Teams must be “audible ready” and elastic.
Just a few questions to ponder: What do you do when your investment process is not working? Is it really necessary to “customize” every client relationship? Who requires a financial plan and who doesn’t? How are you preparing for the massive impact AI will have on our industry? Are you adopting new processes and technology to enhance your practice? There is the way you have always done things, and there are new ways that at the very least need to be studied and evaluated. Stale business models without modification always lead to stifled growth and long-term negative impact. Change is inevitable and necessary. “Open minds lead to open pastures” where growth is more prevalent.
Elite teams control their capacity and make time to serve clients at the highest standard of care.
What is your preferred standard of care for every client? All clients deserve the best service possible. Your brand should be measured by the experience all clients receive, not just your best clients. Unfortunately, that is not usually the case. Unless teams manage capacity well, consistent service will suffer. This analysis goes well beyond book segmentation. In stable or volatile markets, the dials turn at different speeds. How do you adjust? Who gets your time, and how much of it? This is probably the most controllable aspect of your practice, but if not handled properly, actually becomes the most unwieldy. It’s all about process, a defined plan, effective delineation of roles, and creating an uninterrupted standard of care for each client. Don’t discount the value of your brand by allowing capacity control to become unmanageable. At one point in the client lifecycle, you made a commitment to serve that client at the highest level. Your commitment should remain constant. It’s all about managing growth, capacity, and time, all factors that can be managed with process.
Great teams communicate clearly and consistently.
How important is communication? Life, business, attitude, and reputation all benefit from effective personal interactions. We have all been in situations where lack of communication has had a negative or even disastrous impact. Open communication with full transparency is not always easy but should be the goal. You can learn to become a better communicator. It’s not always easy, but if you develop effective communication processes your team will thrive. Think about your day-to-day opportunities to improve your interactions, with your team, your clients, your family:
Ad hoc or consistent
Frequent or sporadic
Transparent or veiled
Direct or digital
Detailed or unclear
Purposeful or canned
Critical in its importance and immeasurable in its value, open and consistent communication is very easy to implement in a structured and dependable way.
Excellent teams share success equitably.
Rewards matter! In many ways people measure their personal success from rewards. Yes, this is about money, but it is also about recognition, titles, affirmation, feedback and promotions. People are all wired differently and respond in different ways to rewards. In some cases, a cash bonus without feedback falls short, and obviously all the positive affirmations on the planet without financial recognition fails to hit the mark. Truthfully, your practice needs to deliver on all fronts. What if you had this structure in place:
Consistent feedback with a balance of positive and developmental input
Semi-annual review in an organized way
Clear and concise messaging on role and accountability
Equitable and transparent compensation model
Annual career pathing discussion with goals defined
Ongoing ad hoc recognition for positive contribution
Occasional “surprise” recognition that shows you’re paying attention
This is not as overwhelming as it sounds. Achieving this goal does, however, require a planned and thoughtful effort to deliver it without fail. As team leader, not all has to be done by you. If you structure things properly with clear delegation and team lines of authority, much of this can be systematized or handled by others.
Great teams have ways to express leadership.
This can be very complicated for discussion for many reasons. Here are just a few:
Vertical teams
Teams of equals
Merged teams
Retirement and team transitions
Ineffective team leaders (not what they do best)
Teams across multiple geographies
None of the above mean there shouldn’t be leadership. But there must be clarity around leadership. A great example would be the Managing Partner concept of Law firms. Typically rotated, nothing in that model says they are the best, that they generate the most revenue, or that they are the most important to the franchise. Essentially, in Wealth Management the same process can be developed if the leadership conundrum is not solved in the traditional way.
Leadership provides clarity, order, and a consistent way of managing the team. Each team is different, but no team can thrive with ambiguity around leadership. Develop a process that works for your team. Experiment with it and adjust if not effective. Clarity rules over ego. Poor or no leadership destroys businesses, creating long term doubt and confusion, which of course leads to confusion and lost momentum. Seek help here and get advice from others, but don’t ignore its importance.
Great teams act quickly on success, failures, or change.
You have all heard the saying “problems don’t age well.” Conversely, opportunity needs to be acted upon or it becomes a missed win. There will be mistakes, bad decisions, the wrong hire, underperforming team members, and missed calls on the market. How you address mistakes and reverse adverse outcomes is where exceptional teams put problems in the past and move forward with a higher conviction. Don’t let obvious mistakes stand in the way of proper judgement. Don’t let the reputation of the team suffer because of the shortfalls of others. Be thoughtful, be thorough in your discovery, have empathy for others, but act upon known issues that can impede the progress, reputation, and perception that others measure as they evaluate the quality of your team.
Conclusion
In this presentation I have highlighted many things about the attributes of successful teams. Obviously, there is a deeper dive available on each of these attributes. Great teams have solved for many of the challenges they have faced over time, but the evolution of team dynamics and recent trends create the need for continued focus and evolution. New issues pop up every day. Some of the newer challenges are: cross geographic teaming, increasing need for highly specified roles, career pathing opportunities for personal development, implications of AI on team impact, senior team leader career extension and managing exit strategy, and mapping in family members and resulting team dynamics. While much of this is broadly known to all practitioners, the real path forward can only be developed by looking specifically at your own team. You are likely doing much of what we discussed. Hopefully, this thought provoking review kickstarts your enthusiasm about re-defining your team and your practice.
About the Author
Jim Tracy is a founding partner and CEO of Xcelerate Growth Partners. His background and previous successes in wealth management uniquely qualify him to help deliver on the primary goal of this business….. growth! Xcelerate was built to fill known gaps in the industry with other partners and expert alliances working to drive growth.
Prior to starting Xcelerate, Jim Tracy was a Managing Director and a Senior Advisor to Morgan Stanley Wealth Management. He has a 38-year history with the firm and has been instrumental in leading, building, and driving results in many key initiatives.
Jim started his career as a Financial Advisor and achieved success at many levels of field leadership as a Branch Manager and then as a Regional Director. His background has helped him gain a unique perspective and deep understanding of both individual and institutional client needs, and the significant importance of the advisor/client relationship.
In 2005, Morgan Stanley appointed Jim as Head of the industry leading Consulting Group Managed Account business and the Institutional Consulting business, now known as Graystone Consulting. Under Jim’s leadership, the Consulting Group has become the leading advisory program in the industry with over $2 trillion in assets. In addition, his team has created substantial innovation and enhancements that paved the way for significant practice management improvements and efficiencies.
Jim has been recognized many times by his peers across the industry. In 2018 he received the Pioneer Award from the Managed Money Institute (MMI) and also served as Chairman of the Board of Governors. Jim has authored many articles, presentations, and keynote speeches on industry trends and innovation in the financial services industry. His forward thinking about the future financial advisor has helped prepare many advisors to be on the leading edge of change.
Please send comments or inquiries to Jim@Xcelerategrowthpartners.com.