In recent years, companies everywhere have worked hard to adjust to a huge spike in purpose-driven consumerism. Research tells us that across the world, 63% of consumers prefer to buy goods from companies that reflect their personal beliefs. This is a monumental number, and is a telling statistic proving people today are prioritizing their own wellness and values before considering a transaction.
Similarly, recruiting good talent is a transaction in which it's become increasingly important for both parties to share a common set of values. As a firm, if you're not leading your growth strategy with purpose, you are leading with ego. And ego will never produce the results you're looking for.
In my latest article, "Small Firms Can Make a Big Impact with the Right Advisors" I wrote how firms that lead with purpose will be better positioned to attract the right talent to their firm. I want to expand on how they can take this concept and bring it into practice.
When I talk to firms about their struggle finding and retaining new talent, I can tell in a matter of minutes if their difficulty stems from ego. How? They spend our entire conversation touting ways they excel over the competition, rather than how they're helping their advisors succeed.
I believe one reason this happens is because of a misconception that having a "mission" is the same as having a "purpose." But these are very different things. Every company has a mission - it's what they're trying to solve or accomplish. But not every company has an articulate purpose - which is why they are in business in the first place.
So, how can you play to the strengths of your firm while remaining advisor-centric? Here are a few examples of common ego-driven statements, and how simply leading instead with purpose can completely change the perception:
Ego: "Our firm has invested millions of dollars to deploy the most innovative technology tools available in the marketplace."
This phrase raises my ego-flags. It's entirely anchored around why the firm is superior among its competition and it doesn't tell me how this impacts advisors. Here's how this statement can be rephrased to a purpose-driven value proposition:
Purpose: "Our firm invests in independence. We support entrepreneurial-minded advisors by giving them robust and flexible technology options, so they can create a customized tech stack that works for them."
Ego: "We recently underwent a huge office expansion in the heart of downtown, complete with an in-office gym and 20-story views."
My first question is, why have you expanded? Do you really need that much office space or is your company more focused on how it's perceived on the outside? Firms that focus on their physical location as a value proposition need to have tangible reasons why the space benefits the way advisors work and live. Otherwise, it's just ego. Here's an example of a purpose-driven statement about location:
Purpose: "We've thoughtfully created a work environment for our employees that fosters collaboration, teamwork, and healthy living. Our gym is free to all teammates and we encourage meetings to be conducted in our open, city-view spaces to inspire creativity."
Ego: "Our firm saw rapid growth over the last year, adding 300 advisors nationwide."
Firms like to beat their chest about how many advisors they've added - but the true tell of your success is how many good teammates you've kept. Otherwise, you could just be a revolving door for advisors. Talk instead about why recent growth is beneficial for advisors' day-to-day at your company. Here's the same statement, revised:
Purpose: "Last year we welcomed 300 new advisors to our team. Continued growth means more resources at our advisors' fingertips to better serve their clients and focus on the practice areas most important to them. That is why we've seen a consistent 98% advisor retention rate."
At our core, we each have a purpose for doing what we do every day. The same holds true for businesses and the talent you're looking to attract. When we lead with purpose, we can't go wrong.
If you visit the home page of your favorite industry news publication right now, you're likely to see a story announcing a significant merger or acquisition. The M&A activity is hard to miss - and it's inspired a few major camps of thought regarding the future of our industry. One of the most important conversations revolves around how smaller firms can "stay competitive" in a space that's so rapidly evolving.
I don't believe the strong foothold of boutique firms - which DeVoe & Company categorizes as $250MM AUM or less - is going away at all. In fact, I don't even think "staying competitive" is the conversation we should be having. Because if smaller firms focus on the value they offer their advisors, rather than simply going head-to-head against larger entities with bigger pockets, they'll be positioned to build winning teams stacked with talented advisors who see the many benefits of joining a smaller firm. And this will keep them thriving. (See more about how to define your value in my previous article, The Two-Way Street of Advisor Recruiting)
In order to build powerhouse teams that drive incredible results, I often tell boutique firms to focus on these three golden rules:
We can't overlook the fact that so many advisors out there prefer a boutique firm versus an enterprise, and vice versa. It simply comes down to personal preference.
So, small firms, instead of focusing on the resources you don't have, play to the strengths of your business and the value you provide advisors because of your size. These sellable factors include:
Greater exposure: The "big fish, small pond" mentality can be a major value proposition for advisors looking to join your firm. In an environment where each and every advisor is seen, the results they produce for the greater team can be easily traced right back to them. This transparency can be refreshing for those coming from a larger entity.
Decision-making power: Advisors on your team all get a seat at the table. This benefit is huge, especially for advisors who have more of an entrepreneur mindset.
Professional growth: A smaller team equals more "hats" per person and more experience for everyone. You'll want to be clear about the diverse responsibilities and career training candidates will be able to take advantage of by joining your firm.
Equity: If your firm doesn't already offer equity options to employees who are rolling up their sleeves and helping to build the company brick-by-brick, consider doing so. This can be a tremendous value-add for candidates and is a tangible offering that shows commitment to your team.
I've seen it time and time again - partners at a boutique firm allocate a huge portion of their revenue towards hiring support staff they don't need. This usually happens because they've recently come from larger firms where these roles are needed. But in this new environment, many of the same roles can be facilitated more efficiently and more cost effectively with the right technology tools. Make sure you shop your tech wisely; try to find a platform that does many things well and can offer a comprehensive service, rather than building a Frankenstein tech stack with many different products.
Spending money on a giant, shiny office space may make you feel great, but if it sits half empty for 15 years, it's not serving anyone except your own ego. When you're trying to build a team that's lean and mean, these wasted extravagancies will quickly set you back. No matter what size your firm is, if you put the greater purpose of your firm above all else (serving clients and making their most important goals a reality), then you'll attract advisors who will share and help further your mission. Investing in areas that directly impact your team will drive success.
The inevitability of industry consolidation is worth the media attention, but it doesn't signal the end for you smaller firms out there - as long as you can measure your goals and value offerings, activate on hiring advisors who share your beliefs, and are mindful of your time and intentions. A diverse and dynamic industry is a beautiful thing.
For the last 20 years, I've worked as a recruiter for financial advisors under the sole belief that building a winning team can happen only when the firm and the advisor are committed to providing equal value to one another.
Unfortunately, not all advisory firms think about recruiting in this way. Some are understandably so concerned with their bottom line, that they mistakenly approach hiring as a one-sided solution to solve their growing pains.
I sit as the driver on both sides of a two-way street, so when I hear these one-sided search queries, they usually bring me to a screeching halt. Why? Because they're all rooted in the notion that the firm holds all the value, and the advisor is just another pawn in the game to stay competitive.
These companies approach the conversation saying, "We've built this amazing business model. We want to bring people in so they, too, can see the value of what we've created!" The problem with this notion is that value is completely subjective, and if you view the entire advisor landscape as interchangeable solutions to raise your profit margins, you'll just end up creating a revolving door for your advisors.
Waste time and money. While your sales team has endless, one-sided conversations with advisors that end in no transaction, your firm continues to underserve your clients.
Watch advisors leverage your offers against competitors'. If your interactions with prospects aren't personal or genuine, or you don't articulate what's in it for them besides the check, you can't expect them to be loyal to you.
Stay stuck inside the box. If you park your boat at a fishing hole where you know you'll only catch trout, you'll only ever catch trout. Likewise, near-sighted hiring objectives tend to overlook out-of-the-box solutions.
I can assure you that when a firm finally shifts their perspective to providing value for the advisors, the result is a win-win for everyone involved.
Years ago, I worked with a California-based RIA who'd grown from $350 million to $1.4 billion in AUM within an 18-month period. They'd done so by fostering a "Wild West" type business model. Their main proposition for advisors was that they could keep doing what they were doing - no structure, all of the flexibility.
There's a reason the Wild West eventually straightened out. You can't sustain it. As this firm began to grow, so did their inefficiencies. We decided together that they needed to change their business model if they were ever going to scale and hire the right people. "But, we just promised our advisors they could have autonomy over their processes! What if they all leave?" A relevant concern, but without action, the firm could never grow into a long-term healthy business.
The principals spent time restructuring the model based on the scalable value they'd be able to provide each one of their advisors. While some weren't happy with the changes and inevitably left, many understood the need for change and appreciated the commitment this firm had to their own individual growth. The moral is: when you focus on the value for the advisor instead of the rapid growth of your firm, and stay true to that value-add, you'll evolve in ways that support a long-term vision rather than an immediate fix.
You already have the vision for the future of your firm. You just need to refocus your recruiting efforts to build a team that will keep you profitable, competitive and innovating - and then shower that value back onto your team.
Do Your Homework: Be aware of what your competitors are doing. How are they successful? How do you stack up? And most of all, know what the rest of the industry is saying about your firm, because their perception is critical to attracting the right team.
Ask the Hard Questions: Who are you? What do you provide your advisors? How does what you provide your advisors benefit their clients? Once you become clear on these answers, you can begin narrowing down your specific value propositions for advisors you wish to hire: like employee benefits, mentorship opportunities, and growth potential.
Always Re Recruiting: Once you've got your value propositions clearly outlined, always be willing to take a meeting with someone even if you're not currently hiring. This will get you outside your current box and will foster mutually-beneficial opportunities with advisors that never would have come your way had you waited for the "right time" to search.
Make Your Passion "Recruitable": If you run a business and it is the love of your life, turn your passion into value propositions for advisors. For example, if you love helping advisors grow their personal brand, offer marketing services that can help put them on the map and turn them into thought leaders. Whatever it is, make sure you genuinely enjoy what it is you're selling - because that realness will make the sale.
Your firm's dream team is out there, but it's about repositioning your hiring objectives and shifting your point of view. If you hire for the firm of tomorrow instead of the firm of today, you'll always find success.
© 2019, FA Match, LLC