In my previous post, How old will you be in 5 years? 10 years? I mentioned that a typical 57-year-old-ish founder-owner of an advisory firm must decide, first and foremost, whether to maintain the status quo and keep their practice on autopilot, or commit to the hard work of transforming it to a real business.
While transitioning a practice to a business is an admirable quest, we noted, deciding to keep the status quo is a perfectly viable option as well with many benefits.
Further, I wrote about Philip Palaveev’s definition of “business” (vs. practice) and how that would ultimately require the following actions at the very minimum:
It all sounds simple, but it’s hardly easy. It will require hard and intentional work.
In this post, I pick up where we left off and discuss in some detail what is involved in finding and developing successors.
Finding and grooming successors
If you’ve spent any time recruiting, you are painfully aware how hard it is to find and keep good people. Still, when it comes to hiring potential successors, being selective will do you good. And it would be best if they are smarter than you, though understandably, some of you may not be so welcoming of the idea of sharing the spotlight with someone else, or no longer being the smartest guy or gal in the room.
Yet if you are truly rational and serious about transitioning your firm from a practice to a business, doing so makes perfect sense. With grit and some luck, you built your firm to what it is today. You need equally talented and hard-working people to take the baton from you and continue to thrive.
To have the future next-gen owners stick around, you will want to pay them fairly, train them well, give them plenty of autonomy and instill in them a sense of purpose. You will need to clearly articulate your strategic vision. (This assumes that you have a strategic plan already but if you don’t, you’ll need to create one.)
They will also need a clear career path. Remember, they didn’t grow up in the eat-what-you-kill sales environment as you did. They are hired as employees, not as quasi-entrepreneurs. Employees are interested in professional growth, promotions, employee benefits and mastering their crafts. Employees also collect paychecks, so they don’t lie awake at night, as you did, wondering how they will close enough sales to make their mortgage payment next month.
Additionally, you’ll have to teach them how to sell because they are probably not natural sales people. They are passionate about helping clients with their financial planning needs. They are ethical and the fiduciary standard feels as natural as social media to them. They may even have a degree in personal financial planning. But, they probably can’t sell and don’t seem particularly interested.
Their apparent neediness notwithstanding, you shouldn’t complain that they lack drive though. They are in fact quite motivated — they just don’t express their drive the same way you do. Just because they don’t think and act like you do, it doesn’t mean that they are slackers. They are smart, talented and hard-working, only different from you. Commit resources — yes, as in your time and money — to training them in sales. They’ll eventually get there.
As you read this, you may be asking yourself, “What is they leave after all the time and money I invest in them?” And you’ve likely had such experience. In response, I will just quote Richard Branson and leave it at that: “Train people well enough so they can leave, treat them well enough so they don’t want to.” (You can’t argue with his success.)
If you are still not convinced of work ethic of Gen X and Y folks, I have one word for you: WOODSTOCK.
Yes, old people were once happily clueless slackers, too. The Greatest Generation had some choice words for hippies waving peace signs, I’m sure. And adjusted for inflation, college tuition, rent, gas and healthcare were all immensely cheaper back then. Moreover, if you landed a decent job, you received pension for life. To be sure, life may not have been easier then, but perhaps you can relax a bit, remember your years of youthful abandon and give younger people some slack.
In any case, even if you do find a sales-driven, rainmaker type, do you honestly think they’ll want to work for you? Why do you think they would? If they are so good at attracting new business, wouldn’t they want to work for themselves, and not for you? Even if they do come and work for you, they will be busy building their own books of business, and eventually leave to join the next firm that offers the biggest signing bonus.
No need to worry though because it doesn’t matter that you don’t (or can’t) hire these superstar rainmakers because you are trying to build a real business with a real enterprise value, not an incohesive group of producers sharing overhead.
In my next post, I will discuss in some detail the second and third items above: implementing a business development plan and developing a written succession plan. Stay tuned.