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5 Steps to Jump-starting the Ownership Conversation

The decision to pursue ownership in a financial advisory firm is a crucial choice in your career. This rewarding goal comes with both benefits and responsibilities that go beyond the role of adviser, and require a variety of business skill sets. Before you consider asking for ownership from the existing owners of your firm, you need to prove that it is not only something you are capable of, but something you have earned.

Here are five essential steps to consider as you build the strongest case for ownership:

Step One: Get Involved

First things first, you must establish your commitment and dedication. Take interest in the ins and outs of running a business (as far as is appropriate) and offer to take on responsibility in these areas. Seize every opportunity to enhance your managerial and business operational knowledge and skills. Not only will this allow you to build up experience to support ownership, it will also help you be better equipped to take on ownership.

You must be willing to do more than just produce revenue. By assuming operational obligations, you are investing in the future of your career and contributing to the overall efficiency and profitability of the firm. Adapt a leadership mindset and work for the good of the team rather than your sole interest.

As you get involved and learn more about the business, examine the company culture and team. Ownership is a long-term commitment, so be sure this is the team and business you’ll be passionate about working with for years to come.

Step 2: Know Your Audience

It is important to recognize the priorities and goals of the existing owner(s) of the business. It’s helpful to get to know your future fellow owners on a personal level, to be sure, but you must dig deeper. Take time to learn about their journey in building the business. Consider how they envision their own careers, including their plans for eventual retirement.

A big part of this step is recognizing the time, energy and money the founding owners have invested in building the business. You should acknowledge that your goal of ownership is meant to build upon and to work alongside them until they’re ready to fully hand over the reins. Keep in mind that a well-crafted succession plan means business growth for the entire company. If you help to make the company grow, everyone involved—including the founding owners—will reap the rewards of a sustainable business.

As you develop your own ideas for the business, directly address the ownership team’s largest business concerns and demonstrate how you can contribute. Ensuring that your objectives align with other owners’ objectives will help you avoid undermining your proposal of ownership.

Step 3: Demonstrate Your Value

In order to take your place amongst the owners of the business you will need to convince the existing ownership team that you add value. Look back at all you’ve accomplished, invested and taken responsibility for. Look to the future, think about the growth of the business and identify contributions you can make that will prove that you are prepared to make a long-term commitment to the business. From there you can establish your value proposition:

  • Refer to your achievements with examples and measurable contributions to growth
  • Present your goals and ideas for the future
  • Research the business’s position in the industry
  • Identify challenges and improvement opportunities and outline your plans for addressing them
  • Be as specific as possible

Step 4: Build the Strategy

Facilitating the addition of a new owner in a financial services business has many moving parts and requires careful consideration and planning. The more you understand the process yourself, the more effective your conversation will be.  You can do some of the legwork in advance by:

  • Exploring effective strategies for internal succession, especially in the context of this unique, relationship-based and regulated industry
  • Understanding the logistics and mechanics of modifying the ownership structure and consider the best way for the business to move forward
  • Considering the business’s organizational, cash flow and compensation structures
  • Examining financing options and how they could integrate with and alleviate hesitancy during the transition process
  • Knowing where to access tools and support to help develop and execute a smooth transition plan

Be proactive about addressing questions and concerns that might arise and show how your proposal can be accomplished, including how you will pay for your share of ownership and how long the process could take. By having some of these answers at the ready, you will show your commitment to the role and your respect of their time and consideration.

Step 5: Timing and Approach

You’ve built a foundation of demonstrable value. You’ve prepared your plan to contribute to the growth of the business. You’ve thought about how to make it all happen. Now it’s time to actually ask for ownership.

Given the weight and delicacy of the proposal, you should find the right setting. Request a formal meeting (an annual review provides an optimal opportunity). If there’s more than one owner, consider whether you want to broach the subject with all of them at once or with just one owner with whom you have a strong rapport.

You should also be sensitive to timing. Pay attention to what’s happening in the company (and the industry) that could either support or undermine your goal of having a productive conversation. It’s best to avoid times of stress due to market performance, taxes or client issues. Identify any potential immediate needs your ownership could help fill such as the imminent retirement of an existing owner or a planned acquisition. Piggybacking on a big professional win can help your case. There is no perfect moment, but a cognizance of timing and circumstances will certainly help the outcome of your request.

The road to gaining ownership in an existing business starts far ahead of asking for it. You must earn the privilege, responsibility and rewards. And you cannot expect that ownership will be granted without evidence of your value as an adviser and as a leader. Once you’re able to demonstrate your initiative, ingenuity and your commitment to the long-term success of the enterprise, you are ready to take the next step in your career as a business owner.

Editor’s note: This article by FP Transitions originally appeared in the May issue of the FPA Next Generation Planner. Download the NGP app today to read all back issues! Stay tuned for the next piece of helpful content from FP Transitions in the December 2019 issue, in which Kem Taylor explores the three questions all next generation planners should ask in a job interview.  

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FP Transitions is the nation’s leading provider of valuation, M&A, succession planning and enterprise consulting for financial advisers. Its integrated team of consultants includes analysts, legal professionals and industry expert consultants working together to provide end-to-end business growth solutions for advisers. Founded in 1999, FP Transitions launched and continues to operate the largest fully supported marketplace for buying and selling financial practices. FP Transitions is the official sponsor of the FPA Next Generation Planner, committed to providing resources and tools that elevate the profession that transforms lives.


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It Is All About Perception: Live Beyond Your Own Business Limitations

Years ago a rookie financial adviser (me) new to the area asked a veteran colleague and friend, “What is the wealthiest street in the city of Milwaukee?”

“Well, that’s easy, it’s Lake Shore Drive because that is where all of the money and mansions are, however, I would not prospect them,” he told me. “They all already have an adviser.”

Many weeks later, the veteran stopped me as I rushed by him on the way out the door.

“Where are you going in such a hurry?” the veteran asked.

“I’m going to see my client at his home on Lake Shore Drive,” I replied.

T.S. Eliot said it best when he said, “Only those who will risk going too far can possibly find out how far one can go.”

Risk has many definitions. To my co-worker, it implied taking time to prospect an affluent niche that he believed would most certainly reject him. To me, the rookie, there was no risk in attempting to prospect them, since no attempt at all would absolutely result in failure.

My point today is that the reality of business risk is really about how our perceptions dictate what we believe is possible. The lesson learned should be: don’t limit yourself.

The following is a brief outline of how you can live beyond any business limitations you might have set up for yourself.

Identify Your Business Risk

It was a simple thought, “I’m not going to get rejected by people who don’t have money,” that led me down a path of forming my belief system around who I was going to prospect. In other words, I didn’t care about rejection, I cared about wasting time with unqualified prospects.

Unfortunately, it took some time to realize that although I was closing these new wealthy clients, they were only willing to invest a small portion of their assets with me; thus, my updated business risk was in not being confident enough to put together comprehensive financial plan, but merely pushing a product.

Model the Masters

Once you’ve identified any challenge, it’s important to look for the solutions. In this case, my solution came in the form of a conversation with my then branch manager who simply said, “You’ve got 500 accounts. You don’t need 500 more with the same average asset per account; what you need is a minimum account size. I recommend from this day forward that you never take an account under $100K.”

He was a former top producer turned branch manager and to me he walked on water. So, it didn’t take long before I picked up the phone and cold-called business owners inserting the phrase into my introduction, “I tend to work with business owners who have $100K or more in investable assets.”

Create a New Reality

Change can be a scary thing until you realize that not changing will cause you more risk. Take for instance what happened just 30 minutes after I started using the aforementioned phrase. The 30-plus year veteran business owner that I was speaking to replied, “I know what you mean, I don’t have time for small accounts either.”

And, just like that everything changed for me. I was no longer afraid to position myself as an adviser with a minimum account size. In fact, I embraced and was proud of it.

Become the Mentor

Now, as a business consultant/coach I’ve had the pleasure to help others break though the reality of their own business risk. Take Sandra P. a 30-year veteran client of mine who agreed to set her account minimums at $500K, then at $1 million and later at $3 million. It wasn’t until she gathered $10 million of new assets in one month that she realized how limited her thinking had previously been.

Why Having a System to Breakthrough Your Business Risk Works

The reason why having a system to break through your business risk works is because it helps you be aware of what those risks are, then by modeling your mentors it supports a paradigm shift of what is truly possible.

If you would like a complimentary coaching session with me, please email Melissa Denham, director of client servicing.

Dan Finley

Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.

 

 

 

 

 


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How to Communicate Your Value Proposition

I recently took part in Commonwealth Financial Network®’s National Conference, where I was asked to present on a topic related to adviser growth. Of course, there are many ways that advisers can grow, but I chose to discuss the value proposition. I think it’s something critically important to get right, and all too frequently, advisers tend to miss the mark.

At the beginning of my session, I had advisers pair up and deliver their current value propositions to each other. Perhaps not surprising, many said that what they heard was uncompelling, rating each other mostly with Bs and Cs. (I’m convinced that the grades would have been even lower if advisers weren’t sitting next to the person they rated.) Next, the group went through an exercise, listing phrases that could describe themselves and their practices. Here, the advisers reluctantly agreed that all the lists sounded alike. We had a wide range of ages, experience, production and geography in that room. Still, they all used many of the same generic terms and jargon to describe themselves and their practices.

The lesson? A value proposition is something that many advisers, at all levels of production and experience, struggle to articulate. Fortunately, successfully communicating your value proposition can be achieved with some thought and effort. Let’s go a little deeper.

It’s Not an Elevator Speech

To start, let’s define value proposition. I’m a big fan of keeping things simple, so here is my definition of value proposition in a nutshell: a clear and compelling reason someone would want to do business with you. This reason is critical because if, as a prospect, I choose you, I’m implicitly not choosing someone else. Prospects need to know how you’re different from everyone else so they can make an informed choice.

Your value proposition is not meant to be an elevator speech (a term I’ve always hated). Now, many advisers think of an elevator speech as the description of your practice that you can give quickly and smoothly to prospects even between floors on an elevator. But if you look at it from a prospect’s point of view? It means that you’ve got me cornered in a steel box with no way to escape, so I’m forced to listen to you pitch your business. Why on earth would an elevator speech be something advisers should strive to master?

So, then, how do you convey your unique value and thus make it easier for people to choose to work with you? You can start by answering three important questions.

Who Are the People You Help?

If I’m a prospect who is perusing your website, I should very quickly get a feel for the type of people who can benefit from working with you. There is a lot of research that shows that in less than four seconds on a site, prospects make assumptions about whether an adviser can help them. So, you have four seconds to capture my attention. For example, if I’m a pre-retiree or retiree, and I see photos that show older people and messaging that speaks to getting ready to retire or taking distributions, I know I’m in the right place. More than likely, I’ll continue to read and learn more about your firm.

But you can also tell prospects verbally or in collateral why you chose to help a particular group of people. Were you a teacher before becoming an adviser and so understand 403(b) plans and your state’s health benefits better than others? Let people know, because that’s the kind of unique experience they are likely looking for.

What Are the Problems You Solve?

Now it’s time to showcase your expertise and the solutions you can deliver to clients and prospects. Whether it’s your in-depth knowledge of the local power company’s pension plan, your understanding of the succession issues that business owners face, or the retirement income plans you create to replace paychecks for retirees, highlight your strengths. Do you have a credential that lends additional expertise and credibility? If so, talk about the CDFA® certification that helps you work better with divorced people or the CFA® designation that you leverage to develop investment portfolios.

Why Do You Do What You Do?

Ah, the why. This is where you get to show your heart—and the DNA of your firm. You had a choice of careers, firms and locations, and advising is what you chose to do. Why? The personal insights you share can be a powerful relationship builder with clients and prospects alike. One of the best value propositions I’ve ever seen came from a firm that talks about its deep commitment to the community and the passion its advisers have to make things better. The firm supports this proposition with many examples of its community work, so that prospects can see the team’s deep and fundamental caring for others. Not surprisingly, the firm has grown quickly over the past few years, and it is well positioned for future growth.

You Are Different—Now Articulate It!

I firmly believe that—with just a little time and focus—most advisers can make dramatic strides forward in communicating their value propositions. At our session, after some training on the three key criteria, advisers took 10 minutes to revise their value propositions. We chose this brief time period deliberately so that participants couldn’t get hung up on having something perfect before they tried it out. They scribbled, rewrote furiously and then had to test their new value proposition by working with their partner.

Afterward, when I asked if the revised value propositions were greatly improved from the first round, every hand was raised in agreement! You can improve your value proposition, too. And I hope you do, because knowing how you are different from every adviser—and being able to articulate it—will help you gain clients and build relationships that last.

Kristine_McManus_2_lg

Kristine McManus is chief business development officer, practice management, at Commonwealth Financial Network®, member FINRA/SIPC, the nation’s largest privately held Registered Investment Adviser—independent broker/dealer. Since joining the firm in April 2014, she has been working with affiliated advisers to grow their top line through the introduction of various programs, tools and coaching. Kristine holds the Chartered Retirement Planning CounselorSM designation, a master’s degree from Pennsylvania State University, and a BFA from Adelphi University.