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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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Retirement Planning Lessons for Emerging Advisers

The leading edge of the baby boomer generation turned 65 back in 2011. Since then, we’ve watched a large percentage of the adviser population move closer to that traditional retirement age. But the transition to retirement has been anything but traditional, as many boomer advisers have chosen to remain ensconced at their firms. It has created an interesting dilemma for emerging advisers waiting to move into more prominent roles. Should we worry about history repeating itself when these emerging advisers age? If so, what lessons can the younger generation learn from watching boomer advisers (not) retire?

Setting the Stage

First, it helps to understand the reasons boomer advisers are increasingly choosing to stay in the business.

It’s not your grandmother’s retirement anymore. The Bureau of Labor Statistics predicts that the percentage of 65- to 74-year-olds actively looking for work will increase faster than any other age group through 2026. When you think about it, it’s not particularly surprising. After all, we’re living much longer than was thought possible when the retirement age was conceived back in the 1930s. In fact, the notion of retirement is outdated—it’s becoming much more of a life pivot.

Retiring successfully isn’t just about money. Health and wellness, family relations, leisure and social activities, and personal growth and development are all important. And everyone copes with the question of what’s next differently. The thought of leaving something behind if there isn’t something more profound to move forward to can be paralyzing.

Boomers come from an era that embraced “living to work” as opposed to “working to live.” Work has been the centerpiece of life. Professional achievement and financial compensation have prominent spots on the self-worth scorecard. Advisers have poured their heart and soul into building a business and serving their clients, making many sacrifices along the way. Plus, these advisers have seen and heard firsthand the difference their advice has made on the quality of others’ lives. Who wouldn’t want more of that?

It’s their identity. When boomer advisers were young, they juggled the responsibilities of creating a family and growing a business simultaneously. Then they reached the point where something had to give. Often, it was the passions of an earlier life—hobbies, sports, socializing with friends. After the kids left home, satisfaction was derived from the work itself, rather than from rediscovering those lost passions.

Founderitis is real. Whether consciously or not, a failure to delegate keeps founding advisers in a power position. Rather than developing the next generation of leaders, they hold tightly to responsibility. But none of us can go on indefinitely, which means the business tends to pay the price.

The Lessons in the Data

Nature, nurture and circumstance have all played into the industry landscape we see today. It’s not that it’s a bad thing necessarily, but it has created challenges both for boomer advisers struggling with how to pivot to the next stage and for emerging advisers who are more than ready to take the reins. It also offers some lessons that emerging advisers may want to take to heart as they develop a vision for what they want their life and career to be.

  1. Broaden your horizons. Be careful that work does not become the one and only focus of life. Spend time with your family, nurture your passions and hobbies and try to ensure that fun is an ingredient in everything you do.
  2. Be careful about scorecards. The industry lists many advisers aspire to be named to include quantitative criteria like AUM and wealth of clients served, not qualitative data like family dynamics, life enjoyment or how you give back to society.
  3. Expect to pivot. Emerging advisers have seen firsthand how some boomer advisers are struggling with retirement. This industry is changing fast. A long-term career will undoubtedly include even more pivots than your older colleagues have experienced.
  4. Hire people who are smarter than you and delegate to them if you want a business that will outlast you. That means reinventing yourself to add new leadership value.
  5. Check your attitude and behaviors. Be open to new opportunities.

What does this really say? Build a life—not just a career—and then work hard to protect it!

Joni Youngwirth_2014 for web

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.


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Reinvention: Why It’s Required to Drive Lasting Success

Do you want your business to outlast you? Some advisers set this goal when they design a firm. For others, the focus comes as they anticipate transitioning their business to a new generation of ownership when they approach the end of their career.

There are no universals when it comes to timing for the business life cycle. The life cycle is the pace at which a practice evolves from inception to growth, maturity and eventually a final stage of decline. If there is no intervention to reinvent the firm, the natural life cycle of the business will rule. The length of each phase is unpredictable. For example, growth can come in a year or develop over many years. But is there a universal requirement for creating success that will endure? Yes. It’s the willingness to reinvent your business.

What Does Reinvention Require?

Reinvention requires a magnitude of change that ushers in an entirely new approach to doing business. For example, the introduction of the robo-adviser created a radically different way to work with clients. No matter what you think of this technology, it was radical enough to disrupt the industry. Since “robo-advice” was introduced, it has been continually improved. Today, the digital approach has morphed to add human service components. In turn, advice given by human advisers has shifted to include digital components. Another client-centric reinvention is the growing interest in responsible investing, as advisers respond to client demand by integrating environmental, social and governance factors into investment decision-making. These are only two examples of reinvention, but they demonstrate its essence: major transformation in response to market forces and industry changes.

Beyond Continual Improvement

Reinvention differs from the concept of continual improvement. Many advisers rightfully believe their business is improving all the time. Improvements may include streamlining the way data is collected from clients, implementing enhancements to customer relationship management, adopting new technology, updating forms for greater efficiency and enhancing internal communication. Although continual improvement is needed to run a solid business, it’s not as radical as reinvention.

Timing Is Everything

Every business is different, but one thing is clear: reinvention is essential long before a practice reaches the decline stage. If one waits that long, it will be too late to save the business. The faster the pace of industry change, the greater the need for reinvention. As such, an adviser needs to be prepared to reinvent his or her practice. In fact, it is likely that radical change will need to happen multiple times to keep a firm in the growth stage. The greatest danger is waiting too long to begin the reinvention process. Maturity can be a long or short phase. This means that strategic shifts should be part of every firm’s business planning process.

Is Age a Factor?

It isn’t a factor for everyone, of course. But as advisers age, some understandably do not embrace change with the same enthusiasm of their younger years. Many advisers keep all their energy focused on their next client meeting. Why stir the pot with worries of reinvention when business is good or when an adviser is moving to a lifestyle practice? Most advisers love meeting with their clients. The responsibilities of being the CEO and running a business pale in comparison. But if advisers lose passion for leading their business, it’s not likely that they will be leading the reinvention process. To guard against unforeseen problems, advisers entering the home stretch of their careers need to incorporate additional focus on strategic direction as part of the business planning process.

Nurturing the Life Cycle of Your Business

Some advisers might think that reinvention—a change of magnitude—is not possible due to the constraints of industry providers and government regulations. I believe that, despite these limitations, every adviser is empowered to adapt to change and adopt new tools, technology and practice models at every stage of a career and the life cycle of a business. The key is to embrace reinvention to keep the firm in the growth stage.

Joni Youngwirth_2014 for web

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.