Recently, many of my columns have focused on the need to create critical mass in your practice, to build an environment in which motivated people will flourish, to institutionalize the way you do business. I even challenged advisors by stating: "The goal should be to have employees eventually become partners of the firm…."
Ben Utley, a financial planner in Eugene, Oregon, read this comment and responded by asking a simple question: "Why?" The answer is anything but simple, since many more questions and issues are wrapped up in the query: If all I want to do is work with clients, why bother adding other advisors? If I don't want to manage people, what would make this appealing? Are you saying that solo firms are no longer relevant? What if my local market doesn't support a bigger practice? If this is such a good idea, where do I find the candidates? The list could go on and on.
In my experience, these questions constitute friction rather than a wall–they are points of resistance that many advisors impose upon themselves and that limit their practices, their success, and ultimately their satisfaction with their chosen profession. I'll address each question in turn.
If all I want to do is work with clients…. Studies by both Moss Adams LLP and Advisor Impact Inc., the Canadian practice management consulting firm, show that the more an advisor's business grows, the less productive that advisor becomes. These advisors become so consumed with tasks like compliance, meetings, and responding to clients' inquiries that they can't get off the treadmill. Adding other professional staff actually allows you to delegate many of those tasks and leverage yourself so you can focus on your unique abilities and interests.
If I don't want to manage people…. The moment you add one staffer, you become a manager of people. It's likely that you'll continue to grow, so the challenge now is to get to some level of critical mass where you can afford a professional manager to perform these unfamiliar and less pleasant tasks for you (or find a way to make yourself enjoy it and do it well). Each additional staff person pulls you into more of a management function. Like pregnancy, the only sure-fire way to avoid this is abstinence. If you don't want to manage, make sure you don't grow.
Are solo firms still relevant? Yes, they are absolutely relevant. Solo firms represent the vast majority of practices in North America. The challenge is whether this model will get you closer to your personal goals. For many it will, but if you truly struggle with time, leverage, expertise, client service, and market presence, then the question becomes: Is it relevant for you?
My market doesn't support a bigger practice…. A valid issue, especially if one is operating in a small, rural community that is economically depressed. But one test to determine its validity is to look in the yellow pages to see who else is offering financial advice in your community. As the joke about lawyers goes; one will starve, two will flourish. In most communities, there is a fair amount of competition for financial advice. Competitors may not be applying your business model, but they are competing for the same dollars and stirring up interest in the financial planning process. Your challenge is to differentiate your practice from those competitors so that you are the place to go for both clients and talent.
Where do I find good candidates? In a market where there are more transaction-oriented advisors, you can either try to grow talent from scratch so those folks embrace your values and approach, or bring in somebody from out of town with the same practice philosophy. Operating in a small market may make either choice a riskier decision, but not an impossible one to execute. Both the FPA and Schwab have created job banks to help facilitate the talent shortage, and there are now many universities pumping out graduates with financial planning degrees. This is not to say it's easy, but there are more resources than ever to solve the problem of adding professional talent.
The inevitable loss of control that comes with adding other people, the intrusion into your management decisions, the need to be accountable to others besides yourself, changes to the way you do business, and so forth are all sources of stress. Individually, they can cause your blood pressure to spike, but together they can bring on a tsunami of emotional conflict. To sign up for this sort of emotional upheaval, as Ben Utley so concisely suggested, you have to have a really good reason.
