20/20 Vision: Why You Can’t Rely Only on a Visionary

So far, these ideas have been taken from others' work, albeit with Wickman's talent for clear explanations. The next step—how to create "the right seats"—is his unique insight (and the one that changed my perspective). To do this, he's created what he calls an accountability chart, which is sort of an organizational chart on steroids. Here's how he explains it: "The accountability chart starts with a fundamental belief that there are only three major functions in any business, and those three functions make every organization run, regardless of whether it's a startup business or the largest company in the world."

Wickman's three functions are sales and marketing, operations and finance. He may be right in a general sense, but I've found that when it comes to advisory firms with, say, less than $1 billion in AUM, it's more helpful to lump "finance" in with "operations," which also includes back-office and clerical functions. Then, break out the two "advisory" functions—advice and client experience, and investment ­management—creating four key functions.

Next in Wickman's accountability chart, these key functions are managed by two positions: an "integrator" who manages the key functions, and a "visionary," which he calls his "greatest discovery." Here's how Wickman describes these visionaries: "They are typically very creative. They're great solvers of big ugly problems (not the little practical ones), and are fantastic with important clients, vendors, suppliers and banking relationships. The visionary typically has 10 new ideas a week; nine of them might not be so great, but one usually is, and it's that one idea that keeps the organization growing."

This concept of visionary was my biggest takeaway as well: It helped me better understand the dynamics in my business and advisory businesses as well. In advisory firms, the founding owner (or one of the founding owners) is often the visionary. They understand personal finance, and more importantly, they understand their clients: what they need and what they want. That's why they tend to be good rainmakers as well as good advisors. It's also why they started their businesses: to create a firm that can fulfill their vision of how clients should be serviced.

What most independent advisors are not good at is building a business that will fulfill their vision. That's why they hire us, and if they grow large enough, ultimately need to hire an in-house "integrator" to take the business to the next level. In fact, 80% of firms I've worked with don't have an integrator. The 20% that do have owners with both visionary and integrator skills are my easiest clients. Essentially, all they're looking for is validation.

As their firms grow, the role of the visionary (while never unimportant) becomes less important, while the role of the "integrator," the manager of the business, becomes more important. An increasing portion of revenues comes from existing clients, as client service and client experience becomes more important than bringing in new clients, and managing costs becomes the biggest factor in the bottom line. Consequently, this transition becomes the biggest challenge for most owner-advisors.

This is not an easy realization for most founding owners to accept. Yet it's essential if they want their businesses to grow, not beyond their vision, but beyond their ability—and if they want to create value in a business that someone will pay for. What's more, it's essential for an internal succession. The heads of three key divisions in an advisory firm—sales, operations, advisory or investment management—plus the integrator and the visionary make up the leadership team. Ownership in the firm needs to be transferred to one or more of these leaders in a way that will continue to provide a balance of vision and management, while maintaining harmony and cooperation among the firm's leaders.

The visionary component of the leadership team is the hardest to replace, perhaps even more so for those owner-advisors who have both visionary and integrator skills. Some firms attempt to move ahead without it, either managing the firm by committee or elevating the firm integrator to the managing partner role.

Without a visionary to provide a clear direction for firm growth and find creative solutions for problems when they inevitably come up, the growth of the business will be severely hampered. While the independent advisory industry wrestles with its succession from the baby boom generation of owner-advisors, I suspect its biggest challenge will be finding—or developing—the next generation of visionaries.