Many people in the advisory industry refer to smaller independent firms as "lifestyle businesses," but if you've ever said this term to one of those firm owners, they get defensive. They appear to see this as a condescending term, suggesting that these firms aren't real businesses, and their owners aren't real business people.
But that's wrong. Although the term lifestyle business may not be great for everyone, I think it's very good idea for many advisors.
Let's not kid ourselves: even after the tremendous growth many independent firms have had over the past decade, even the largest of these firms still hasn't — technically — broken out of the "small business" category.
Put another way, probably everyone who works at Fidelity Investments, JP Morgan Chase, or even Charles Schwab, thinks all independent advisory firms look like lifestyle businesses.
And they're most likely right — at least from the perspective that independent advisor firm owner(s) undoubtedly could make more money if they had focused their efforts over the years on becoming top executives at the above mentioned financial giants.
But they didn't — they chose another path.
This brings me to my key point. Very few independent advisory firm owners started their firms because they couldn't get a job anywhere else. In fact, even today, most firm owners have had other jobs. And in most cases, it was those other jobs that drove them to want their own businesses.
We all want to get different things out of life — and out of our working lives. Some people like the security, the team work, the resources and the power of working at large corporations: at the bottom or the top.
For others, control of their working environment — how they work with clients and how it effects their own lives — is the most important issue. These are the people who typically start their own independent advisory firms.
Several years ago, then business consultant Mark Tibergien (now CEO of BNY Mellon's Pershing Advisor Solutions) published an article in Investment Advisor that discussed firm owners' lives. His aim was to help owners make more fulfilling decisions about their businesses for themselves, and he called them the "Definitions of Success."
