The 5 Biggest Challenges Big Advisory Teams Need to Consider

The 5 Biggest Challenges Big Advisory Teams Need to Consider

A move for any team of advisors can be challenging, yet for whales those challenges multiply

The movement of billion dollar premier wirehouse teams has become part of the industry’s new normal.  Consider Paul Feinstein’s move from UBS to First Republic, or Matthew Celenza’s move from Merrill Lynch to Dynasty. Headlines aside, what many don’t realize is how much goes into moving behemoth teams like these. Ultimately, what we find is that the bigger the team, the bigger the obstacles they are likely to encounter. Given that, advisors like Paul and Matthew who ultimately choose to move despite the challenges that they were up against, do so because in the end their goals – the commitment to better serve clients as true fiduciaries, and the desire to build independent enterprises – are strong enough to prevail.

So when corner office marquis teams consider making a change in firm or business model, what are the obstacles that they – and even smaller teams – have to consider and devise a plan to overcome?

The 5 Biggest Challenges Big Teams Need to Consider

  1. More is at stake – The level of success achieved by industry “whales” raises the bar for any solution they consider. While it’s important for every advisor in any move to stay where they are unless another opportunity is meaningfully better, an option considered by a large team must move the needle even more significantly. These teams are often well-oiled machines—effectively serving clients and successfully growing. Any disruption in a team’s momentum can be counterproductive. Big producers may assume that a move means taking yourself out of business for a period of time, and potentially even taking a step backwards. For large teams, the motivation to move may be less about solving for a particular frustration and more that, opportunistically, they want to build something greater that benefits both clients and partners.
  2. Partner alignment – Large teams are typically multi-generational in makeup. Each member of the group, and certainly each generation of advisor, may be at a different point in their careers and have a unique perspective with differing expectations about what they need and where they see themselves next. Others may be more risk averse and only entertain a lateral move to another large firm, IF they were to consider making any kind of change at all. Some may be more entrepreneurial than others and see business ownership as the goal. Partners who are closer to retirement may be more concerned with protecting the deferred compensation they have amassed at their current firm. If they have never monetized and want to enhance their nest egg, they may value a meaningful upfront check. Partners need first to identify all of the varying – and sometimes conflicting – points of view and figure out how they will reach a consensus.
  3. Business processes and relationships – Large practices tend to be complex businesses built by successfully navigating and taking advantage of all of a firm’s resources. These advisors have mastered how to get things done, often as a result of negotiating exception management. In order to contemplate a move, these advisors must come to terms with untangling numerous connections to their firms (such as through banking and trust services) and find replacements for long-standing relationships. Moving may feel like going from knowing everything and everybody, to starting over and having to rebuild critical contacts.
  4. Knowledge of the landscape – The landscape has changed dramatically just over this past year alone and certainly since partners may have last looked. Successful teams have a world of opportunity and likely will want to evaluate options beyond the firms locally. Most large teams will want, at a minimum, to get educated about what it means today to be independent. This requires getting exposed to what can be a dizzying set of alternatives and learning a new vocabulary. Considering independence raises a set of unique model-specific questions, such as:
    How do you access capital?
    Who has oversight responsibilities?
    How do you replicate the resources and infrastructure that you currently rely upon?
  5. Inertia – Even the most successful of teams can experience inertia—that is, the natural resistance to change that we all struggle with from time to time. Now multiply that among multiple individuals on a team. If inertia seems to be at play, this is when it’s important to decide if you are settling because change is too difficult or do better solutions exist that are worthy of the disruption of a move?

Related: Considering a Model of Ensemble Advisors? 5 Ways it Can Succeed

There’s no doubt that any team – large or small – will encounter some level of disruption from each of these obstacles through the process of a move. The reality is that as a team grows, these challenges become amplified to a greater level. But the rewards of a move – to clients and advisors alike – can be amplified as well, that is, for the right opportunity and with the proper due diligence. Going into the exploration process with a full understanding of these potential complications and solving for them at the onset – rather than putting out fires later – will limit their impact and help you focus on building the next chapter.

Barbara Herman
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A chance meeting in 2003 with Mindy Diamond proved to be impeccable timing. Barbara – a practicing attorney specializing in tax law at the time – had been with Pricewaterh ... Click for full bio

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

China's Push Toward Excellence Delivers a Global Robotics Investment Opportunity

Written by: Jeremie Capron

China is on a mission to change its reputation from a manufacturer of cheap, mass-produced goods to a world leader in high quality manufacturing. If that surprises you, you’re not the only one.

For decades, China has been synonymous with the word cheap. But times are changing, and much of that change is reliant on the adoption of robotics, automation, and artificial intelligence, or RAAI (pronounced “ray”). For investors, this shift is driving a major opportunity to capture growth and returns rooted in China’s rapidly increasing demand for RAAI technologies.

You may have heard of ‘Made in China 2025,’ the strategy announced in 2015 by the central government aimed at remaking its industrial sector into a global leader in high-technology products and advanced manufacturing techniques. Unlike some public relations announcements, this one is much more than just a marketing tagline. Heavily subsidized by the Chinese government, the program is focused on generating major investments in automated manufacturing processes, also referred to as Industry 4.0 technologies, in an effort to drive a massive transformation across every sector of manufacturing. The program aims to overhaul the infrastructure of China’s manufacturing industry by not only driving down costs, but also—and perhaps most importantly—by improving the quality of everything it manufactures, from textiles to automobiles to electronic components.

Already, China has become what is arguably the most exciting robotics market in the world. The numbers speak for themselves. In 2016 alone, more than 87,000 robots were sold in the country, representing a year-over-year increase of 27%, according to the International Federation of Robotics. Last month’s World Robot Conference 2017 in Beijing brought together nearly 300 artificial intelligence (AI) specialists and representatives of over 150 robotics enterprises, making it one of the world’s largest robotics-focused conference in the world to date. That’s quite a transition for a country that wasn’t even on the map in the area of robotics only a decade ago.

As impressive as that may be, what’s even more exciting for anyone with an eye on the robotics industry is the fact that this growth represents only a tiny fraction of the potential for robotics penetration across China’s manufacturing facilities—and for investors in the companies that are delivering or are poised to deliver on the promise of RAAI-driven manufacturing advancements.

Despite its commitment to leverage the power of robotics, automation and AI to meet its aggressive ‘Made in China 2025’ goals, at the moment China has only 1 robot in place for every 250 manufacturing workers. Compare that to countries like Germany and Japan, where manufacturers utilize an average of one robot for every 30 human workers. Even if China were simply trying to catch up to other countries’ use of robotics, those numbers would signal immense near-term growth. But China is on a mission to do much more than achieve the status quo. The result? According to a recent report by the International Federation of Robotics (IFR), in 2019 as much as 40% of the worldwide market volume of industrial robots could be sold in China alone.

To understand how the country can support such grand growth, just take a look at where and why robotics is being applied today. While the automotive sector has historically been the largest buyer of robots, China’s strategy reaches far and wide to include a wide variety of future-oriented manufacturing processes and industries.

Related: Smooth Tomorrow's Market Volatility With a Smart Approach to Robotics & AI

Electronics is a key example. In fact, the electrical and electronics industry surpassed the automotive industry as the top buyer of robotics in 2016, with sales up 75% to almost 30,000 units. Assemblers such as Foxconn rely on thousands of workers to assemble today’s new iPhones. Until recently, the assembly of these highly delicate components required a level of human dexterity that robots simply could not match, as well as human vision to help ensure accuracy and quality. But recent advancements in robotics are changing all that. Industrial robots already have the ability to handle many of the miniature components in today’s smart phones. Very soon, these robots are expected to have the skills to bolster the human workforce, significantly increasing manufacturing capacity. Newer, more dexterous industrial robots are expected to significantly reduce human error during the assembly process of even the most fragile components, including the recently announced OLED (organic light-emitting diode) screens that Samsung and Apple introduced on their latest mobile devices including the iPhone X. Advancements in computer vision are transforming how critical quality checks are performed on these and many other electronic devices. All of these innovations are coming together at just the right time for a country that is striving to create the world’s most advanced manufacturing climate.

Clearly, China’s trajectory in the area of RAAI is in hyper drive. For investors who are seeking a tool to leverage this opportunity in an intelligent and perhaps unexpected way, the ROBO Global Robotics & Automation Index may help. The ROBO Index already offers a vast exposure to China’s potential growth due to the depth and breadth of the robotics and automation supply chain. As China continues to improve its manufacturing processes to meet its 2025 initiative, every supplier across China’s far-reaching supply chains will benefit. Wherever they are located, suppliers of RAAI-related components—reduction gears, sensors, linear motion systems, controllers, and so much more—are bracing for spikes in demand as China pushes to turn its dream into a reality.

Today, around 13% of the revenues generated by the ROBO Global Index members are driven by China’s investments in robotics and automation. Tomorrow? It’s hard to say. But one thing is for certain: China’s commitment to improving the quality and cost-efficiency of its manufacturing facilities is showing no signs of slowing down—and its reliance on robotics, automation, and artificial intelligence is vital to its success.

Want all the details? Download the ROBO Global Investment Report - Summer Brings Best ROBO Earnings in Six Years or visit us here.

ROBO Global
Robotics and AI
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ROBO Global LLC is the creator of the ROBO Global® Robotics and Automation Index series, which provides comprehensive, transparent and diversified benchmarks representing the ... Click for full bio