Avoiding the Collapse of Independent Wealth Advisory Businesses

We have spent years working with hundreds of advisory businesses and talking to thousands more. It is time to share the honest truth. The fee-only independent advisory industry is changing rapidly with consolidation and closure of firms due to a lack of sustainability. This is occurring because most advisor owners don’t have the passion, experience, or interest in being a CEO.

Fact: Advisor owners have not evolved into CEOs and most don’t want to be the CEO of their business.

To be fair, advisors were never trained to be CEOs. Most advisors never went to MBA classes or had a CEO mentor that shared the knowledge of what it takes to run and grow a business. Advisor owners were never coached on the evolution from advisor to CEO and the art of shedding responsibilities each step of the way. And most advisor-owners have not been encouraged to invest time and money into improving their CEO skills.

Fact: Many advisory business owners are burning out, departing due to serious illnesses, and not attracting new clients and staff.

The independent industy is made up of thousands of owners that only want to network with their current clients and COIs. These owners want to leave new business development and operations to fate. These firms’ operations managers and support staff dream of leaving to work for a more sustainable business but are tied to their current employers due to kids in local schools, handcuffing salaries, family guilt if they moved away, and the lackluster pay that other advisory businesses are offering. The non-owner advisors dream of creating a better, sustainable business. If they are risk takers, they are leaving their employer to start their own business through XY Planning Network, Garrett Network, or with no guidance whatsoever. Unfortunately, these new owners also have no idea what it takes to be a CEO. And finally, and most alarming, current advisor owners are literally walking out the door due to burnout, leaving due to sudden illness and neither has a legacy plan nor streamlined operations in place.

With no CEO at the helm, decision making moves at a snail’s pace. Staff mourn the loss of having a leader that inspires and appreciates quality servicing of the clients. College grads are gravitating away from the unsustainable businesses and choosing another industry or nice within the vast financial services world.

Do advisory business owners care about being sustainable? Do we have it all wrong?

There are so many consultants, coaches, and custodians TRYING to get owners to become CEOs and work “on” the business. But do we have it all wrong? Maybe we should be encouraging the non-CEO owners to roll up, partner with a younger CEO, be acquired, or tuck into another firm . The fact is: maybe most advisor owners are satisfied with the client base and the attrition of clients and staff that will come as the business dwindles. Maybe they don’t mind the turnover nor the staff’s dispassionate approach to daily activities or business improvements. Or maybe the size of their paycheck is everything they dreamed of and they aren’t worried about receiving income when they or their health decides it is time to transition out of working?

While we struggle with the collapsing of advisory businesses, we leave CEO-wanna-be’s with solutions to rise above this trend and succeed. And for the sake of the consumer that deserves great, objective advice, we hope you will embrace educational solutions to becoming a true CEO:

  • Harvard Business Review $110 20-minute manager cliff notes that range from Creating a Business Plan to Delegating Work to Managing Time. These have great information and are easy reads.
  • Onsite or online classes for Organization Excellence, Human Resource Management, Project Management, Leadership through Fred Pryor or Kaplan or a local community college.
  • Hire a coach that will help you become the CEO while you hand your clients to an advisor to be managed and cultivated OR let that coach help you hire a CEO or COO and learn how to give them the authority to make decisions and manage the business and staff.
  • Read articles with themes around solutions and CEO Traits – here are some examples from great coaches and yoda’s of our industry:
    7 Traits of CEO’s running billion-dollar RIAs by Belay Advisor
    How to Become your own CEO by Clientwise
    Make Operations your Secret Weapon by First Round Review
    Think like a CEO, Not a Top Producing Financial Advisor by Clientwise
    Do You Know Your Sweet Spot by Accelus
  • Whatever you decide, please do it with confidence and clarity. The consumers need a strong, viable independent advisory community and we must strive to provide it.

    So where to you go from here? Our DIY Directory of Pre-Vetted Outsourced Providers could be a good starting point for you. It provides a comprehensive list of affordable and capable resources to reduce your workload and coach you on becoming a CEO.

    We continue to be at your service and hope these words have inspired you.

    Seeking operational excellence? Drop us a line by connecting HERE