Financial advisory firms that find themselves on an aggressive growth track should be mindful of where they might be headed, because every stage of growth comes with unique challenges.
The topic of going from being a business to an enterprise was front and center at the keynote presentation Monday in San Diego at the annual
Insider's Forum conference.
“If you're heading down the path of complexity, you need to be prepared to take risks; you need leadership, skill, and you need to be prepared to make mistakes, and if all that energizes you then go for it,” said Roy Ballentine, executive chairman and founder of Ballentine Partners.
By way of emphasizing that growth is about a lot more than just building assets under advisement, Mr. Ballentine said his firm learned to accept that “mistakes are inevitable, and it's a really good idea to prepare for dealing with them.”
Mr. Ballentine was joined on the panel by Harry Jones, co-managing partner of Edge Capital Partners, and Tim Kochis, chief executive of Kochis Global.
While sharing their unique experiences and perspectives about growing from a business into an
enterprise advisory firm, they proved that there are many ways to manage and develop a growing advisory firm.
Mr. Ballentine, for instance, stressed the importance of “finding out what you're good at, and getting rid of everything else.”
However, his firm is also completely team oriented when it comes to bringing in new business, which means that there are no specific bonuses and perks for bringing on new business, because every employee is expected to embrace new business development as a responsibility.
Mr. Jones said his firm does recognize and reward employees for bringing in new business, but inside the firm there are “multiple touches for each client,” meaning that no one employee has complete ownership of a client.
That structure, he explained, came in handy recently when an adviser left the firm, “but we kept 85% of the revenues because we had multiple people touching those clients.”
In broad terms, Mr. Jones said Edge Capital works with clients from the perspectives of advisory services,
portfolio management, and client services.
“When we started the firm we wanted to make every client a client of the firm and not of an individual adviser, that makes your business, or enterprise, that much more valuable,” he said.
That kind of team focus, Mr. Jones added, is also a big priority when evaluating the
people they hire.
“We've been very deliberate and methodical about the people we've brought over,” he said.
Mr. Kochis said part of growing a business is hiring people, which is why he tries to develop a “large pool of people to choose from.”
But the key to keeping good people from leaving, he added, is “making it a good place to work, and a fun place to work.”
In addition to giving employees a reason to stay, Mr. Kochis said he is also looking for specific attributes from those he plans to groom for a more significant role in the development of the firm.
As he described them, the three primary characteristics he looks for include competence, a solid contribution to the firm, and commitment.
While he acknowledged that an ownership stake “is not necessarily everyone's brass ring,” Mr. Kochis said in separating ownership from management, he is looking for a serious commitment for the management track.
“This has to be a place where people will anticipate they will spend the rest of their professional career,” he said.
Mr. Ballentine agreed that management has to do its part to ensure that the firm is a place where people want to work.
“In our business your team is your production line, and that production line goes home every night, so every day they become free agents and I hope they come back,” he said. “In my experience, people don't leave jobs, they leave bad relationships. I believe you should invest in those people, show how much you care about them, invest in their training and career development, and spend a lot of time with them. That's how I take care of and hang on to my production line from one day to the next.”
