INTRODUCTION: Why Form a Team?

"By seizing the opportunities that disruption presents and leveraging hard times into greater success through outworking/outinnovating/outthinking and outworking everyone around you, this just might be the richest time of your life so far."

- Robin S. Sharma, Global Leadership Expert, Bestselling Author

In the financial services industry, the age of the sole practitioner advisor is a business model with many inherent challenges. The sole practitioner has been replaced by financial advisor teams that provide leverage to client relationships and can provide more than a commodity client experience. The key differentiating factor is for advisors to provide a service model that is unique and that focuses on the client first. Let's examine some of the trends and/or threats to the industry as well as an advisor's practice that fully support the rationale for creating effective teams.

Price Compression

So how did we get here? A little history is in order. In May 1975, brokerage industry commissions were deregulated. It brought new competitors into the market and basically broke up the monopoly on securities pricing. The downside to this free market pricing scenario is that the industry has not been able to raise prices since that time frame. Innovative firms adjusted by creating proprietary products that, for quite some time, eliminated any reason to raise prices. This was, in large part, because proprietary products had considerably higher fees or sales commissions associated with them. The industry was very innovative in generating new mutual funds, public partnerships, private placements, lending, and many hybrid products that helped to stem the tide of increasingly growing operating costs associated with running the business. Unfortunately, many products didn't live up to client expectations and there were inherent conflicts associated with this innovation.

With operating costs continuing to rise to the present day, financial advisor business models must evolve as well. Unlike many industries that pass on additional costs of doing business to the consumer, the financial services industry is challenged to use this strategy. Clients have the power to vote with their feet, walk away, and take their business to a host of competing organizations. Gone are the days where simple transactional business was a component of delivering an exceptional client experience. Price compression in the industry is one of the threats to doing business that requires financial advisors to transform their practices to deliver a value proposition based on advice and guidance.

The Dilemma I Faced

I (Curtis) recall as a branch manager taking on an assignment in the Northeast. The complex had four locations and approximately 50 financial advisors. On the surface, it was a very profitable complex. There were no teams in the office, and approximately 13 financial advisors controlled more than $13 billion in assets, a key driver of performance. Those advisors were all at least 55 years of age or older and potentially could face retirement in a few years. The potential loss of client relationships due to the retirement of these advisors and the lack of a quality service experience could also negatively impact branch office performance.

I fully expected I could lose substantial revenues in a two- to three-year time frame during my tenure due to turnovers, retirement, and other causes. Additionally, the return on assets was relatively low, at 0.04 percent. We had plenty of assets, but the client experience numbers were woefully low. I needed to find a solution to this dilemma!

We needed to help these advisors create the capacity for change as well as do a deeper dive with existing client relationships. Creating teams around these financial advisors to improve productivity as well as improve the client experience was important. Everyone could interview both internal and external advisor candidates. We established a simple profile by asking potential teams and team members who they would like to work with on a team, and then initiated and fostered interviews and meetings between individuals. In some cases, candidates who had great credentials, MBAs, former attorneys, business professionals, and certified public accountants (CPAs) were hired. When teams hire and/or onboard a new team member, they have a vested interest in the team member's success. Each team was required to develop a business plan and strategy document and receive ongoing coaching by a manager. The ongoing coaching was key to the success of teaming strategies. If bodies of people were just assembled together, the overall strategy would not have worked.

In discussions with teams it was understood that the firm was making an investment in their practice. It was explained that the person being hired would cost in compensation and benefits, close to $100,000. It became very clear, and the team understood the commitment that all parties would be making to ensure the success of the new team member (see Chapter 12, "Onboarding and Mentoring a New Team Member"). The team would make the final decision on hiring the new team member; it was never a forced relationship. There would be a two-year probationary period before the team member would achieve permanent status on the new team.

These new team members were also supported by going through a rigorous branch training program led by managers and experienced financial advisors. The overall impact was extremely positive, and it moved the office along in forming new team relationships.

The components of a team business plan and strategy document consisted of the following:

• Vision statement
• Mission statement
• SWOT analysis
• Goals
• Business forecast

The plans were comprehensive; however, these were the basic components. Meetings were scheduled with each team on a quarterly basis, and supplemental team-based training was instituted. We cannot underscore the importance of continued team-based training. There were times when team-based practice management sessions were scheduled. Successful teams from other branch offices were brought in to spend time coaching these teams. We would organize the office and run segmented training sessions based on an advisor's level of productivity and the developmental needs of each group. For teams at, or near, the $2 million in revenue level, we might have coaching sessions by either bringing in teams or visiting with teams at the $4 million or $7 million level. This was particularly helpful in enabling teams to modify behaviors and make productivity improvements. We wanted teams to believe they could accomplish stretch goals. Peer-to-peer meetings and training sessions fostered exponential learning, and the successful approaches reinforced positive team behaviors.

This, in turn, created an environment where the successful teams could mentor and share successful concepts with other financial advisor teams within the complex. "Success breeds success," as is commonly understood by many. Of course, creating a culture of teaming does take some work, as you will discover after you read more about team effectiveness strategies. The positive outcomes were that teams began collaborating with each other on specific client initiatives. If a team didn't have the expertise, they could collaborate with a team that was competent in a specific area, such as business financial services, pensions, or areas more specific to the ultra-high-net-worth clients. Decisions were made to take teaming to a new level by fostering collaboration and partnering within several business units and specialists. There were numerous specialists representing a considerable number of products and services. We made every effort to make them a part of the team in the office. They became collaborative team members supporting our client development and marketing efforts. These specialists were not made to feel like outsiders to what we were trying to accomplish. A discussion of this Force Multiplier Effect and collaborative business model occurs in a later chapter.

Sometimes it was necessary to intervene in conflict resolution or the restructuring of team agreements. And on rare occasions we were involved in team dissolutions. The complex grew to 135 financial advisors in three years. New hires were succeeding at a 90%-plus success rate. Turnover among financial advisors was almost nonexistent. Revenues and assets more than doubled within three years, with revenues approaching $100 million. While many of the quantitative results were significant, the impact to the culture and achievement of financial advisors was even more impactful.

If financial services firms want to have a positive impact on organic growth, team effectiveness strategies offer an excellent solution and approach. No one would ever consider forming a team and then walking away thinking that the work is done. When you have a group of talented individuals such as any professional sports team, the dynamic that separates the team is the leader/coach. Well-coached teams have greater chances to improve performance and succeed in a variety of environments.

Lessons Learned

What did we learn by creating an environment where more than 60% of the advisors were on a team? Merely putting people together as a cobbled-together solution will not work. Teams must have a unifying vision. There must be a team business plan with a delegation of duties and responsibilities for...