Advisor teams have proliferated over the past decade in the financial services industry, and for good reason — they work. Before the mid-nineties it was the exception, not the rule for a financial advisor to be part of a team. Teams have grown exponentially as the result of client demand and generally higher productivity.
However, there is no guarantee of an increase in productivity for all advisors on the team. A team is a professional marriage, and many of the elements of a successful marriage apply to a successful team. The most important elements are ensuring the right fit, the same level of commitment and shared goals. When these elements come together, a successful and productive team will result.
Once these success elements are in place, taking the team to the next level involves six important steps. These include: shared values, frequent communication, accountability, clear vision, fair compensation and a clear succession plan.
Shared values: Examples of important team values include: the client experience, how members of the team are compensated and recognized and the method by which client portfolios are invested. These values should be established, shared and followed by team members. Have the values been communicated to all members of the team, especially new members? A lack of established values that are shared by all members will result in dysfunction and disconnect.
Frequent and open communication: A professional relationship is similar to a personal relationship, and effective communication is essential to both. The most frequent problems I’ve observed (and the most easy to remedy) are problems with communication. Teams must establish venues for communication and foster open and candid communication. I recommend a team meeting once a week. An agenda is critical in keeping the meeting focused and on track. The meeting should be used to reinforce values, vision and accountability and should provide an opportunity for all members to contribute. These team meetings, when well organized, can be over within an hour. If done right, they will focus and energize team members.
Accountability: Once the vision and values have been established and communicated, every member must be held accountable for their role in achieving team goals. A job description should be written for each team member. Compensation and recognition should be based on the contributions each team member makes in their area of responsibility. During each meeting, every member should provide a short summary of their weekly accomplishments. This accountability serves as a powerful motivator.
Vision: The process of creating a vision and setting goals is invaluable. Team members are more productive when working toward a specific vision. This vision can evolve, and should be flexible and fine-tuned over time.
Fair compensation: Compensation must be fair to all parties involved in order for a team to be effective. As the team grows, those most responsible for growth must be appropriately compensated. This is particularly true with junior members. To be limited to a small percent of the practice will frustrate a successful advisor who has a great deal of potential, and could result in him leaving. Accountability and compensation must go hand and hand for accountability to be effective.
Succession plan: Members of the team depart for a variety of reasons, and in many cases it’s the retirement of a senior partner. A succession plan should be developed and communicated to all members of the team. Senior advisors are often uncomfortable with a succession plan because they worry circumstances will change. However, by not communicating the succession strategy, the other partners won’t know where they stand. This uncertainty is an ongoing distraction and can affect morale and loyalty.
Being part of a team is no guarantee of success. However, if the elements of a successful team practice are in place, it will greatly increase the probability that the results of the team as a whole will be greater than the sum of the parts.
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