Last week, in part 1 of this blog I said:
Financial planning is the killer service in the marketplace. So why do the bigger branded players still control the lion’s share of wealth management? It makes no sense and it’s time to do something about it.
I also looked at some of the limiting beliefs I believe adviser-owners hold on this issue. Check out last week’s blog here.
Why do the bigger brands control the marketplace?
It’s easy to pick holes in the business models of some of the big, branded players. Yet, despite how easy it is for us to pour scorn on them, clearly they must be doing some things right to succeed.
My suggestion is to make a list of all the things you think they do wrong (that’s pretty easy), and then create a list of what you suspect they are doing really well (now it gets interesting).
I had dinner recently with Nick Cann (former CEO at the IFP) and Kevin Garforth (an experienced financial services executive). We were discussing the topic of what brands like St James’s Place do well.
SJP do a lot of things well:
- Selection and screening of new advisers
- Training & development
The part they particularly get right is recruitment.
They screen for people that will work well in their model.
And they don’t spend a penny on developing those that don’t fit.
The special forces in the military do the same thing. Selection for the SAS, the Paras or the Commandos is hard. It’s designed to de-select those who don’t have the mindset to do whatever it takes. This phase of the process is not about developing people, it’s about weeding them out. It’s only those that pass selection that the armed forces put loads of time and money into developing.
And it’s only those that pass selection in the SJP model that get the big investment of time and money. The selection process is actually about finding the people who don’t fit the model.
Only once they’ve found their right candidates do they invest. And then, they do absolutely everything possible to help advisers succeed. They don’t spare the horses at all and have a great track record.
How does your business compare in that regard?
Developing people is one of the biggest challenges for small businesses. Who’s got the time?
And “on-the-job training” is usually a euphemism for no training. It’s one of our greatest weaknesses. How can you attract A-class talent if that’s the offering?
For me, it’s another reason why scaling up is an absolute necessity for smaller firms if we want to make an impact and change the world.
Get better, not bitter
I did a ski instructor course in Switzerland about 7 years ago and my instructor quoted one of her ski racing friends who said, “When I focus on my competitors I get bitter. When I focus on improving myself, I get better.”
Let’s learn from what bigger businesses do well, but let’s stay focused on improving ourselves each and every day. That feels do’able. That is very much in your control. Then the results will come.
Instead of slagging off SJP or other big brands, why not ask ourselves, what are they great at? And copy it.
With the proposition you have in your business, combined with improved selection, training and development of your team, what could your business become?
I’ve only got another 5 years and then I’m out
The push back I often get when I talk about scaling smaller firms is, “Brett, I’m only looking to work for another 5 years.”
When I hear that, the thought that immediately goes through my mind is:
“So make them count.”
If you believe you have a shorter window of time I want you to think about what you’re going to do with yourself in that window. Coasting will bore you to tears; and it won’t be good for your staff or your clients.
3 years, 5 years, or 10 years is an eternity if you’re focused.
Do you want to be great?
Do you want to go out with a bang instead of a whimper?
You don’t have to bet the farm, but you do have to have a vision and get after it; otherwise, life is deadly dull.
So, what would need to occur for your business to take that next step up?
You can just work away and play golf for the rest of your life, or you can make a difference – to your clients, your staff and yourself.
Which one sounds more exciting?
And to be honest, you can change the world and still play golf, it’s not an either/or choice. Especially if you’ve set your own boundaries as I strongly recommend. See my blog, You Can Be Ambitious Without Destroying Your Lifestyle (here’s how).
What about merger and acquisition?
It may well be that merging or acquiring is part of your growth journey, but don’t jump straight into solution mode as you try to scale.
Merging with someone else could be totally unenjoyable. Merger often means sale. Be clear on why you think merging is the next logical step. Don’t use it as a way of avoiding the tough choices and decisions you’ll confront as you scale.
Acquiring is also a lot of work. Acquisitions work best when your core business is slick and totally nailed down. Then the acquired firm and the new team members can be onboarded well into the existing successful culture.
Acquisitions can be really hard when your own business isn’t quite sure who it is or what it does. There is a time for growth by acquisition, but maybe it’s further along your development curve as a way of not only acquiring clients but for acquiring great talent to bolster your team too.
Developing younger talent
Any business that wants to be great will have to become masters of talent development. Sure, not every person you put time and effort into will stay, but enough of them will if you commit to it 100%.
In my blog, Build The Perfect Support Team For Growth, Sale Or Succession I looked at the biggest issues in developing your team and specifically, your younger talent. This snippet is worth repeating:
“The reason many younger hires leave is that they are not being moved on fast enough. I know this is a tricky issue if there are mismatches in expectations, or in evaluating a younger hire’s level of ability. However, they don’t need to be as good as you are now; after all that took you 30 years. The question to ask yourself is ‘are they at least as good as you were at their age?’
The answer, in the vast majority of cases, is they’re miles better.
Moving people onward and upward is also vital if you want to be creating future leaders who can take on responsibility within the firm. Without more leaders everything has to go back through you. That’s a recipe for burnout and worse still, you become the handbrake in your own business.
How do you move people on faster while creating future leaders?
Give people responsibility and see what happens.
What mostly happens? They do alright and grow in confidence (as does your business).”
Scaling great small firms is our biggest issue as a profession
We know that many of the best financial planning firms in the country are still independently owned and managed and that financial planning is the killer service in the marketplace.
So, here’s my question again: Why do the bigger branded players still control the lion’s share of the advice marketplace?
To my mind, well run, good-quality financial planning firms can offer so much more, and at scale. It’s time to change that dynamic.
I can help if you want help.
Let me know how you go.