Can your advisory firm survive without you?

Many financial advisors start their careers working as sole practitioners, responsible for building the book, managing clients and overseeing daily operations. It works well when you're getting established, but as the practice grows, so does the work required to maintain it. Otherwise, the advisor responsible for driving the firm’s growth could end up limiting it.

When most client relationships, service responsibilities and daily decisions continue to be managed by one person, there’s less time to bring in new assets, and existing clients might receive less attention. Eventually, the agency could become increasingly challenging to operate without its lead advisor. Instead of waiting until service demands become overwhelming, advisors can start building the people, processes and structure needed to support future growth from the beginning.

A practice may be too dependent on its leader if servicing the existing book of clients takes time away from growing the business. As more clients come in, the number of ongoing requests, reviews and other responsibilities also increases. Without additional staff to absorb some of the work, the same person responsible for driving growth could become so bogged down that they don’t have the time for it.

Over time, this can create issues on both sides of the business. The advisor has less capacity to pursue new opportunities, and the demands of the existing clientele can make it more difficult to maintain the same level of service.

No need to step away immediately

Offloading some of those responsibilities doesn’t mean the lead advisor has to step away from client relationships immediately. To make the transition smoother, delegating service to other team members could be one of the first responsibilities to pass off. Following up on paperwork, processing distribution or withdrawal requests, or scheduling and preparing for client review meetings can give junior advisors or other staff members the opportunity to take on a larger role while also allowing the lead advisor space to focus on the firm’s growth and future direction.

However, if team members still need the lead advisor to tell them how to handle everything, delegating responsibilities only goes so far. Documenting the firm’s sales and service processes provides a consistent blueprint for how things get done, giving staff a clear understanding of their responsibilities and how to handle different situations. As these processes become part of daily operations, fewer decisions must run through the firm's leader.

Giving junior advisors the opportunity to take on more responsibility involves more than training them on sales and service procedures. Throughout this process, they should also become familiar with individual clients, their goals and objectives, family circumstances and the emotions that could influence decisions. Letting junior advisors participate in these relationships can prepare them to handle more significant client decisions independently.

An advisor-centric model can also become an issue once the owner decides to sell or transition the practice. If clients get accustomed to working with other team members before a transition occurs, a potential buyer might have less reason to worry about losing a significant portion of the client base once the founder leaves.

Don't wait until retirement is on the horizon

Founders don’t have to wait until they start thinking about retirement or see an opportunity to make a sale to start offloading responsibilities. As the firm grows and service responsibilities take up more time, leaders may want to start planning for the future, five or 10 years down the line. That doesn’t have to mean making major staffing or structural changes all at once. Having a junior advisor conduct client interviews or handle routine service needs for a smaller group of clients could be a good place to start.

As the firm evolves, the right people and processes can help responsibilities grow alongside it. Thinking about that structure before the workload becomes too much gives advisors more time to develop their team, create consistency across the business and build a business that can continue growing even as their own role changes.

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