Many advisors create vertical teams hoping not only to grow a business, but also to create a potential successor for the practice down the road. Sounds like a great plan, but when is the last time you evaluated how successfully your team is functioning?
Too often, seasoned financial advisors are completely oblivious to the cues that their team is about to derail. There may be tenured junior advisors or support staff working with you who are no longer as effective or satisfied in their roles as they were when they began. You may be reluctant to let them go because of their long history with you or the firm. Perhaps you have made a personal investment of your time or resources into someone on your team, only to be shocked when they resigned their position. Misreading the signs of an employee's level of engagement can have far-reaching negative implications for the continued success of your practice.
Most vertical teams in the financial industry struggle with long-term sustainability. In evaluating the potential factors that influence the success of these teams, the primary responsibility of these failures lies with the lead financial advisor. However, it has nothing to do with his or her financial acumen or ability to attract and work effectively with clients. The problem is usually the advisor's ineffective leadership skills.
The Story of Steve
The example of Steve F. demonstrates how limitations in leadership, emotional intelligence and communication skills can result in a team's implosion. Steve's production and assets under management had placed him in the highest achievement club level of his firm. He enjoyed both the recognition and influence in the firm that his status gave him. However, he experienced a lot of turnover with his sales support staff. They described him as demanding and inconsistent. Steve was frustrated that his numerous assistants were unwilling to commit to the level of professional service he required to attract and retain the high net worth clients in his practice.
That's why, seven years ago, he decided to create a vertical team. He hoped not only to increase his assets and grow his business, but also to identify a potential successor who could eventually take over his practice and buy his book. He hired a licensed sales assistant, a marketing specialist and a junior financial advisor. Steve paid the advisor a salary. The advisor agreed to service Steve's clients and support his firm's success.
Initially, Steve reported that the junior advisor seemed thrilled to work with a successful advisor of Steve's stature. When he joined Steve, he was in his late 20s and said his primary goal was learning to be a successful advisor. He didn't see the need for recognition in the firm and was fine working behind the scenes. He and Steve had a discussion about succession planning and how the junior advisor's role and financial opportunities would advance on the team over time, but nothing was in writing. Both the junior advisor and Steve assumed everything would work out on its own.
Over the past seven years, Steve's business grew 20% a year on average. The junior advisor's dissatisfaction also grew. He believed that Steve did not deliver on his promise to reward him for his loyalty and contribution to the team. Although Steve gave the junior advisor a yearly bonus, the formula Steve used to calculate the amount was vague and it never reached the advisor's expectations. Steve reluctantly engaged in discussions concerning the status of their arrangement only if these conversations were initiated by the junior advisor.
Eventually their relationship became acrimonious. Steve felt the advisor was ungrateful for the opportunity. The junior advisor felt he was taking on more clients and investment responsibility and was undervalued for his contribution to the team. As a result, the junior advisor, now in his late 30s and with 10 years of experience, left both Steve and the firm. Steve was hurt on both a personal and professional level and had difficulty recognizing the role he played in this negative situation.
Seeing the Cues
One of the most challenging tasks you will face as a lead financial advisor is ensuring the engagement and the retention of your junior advisors and staff. Employee engagement has been defined as the extent to which employees commit to something or someone in their organization, how hard they work and how long they stay as a result of that commitment.
A research study on employee engagement among U.S. workers published by the Gallop Management Journal in 2006 identified three types of employees: engaged employees, not engaged employees and disengaged employees. Engaged employees drive initiatives and move the team forward. Not engaged employees do the minimal amount of work necessary to keep their job. Actively disengaged employees have an actively negative attitude about work and can be disruptive to the job environment.
Getting your staff to be engaged is easier said than done. If fact, a recent study by Dale Carnegie & Associates revealed that seven out of 10 employees are not fully engaged in the workplace. Around half will do the minimum expected.
Therefore, creating a culture that proactively promotes employee engagement is critical to the sustainability of your team. The good news is that as the senior leader, you have the power to cultivate this type of a work environment.
The first step in creating an engaged work culture is to clearly define your vision for the team. Then you must translate this vision into a mission statement that is germane to your business goals. It should provide a guideline for the behavioral style, work ethic and priorities that you desire in your employees.
You next need to assess your employees on a regular basis and determine the factors in your current work environment that influence employee engagement. Ask yourself what changes you can make to motivate and reenergize those employees who have a past history of being productive members of your team and are no longer engaged. You need to ensure that your culture encourages these valued individuals to thrive and achieve their own professional goals. Just as importantly, if someone is not working out, you need to be decisive about getting them off your team.
It is also essential that you have frequent, transparent communication with members of your team. To do this, it's vital that you make no assumptions about the level of an individual's engagement. Instead, have both formal and informal conversations with them to determine the alignment between the personal values and goals of the employee and the team/firm mission and standards. Discussion topics could include work satisfaction in their current role, personal ambitions for their career path and potential opportunities in your company.
Create a trusting relationship by helping your team members understand the expectations of their behavior. Be consistent in your responses to their actions, so they can anticipate the consequences. Clarify employee expectations concerning raises and promotions. Differences in perception on these key issues can negatively impact their commitment and job satisfaction.
When communicating your expectations, it's crucial to break down complex behavior or concepts into smaller, observable behaviors. You know what you mean when you identify "giving excellent client service" as an essential team value. Unfortunately, everyone has a different interpretation of what a great client experience looks like. Describe the exact behaviors you are looking for, such as returning all client calls within a specific time period, doing whatever it takes to find a client solution and following up with clients within a week to confirm that their needs have been fully met.
The investment of time and resources to foster employee engagement in your work environment is essential. Individuals who are aligned with your team's mission and values can become ambassadors for you in the community and positively influence both your reputation and bottom line.
Denise P. Federer, Ph.D., is a clinical psychologist, executive coach and founder of Federer Performance Management Group. She has been a consultant to the financial services industry for 25 years.