I am fascinated by the number of advisory firm principals who still believe the best path forward for junior advisers is in the back room, cutting their teeth on low end clients. If you’re in the business of building an advisory firm, this approach doesn’t make any sense.
I am strongly advocating a rethink of the role allocation of junior talent. Bring them into the front office on your best clients, on joint appointments. Encourage greater collaboration on your difficult cases and promote client sharing between junior and senior talent with your best clients. (Be clear, I am not advocating dumping your best clients onto your newest talent without collaboration. This would be irresponsible and contravene your duty of care to clients and your team.)
Parking your newest advisers in low end client work to ‘learn the ropes’ is based on outdated thinking, which I don’t believe the current employment environment will allow you to support for much longer.
Keeping junior talent in low end client work creates silos
First and foremost this outdated thinking promotes ‘your client’, ‘my client’ attitudes, which create silos in an advice business.
Silos reduce business value.
- Talent gaps. A silo-operated advice business resembles a barrister’s chamber. Everyone is very busy and there are lots of shared resources, but there is little professional support for increasingly heavy workloads and increasing client expectations. A talent gap is cultivated between a senior adviser’s high-end skills and those of the next level of adviser. Talent gaps doom senior advisers to high workloads. On-going success doesn’t mean freedom and more time, but just the opposite.
- Inconsistent value to clients. Advice silos don’t encourage consistency of a firm’s client value proposition. As advisers in a silo become more experienced, they develop their own habits for running a client discovery meeting, re-directing a client’s misaligned focus, prospecting for new clients, and providing clients with greater financial choice in their financial decision making. These soft skills vary from silo to silo, greatly affecting the client value proposition throughout a firm. Thanks to the industry’s back office industrialisation efforts over the last few years, most firms can guarantee consistency in the hard skills of advice (e.g. technical compliance and statement of advice construction), but these are now considered a ‘ticket to the game’ of advice and rarely contribute to significant value add for a real client.
- Compromised client relationships. In these advice silos, clients don’t develop a relationship with the firm, but a relationship with one individual within the firm. Worst case scenarios occur when advisory staff who have worked your low end clients, and achieved hard experience at your expense, leave or are poached from your firm, and start taking ‘their’ (read ‘your’) client relationships with them.
- Lost opportunity to cross sell. Cross sell opportunities are often missed in firms with advice silos as there is little or no remuneration benefit to refer a client to another silo. Also there is the problem that an “A” client for one silo is a “D” client for another, and the service proposition can’t be guaranteed across the firm.
Restricting junior talent’s experiences will cost you good staff
Good talent won’t join your firm to repeat your career. They will only join your firm so they can leverage the firm’s experience to fast-track their own, i.e. they want to ‘get somewhere’ quicker than they would if they worked for themselves or someone else.
Due to the boom we’re experiencing (ask a Western Australian how hard it is to get and keep new team members– it’s probably a reality check for all of us), two years is becoming the average length of employment/service. Our real competition isn’t for clients, but for staff. The banks and institutions are throwing everything at the staff advising our metropolitan and regional clients to lure them across. Your employment advantages over the institutional predators are still the same as always: quicker opportunities for experience; closer relationships with real clients; strategic independence; and options for equity. These all appeal to the X and Y Generations, but all strengths have corresponding weaknesses. To overcome these weaknesses, principals need different strategies.