Charmeon runs a $1.8m advice firm.
She has just hired another junior adviser.
Her plan: hit $3m by 2030.
She left a big bank in 2018, starting with no clients.
She is excited about her firm’s future.
She has a great team, good clients, aligned centres of influence, and a great reputation in her advice niche – Gen Y daughters concerned about their aging parents.
She believes she can maintain her growth, having overcome her hardest-ever challenge of creating something from nothing.
She should be more concerned.
The next stage can too easily turn something into nothing.
PRODUCTIVITY
Productivity is such a buzzword; it is too often ignored.
A $3m firm isn’t better than a $1.8m firm if productivity stays the same. In fact, it’s worse.
Growth without increased productivity is just more headcount carrying greater problems, at a bigger scale, with more risk, more to lose, more stress and far less time.
Between today and 2030, productivity will become the greatest risk for advice teams.
Why?
A number of factors.
Firstly, the product-based financial advice institutions will always win the remuneration bidding wars.
They always have.
The institutions can afford the remuneration packages they offer because of their scale, product margins, infrastructure, and brand awareness.
Making senior advisers more productive is different from making them more effective.
A single adviser generating $3m in revenue is clearly effective.
But the dependency ramifications of that level of performance create significant productivity problems for advice teams.
Three $1m advisers are more productive and sustainable, and provide a more valuable internal structure for up-and-coming team members and an external one for potential new recruits or merger partners.
This means that competing and winning new talent for advice firms like Charmeon’s is critical.
But Charmeon needs different incentives.
Incentives that institutions cannot match.
Pathways to shareholding or directorship.
Quicker access to deeper client responsibilities.
Accelerated skilling and access to complexities that their institutional peers won’t experience for years.
A career that is not ambushed by product or tech trends.
These paths and incentives are unfamiliar and, at times, uncomfortable for founders like Charmeon.
She expected new talent to be content to follow the career path she had forged over several years.
She might need to think again.
If that isn’t enough to contend with, there’s a second challenge of growing productivity.
CAPACITY
Growing advice teams hit a rock-like glass ceiling somewhere between $2m and $3m in revenue.
With revenues of below $2m-$3m, adding team members generally improves capacity.
Above it, the opposite can happen.
As advice teams exceed their second tipping point (their first being survival), the demands of HR, tech, compliance, new business, governance, key-person risk, and skilling increase exponentially.
Hiring two or three more team members doesn’t just mean two or three times the onboarding load.
It can mean five or six times, as seniors reduce their capacity to support new team members, as new systems are installed to replace overburdened legacy systems, and as oversight and quality control become essential to manage advice risk, reputations, and to retain enduring client relationships.
That additional management cost is a direct drag on the very productivity target that justified hiring them.
Then there’s the challenge nobody wants to address.
In 1969, Laurence J. Peter observed that in every organisation, every team member eventually rises to their level of incompetence – the Peter Principle.
What happens if Charmeon is the problem?
She has excelled at building trusted client relationships, delivering valuable advice, building solid referral relationships with alliances, creating a loyal, hard-working team and culture, and creating an envious reputation.
What happens if, despite all the skills she has demonstrated to build a $1.8m firm, they are not the same skills needed to grow a $3m+ firm?
There is no question Charmeon’s role is critical for the firm’s future, but if her proven unique abilities are confused with the skills needed to overcome the future and different complexities her growth will create, there is a significant risk that bigger will not be better for her, her team, her clients and her reputation.
If Charmeon is part of the productivity problem, she will probably seek to solve the new complexities of growth with new systems.
This is a classic sub-$2m approach.
Which is doomed.
More new systems will add additional drag to all too-busy resources who become numbed with ever-changing systems (i.e. new CRM, new AI, new License, new location, new merger, new platform, new socials, new brand, new whatever), which reduces productivity, ironically increasing the need for more teams, which increases the stress and erodes the prized culture from the firm’s early days.
The needed response is different priorities, not different systems.
There are, however, some priorities that existing founders and principals do not like to hear, such as separating strategy ownership from day-to-day operational execution.
That is, “…this is my firm, and I will run it as I believe it needs to be run.”
2030?
The investment needed in team members, existing and new, is only going up.
Getting a return on that investment is going to get harder.
Today, the supply of advice can’t meet the demand for advice, and it won’t be able to for a while yet.
AI will change some of this. Not overnight, and not evenly across every category of advice.
The work of building a productive advice team that can thrive in 2030 has to start now, with the team you have and the team you’re about to hire.
So the real question isn’t whether you can find new team members.
It’s this: are you building your 2030 team, or just adding headcount to your 2026 model?
Jim