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Avoiding the collapse of independent wealth advisory businesses

By Jennifer Goldman, CFP® posted 05-29-2017 09:18

  
We have spent years working with hundreds of advisory businesses and talking to thousands more. It is time to share the honest truth. The fee-only independent advisory industry is changing rapidly with consolidation and closure of firms due to a lack of sustainability. This is occurring because most advisor owners don’t have the passion, experience, or interest in being a CEO.

Fact: Advisor owners have not evolved into CEOs and most don’t want to be the CEO of their business.


To be fair, advisors were never trained to be CEOs. Most advisors never went to MBA classes or had a CEO mentor that shared the knowledge of what it takes to run and grow a business. Advisor owners were never coached on the evolution from advisor to CEO and the art of shedding responsibilities each step of the way. And most advisor-owners have not been encouraged to invest time and money into improving their CEO skills.

Fact: Many advisory business owners are burning out, departing due to serious illnesses, and not attracting new clients and staff.


The independent industy is made up of thousands of owners that only want to network with their current clients and COIs. These owners want to leave new business development and operations to fate. These firms’ operations managers and support staff dream of leaving to work for a more sustainable business but are tied to their current employers due to kids in local schools, handcuffing salaries, family guilt if they moved away, and the lackluster pay that other advisory businesses are offering...


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06-26-2017 12:35

Firms with 2 or 3 owners will lower the probability that owner burnout will hurt the firm's ability to grow (and hurt your career path). Also firms with owners that came from the corporate world and saw what it took to run a business might be a better fit too. Look for someone that has experience in wearing multiple hats before starting their own firm. It might take a lot of informational interviews so hopefully you can juggle being a student and intern with meeting with lots of owners. Jen 

06-26-2017 11:41

Great topic. I am a Financial Planning student looking to one day work in an advisory/planning role. I am not afraid of the hard work but I am concerned about the difficulty of growing a firm and acquiring new clients. I once asked the partner of one of the firm's I was interviewed for, to tell me his view of what he does. In his short explanation he used the word 'very difficult' about 3 times and I began to wonder just how difficult? Of course as someone who hopes to be employed by one of these firms, I do worry about finding myself in one of these 'burn out' firms and as a new hire, having to bear the weight of expectations to help resurrect things?