I know you already own a wealth management practice. Here’s the rub, if you think that’s true, then your not a business owner, you own a wealth management practice. The difference here isn’t the practice part, it’s the business owner part. I’ve found that wealth management firms who have leaders that think like business owners are very different and way more valuable than wealth management practices. Read on to find out why.
My story of my move to wealth management.
My first twenty years in the world of business was owning and running a vending and food service company. We fed people who worked in factories. Eventually the business grew to one that had 90 employees, served four distinct communities and had three different divisions. I’m going to bet that this is a little more complicated than your wealth management firm.
I’m also going to bet that your wealth management firm is much more financially successful than my vending business ever was. Complexity isn’t always a good thing. At the same time, because my business was complex none of our customers felt they were doing business with me. They all felt like they were doing business with my company. That’s the main difference between a business and a practice.
Your story is a little more challenging.
By challenging I mean having your clients feel that they’re doing business with your firm and not you. I bet you got your clients by providing outstanding one on one service. You were trained in how to service clients. You weren’t trained nor did you have to work very hard at creating a business. Instead, you likely focused on finding new clients who you could provide outstanding service to.
Here’s where the challenge comes in, that is if you want to create real value in your firm. If you want to have a business that’s truly sellable you’re going to need to make a very difficult change. You’re going to have to figure out a way for you to transfer loyalty of your clients from you to your firm. You’re going to have to have others in your firm service those clients that have come to depend on you for advice. You’re going to have to learn to let go and let others in your firm help. It’s the only way to increase value in your firm. It’s the only way you can scale your business.
What business owners do that’s different.
Successful business owners that I know spend a lot of time figuring out how to get out of the way. They don’t really want to service their customers. They want others in their company to do that. Truly successful business owners spend most of their time thinking about strategic activities they can help their business implement. Then, they engage others in their company to do the implementation.
Is this something you’re doing? I’m going to bet that with the little time for strategic activities you have it’s all around finding new clients. Instead, think about broadening your horizons. Think about acting like an owner of a manufacturing firm. Owners of manufacturing firms think about global issues. If they don’t, their competition will eat their lunch. What would happen if that was reality in our industry?
How I want you to think about your business.
I want you to stop thinking about your firm as a practice. Yes, I know you are a practitioner. That’s only one of the hats you wear. I want you to really think that most of the time you’re the owner of a business that happens to be in the wealth management world. Really, it’s the only way you’re going to build lasting value for your firm.
If you have an interest in selling your firm someday I can promise you that your new owners won’t want you. In fact, the more important you are in the firm, the lower the price will be and the less cash you’ll get up front. On the other hand, if you can prove that you’re operationally irrelevant in your business you’ll have a much stronger business that others will want to own.
If you want to change it only takes persistence and practice.
There is hope. I’ve seen it happen. That is where wealth management firm’s have made the transition from advisor based to firm based. It will be a process of trial and error. You’ll have to make small experiments and make changes to fit your model. I know you can do it. Do you?