This content is from: Practice Management

The Secret Ingredient for Keeping Advisors Happy

Get this wrong and risk watching top talent bolt.

Job satisfaction for financial advisors boils down to three things, according to Cerulli Associates’ RIA Marketplace 2019 report. Two don't surprise: Higher pay and building financial value in an independent business. The third ingredient is harder to quantify and can be challenging to implement: increased autonomy.

Many RIA owners encourage employees to act entrepreneurially. However, autonomy is relative, existing on a spectrum. It also has limits as advisors must follow compliance rules, conform to company culture, and follow guidance from supervisors. RIA owners who tut-tut the notion of increased autonomy do so at their own peril. 

“Executives are agonizing over deciding to loosen the reins on investments, and perhaps risk, or remaining steadfast while potentially losing advisors. It’s the number one thing keeping wealth management executives up at night,” Doug Fritz, the CEO and founder of F2 Strategy, a technology and marketing consulting firm to wealth management firms, told RIA Intel last year.

Experts interviewed for this article suggest that firms must create a supportive environment where independence is encouraged, while ensuring that all compliance regulations are adhered to. That’s admittedly a tricky balancing act.

San Francisco-based Eric Ries, author of The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth, and CEO of Long-Term Stock Exchange, a national securities exchange, asserts that most firms are filled “with incredible creativity and innovation and talent, but the way that our management systems operate, it’s like having a creativity dampening field in most organizations.”

Most organizations send subtle messages to not rock the boat but those signals stifle independence and entrepreneurial behavior. “In any organization, you have to create a structure that makes it safe for people to take risks,” Ries declares. If staff is encouraged to make strategic risks, “you don’t need as many controls and procedures to describe telling them exactly what to do.”

For example, Ries consulted on a project for an asset management firm in which an IT organization was meeting with a financial compliance team to jointly develop a new product. The problem was bloat. Two dozen people were aboard yet none worked full-time on the project. Nor were any of the executives, who would ultimately greenlight the finished product. 

Ries encouraged them to establish a three-day workshop, develop a new plan of action, identify full-time members from both IT and compliance, assign a board of directors, and show their first version in 90 days. What the team effectively did was develop a new culture in which staff could operate more like entrepreneurs while sidestepping corporate bureaucracy.

“The company got out of the way and allowed this natural creativity to flourish and offered some freedom,” Ries says. He adds that specific details matter greatly, including the way recording was done, how the meeting was organized, and how budgeting was allocated.  

When transforming a culture, “you can’t change everyone at once,” Ries says. “You find early adapters and change them, and build momentum.” Once entrepreneurial and autonomous behavior is embraced, employees become “more customer-centered, more scientific using data to make decisions, and more committed to the truth and speaking the truth.” But this change requires buy-in from the C-suite. Absent that, entrepreneurism won’t flourish. 

At Carson Group, a financial advisory firm with $12 billion in assets under management, including 120 partner offices nationwide that serve 32,000 families, entrepreneurism and autonomy are part of the company DNA, says Kelsey Ruwe, its Omaha, Neb.-based chief of staff.  

Once an advisor is hired, he or she is expected “to speak autonomously, raise questions, and ask why things are done that way,” she says. Staff is encouraged to challenge one other, and strive to “make everyone in the room better.”

Most of Carson Group’s partner offices, spread throughout the U.S., operate in an entrepreneurial way, each with its own leader. “They’ve built their business from being autonomous and being entrepreneurial. It fits into their model. We learn from them, and they from us,” Ruwe points out.

Championing autonomy helps Carson Group retain staff, which is critical given that many baby boomer advisors are looking to retire. “That’s what advisors want,” Ruwe asserts. “Everyone wants to come in and make a difference.  We create the environment that makes them feel safe.”

Russell Johnston, a New York-based partner in the Government Matters practice at the King & Spalding law firm, attributes RIAs embracing greater independence to a “generational shift, resulting in more and more folks looking to be more entrepreneurial and giving them more autonomy. Very often part of what is most satisfying in a job is the ability to be creative and think for themselves, and being autonomous makes it easier to do.”

But Johnston says this drive for independence must be tempered “with caution.” Because firms are so heavily regulated, they need to install “guardrails” that cover customer interactions, generating new business, and serving your organization’s mission.

“The more a company can explain what its particular regulations are, what the industry’s regulations are, and the more staff understands them, the more they can think creatively,” Johnston says.

Related Content