RIAs are human capital-driven businesses, much like firms specializing in law, accounting and consulting. Many such firms have crafted succession plans to help identify and develop the next generation of talent. The RIA industry can and should emulate this long-term approach to succession planning. To do so, RIAs must adopt a different mindset earlier than they think, developing a long-term vision and then working backwards to achieve it.
As an avid gardener, I’ve come to note similarities between cultivating a garden and developing homegrown talent. Both require extensive preparation and care, especially as you approach major transitions. Sustainable gardening involves design, construction and maintenance to meet the needs of the present without robbing future generations of their needs. The same is true for an RIA practice.
DESIGNING YOUR GARDEN
A prudent gardener selects plants that grow well judging by the sun, soil and water available. Similarly, you should cherry pick talent that will thrive in your firm. But don’t plant potatoes if you need tomatoes. Hire people with skills and personalities best suited to your clients. Don’t forget companion plants. Every gardener knows that planting basil together with tomatoes improves the flavor of tomatoes and repels pests. Surround your new hires with a team that complements them. An individual who excels at business development may benefit from a strong compliance person by his side.
CONSTRUCT A NURTUTING ENVIRONMENT
A good gardener always tests the soil to see if it is acidic or has a high alkaline content. Then she can add compost and fertilizer accordingly. Similarly, you need to test your work environment. Is it conducive for new talent? Is the ground overrun with old roots that may need to be removed to make way for new shoots? Take the time to reflect and make a few organizational and attitudinal changes as needed to create a nurturing environment that enables talent to grow while allowing room for some variation.
Weeding and pruning are necessary. Not every seed will sprout, not every plant will grow strong, weeds will find their way into your garden. Maybe you have such a terrific environment that your garden becomes overcrowded with saplings competing for nutrition. In that case, you’ll need to thin. Even the best specimen plants need pruning. Successful gardeners never underestimate the benefit of this regular chore. The same is true for your firm. You need to provide ongoing support to your stars and eliminate the weeds.
Inevitably every gardener is faced with the conundrum of one dead plant ruining a beautiful hedgerow or a deer chewing a plant. Sometimes, you have to replace one plant with a mature specimen grown elsewhere. If you lose talent, go ahead and find a replacement, someone who will work well with the rest of your team.
It takes years of patience and diligent planning to create a beautiful garden with a harmonious selection of plants. It can take just as long with firms. Start planning your company’s future today, long before you have to think about succession. In the process you’ll find that you have transformed your practice into a thriving, growing partnership that values continuity among clients and employees.
Rajini Kodialam is co-founder and managing director of Focus Financial Partners.