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Veres: Here's What Top Firms Are Doing Right

Until recently, I thought the state of the art in practice management was pretty simple: Use your technology efficiently, break your routine tasks into repeatable processes and compensate for what you want the staff to accomplish.

As it turns out, that’s just table stakes for the top firms.

I had to update my thinking recently after I attended the latest group coaching program of the Ensemble Practice — the group founded by Philip Palaveev, formerly of the defunct Moss Adams consulting organization. The group’s core mission is to help advisory firms accelerate their growth.

One key insight for me was the importance of a systematic approach to talent: You can get more leverage and growth out of developing your staff into future leaders and partners than out of pretty much whatever else it is you’re doing now: marketing, doing planning chores or tending client relationships. The analogy is that you’ll get more fruit (read: revenue) if you grow an orchard instead of a few big individual trees.

A couple of key sessions stood out during the meeting I attended. In one, consultant (and former Moss Adams CEO) Bob Bunting told the audience that ambitious firms need a steady infusion of talent.
Since only a small number of people have the qualifications and motivation to be a leader, and hiring opportunities don’t come around often, he says, you have to hire opportunistically and quickly. One key challenge is that the window where those rare individuals are looking for employment tends to be much narrower than for “average” people.


Next, he says, systematize your key employees’ development by creating a highly visible leadership track, with the overt goal of moving talented people to partner status as quickly as possible.

At Moss Adams, Bunting says, every staff member was evaluated on a scale of 1 to 10, according to how effectively they were performing their job. Those who scored a 7 or better were put on the leadership track:

They got more attention from upper management, more recognition and opportunity, and a visibly accelerated career path.

Part of the magic is making your leadership track highly visible within the firm, so it will serve as a motivator for the rest of the staff. Employees who are not on the leadership track will ask what they need to do to get on it.

Such tracking also helps a founder or CEO prioritize who to spend time with. Bunting argues that the CEO’s core job, more important than any other, is to spend quality time with the best people at the firm — the early adopters, the talented and motivated staffers.

The leadership track also identifies the change agents who the company can turn to when new projects are initiated. Bunting says that for every change, upgrade or forward initiative, there are three types of staff members. Early adopters will pick up on the new idea and run with it. Skeptics will wait to see if the idea works before they’re willing to commit to it. The “never wills” actively work to sabotage it.

When a new initiative is rolled out, therefore, the CEO should focus on helping and encouraging the early adopters. As they make headway, publicly celebrate their successes. Call them up and congratulate them at staff meetings, and circulate congratulatory memos.

Doing so shows the rest of the employees who is getting noticed for making important changes — and, by omission, it also points out who is not making it happen.

Eventually, Bunting says, half the skeptics will want this kind of attention for themselves, and come onboard with the project. The more hardened ones will wait until they see that the new initiative is working and the train is leaving the station, and will recognize that they need to get on board.


What does leadership training actually look like? Sam Allred, a director at Upstream Academy, told the group that leadership can be very simply defined as “creating better results.”

“It’s all about moving the needle, and getting the staff to move the needle,” Allred says.

A common mistake, he says, is to promote and reward those people who spend the most time in the office, who are often seen working after hours. Effort can indeed be a key metric early in someone’s career. But over time, you want to shift your evaluation to measure effectiveness.

Another common mistake, Allred says, is creating a flat management structure and a democratic environment that treats everybody the same. If you talk with your most ambitious staff members, you’ll discover that they don’t want to be indistinguishable from their mediocre peers. Parity can be lethal to the culture of an ambitious firm.

To grow and evolve, Allred says, people need to be challenged. “Nobody grows in the safety of their comfort zone.”

Instead, he suggests, encourage your future leaders to take on one major project a year that is realistically beyond their current abilities. This has two consequences: They’ll be forced to add to their knowledge, and will need to collaborate with others who have the skills needed to complete the project.

One way to track progress is to give each employee an annual score on a scale of 0 to 50, with 40 to 50 being defined as partner-level proficiency. An excellent new hire might achieve a 20 in her first year. At a leadership meeting, her mentor will identify how she can get to 25. The next year, if she has achieved a 25 score, the conversation will be about how to get to 30.

But how do you assign a score for effectiveness, team leadership or a host of other soft skills? Allred’s solution: Measure the unmeasurable by relying on group subjectivity. Everybody who works with given staff members should provide an evaluation of how well they’re achieving their soft goals. The firm leader can then aggregate these scores and use them as a yardstick.

The raw score, Allred says, is less important than progress.

“If you’re a 24 this year, you don’t want to be a 24 next year and the year after that,” he explains. “That tells the senior staff that you aren’t evolving and growing; you’ve flatlined.”


According to Allred, the best-managed firms, ask their change agents two key questions:

  • What changes would you like to see in the firm? 
  • What three things would you change first?

Staff members who want to put themselves on the leadership track need to share their opinions, Allred argues. “If you want to be seen as a leader, you have to give up your right to remain silent,” he says. “You have to speak up and share your thoughts. You have to engage. Leaders speak up.”
More generally, employees who want to become leaders need to want people around them to succeed as well. The best leaders are not intimidated by the success of others; they don’t feel that someone else’s success diminishes them. They celebrate the success of others — and they’re willing to do this even if that success takes someone farther along the leadership path than they themselves have reached.

As I listened to these two presentations, several ideas jumped out at me. First, I suspect a lot of founding partners are complacent and flatlined. Second, the “orchard vs. big trees” concept is not well understood or commonly practiced.

And third, I realized that many advisory firms seem to want that flat operational structure — where everybody is treated the same — that Allred recommends against.

I eventually realized the difference between the future haves and have-nots in the advisory profession might come down to a few decisions. Are you willing to identify, engage and mentor extraordinary people? Are you willing to shift your role from doing to mentoring? And will you encourage evolutionary change, or resist it?

Bob Veres, a Financial Planning columnist in San Diego, is publisher of Inside Information, an information service for financial advisors. Follow him on Twitter at @BobVeres.

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