Company cultures fascinate me. Two RIA firms can offer the same services and produce the same revenue, but one can be a toxic place to work and the other can nurture employees to perform at their best.
How do these firms differ in establishing and maintaining their cultures?
It starts at the top. All employees look to the leaders of the company to establish a vision, mission and patterns of behavior. On a more granular scale, staffers are continually evaluating how management treat their fellow colleagues. If staff members see managers frequently raising their voices, then that same behavior will be deemed acceptable for meetings not involving management. If managers make important decisions without encouraging employee involvement, then employee buy-in into implementing change might not be as high, either.
In a positive environment, supportive managers can propel their teams to achieve surprising results. One young advisor told me how he was taking over a portion of a book that a veteran advisor was passing down due to his retirement. This newer advisor was in his twenties, but his superiors encouraged him to work with C-suite executives and start managing a book of more than $40 million.
When he reflected on the transition 12 months later, he could not speak highly enough of his senior advisors and company leaders. They had instilled in him a sense of confidence. Because of their support, he had felt ready for the assignment and had all the skills needed to tackle the transition.
His colleagues had also encouraged him to ask questions whenever he felt unsure of anything — technical or otherwise. He worked closely with the company’s founder to maintain strong client relationships throughout the transition and noticed how his superior had the utmost care for the client as this change occurred. He spoke about how that behavior now drives him to be a better advisor.
QuoteIn order to understand the culture of a solo-advisor firm, look to his or her clients.
With beaming pride, he also shared with me how he was able to keep bringing in held-away assets and convert referrals from current clients, ensuring that he wasn’t just a servicing advisor but could add to the company’s growth. Without the support of the company leaders, I fear it could have been a different story.
In contrast, negative company cultures can leave scars. Early in my career, I saw how poor communication can adversely affect culture. In the early weeks of joining an RIA, team members disagreed about how prospects should be onboarded to the firm.
When one advisor, who brought in the majority of the business to the firm, didn’t feel like his views were being taken into consideration, he stood up in front of the entire planning team and yelled he was shutting down his book and leaving. He then left the office for the day. As a new member of that team, I was shocked to see this company crumple before my eyes.
The next day, however, everything went back to business as usual. The outspoken team member was at the office when I arrived, as were the rest of the team. Colleagues tolerated his outburst, which unfortunately was not a one-off occurrence, as normal. Not surprisingly, his behavior left colleagues on edge about when other incidents might occur.
This toxic environment spawned other unproductive behaviors: Team members often had closed-door meetings to talk about other staff members, instead of having confidential meetings with superiors. Certain staff members would purposefully not show up for company meetings because they didn’t get along with each other. Others would send hotheaded emails that should never have been written. All of this bad behavior happened in clear view.
Needless to say, the culture at this firm resulted in bad morale, high staff turnover and an inconsistent client experience.
QuoteOne advisor who felt his views were ignored, stood up and yelled he was shutting down his book and leaving. He then left for the day.
Communication makes or breaks culture: A former colleague recently described how the culture of his company suddenly changed when the company executed a succession plan. A new owner came in to succeed the retiring owner and the communication rules changed overnight. The family atmosphere, in which everything was discussed as a staff, evaporated, and it now became a top-down, “here’s what we’re doing” regime. Staff members no longer took time to get to know each other over lunch or early-morning cubical visits, after the new owner commented that people were spending too much time away from their desks. He thought that he was making the firm more efficient, but in reality, he was eroding the culture that had made the firm successful in the first place. Twelve months later, two key members of the support team left, citing the change in ownership and culture as their main reason for leaving.
Culture has to be nurtured and maintained: Culture is like a garden. First, it has to be planned mindfully before anything material can happen. Then, it needs to be nurtured throughout its infancy, fed to ensure its growth and constantly maintained to ensure any weeds don’t take root.
While top managers are the main groundskeepers of corporate culture, every staff member has a role in feeding wilting plants. A good culture publicly praises those plants who are showing their fruits, ensures new plants get everything they need to grow at their own pace, and either removes weeds when they appear or brings in the groundkeeper when the weeds become too much to handle. If staff ignore any part of the garden, its growth is stunted, weeds take over, and in the worst case, much of it has to be ripped out so the garden can be planted again.
Culture for solo advisors? Promoting a positive culture is essential for companies with staff, but what about solo advisors? Does corporate culture even exist when there is just one worker? I think it does, but it’s tightly linked to the personality and vision of the advisor.
In order to understand the culture of a solo-advisor firm, look to his or her clients. They are in the same place as staff members in a large firm. They communicate directly with the advisor and try to understand the nuances of his or her communication style. If the personality and culture of a solo advisor resonates with many clients, and the advisor nurtures those relationships just like managers do with larger staffs, the advisor will find themselves with many healthy, fruitful planning relationships.
But instead, if the advisor doesn’t take care to maintain or weed client relationships, then services become superficial — or at worst, transactional. A solo advisor’s culture then depends on how well they cultivate their client relationships into long-lasting bonds.
Culture is a living entity inside every financial planning practice, regardless of whether staff is present. When leaders tend to their culture with care, it can become the lifeblood of a company and ensure its long-lasting success.