Growing Your Team Through Change • Financially Simple


In my last blog entry, I went over the importance of effective change management. Specifically, I discussed managing team expectations during a time of transition. But I feel that we’ve only begun to scratch the surface of that subject. As you enter into a transitionary period, it can be very easy to lose momentum. In many cases, this could cripple the ability to achieve your desired outcome. So, in today’s post, I want to look at some ways of growing your team… even in the midst of change.

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The Nature of Transition & Growing Your Team

Friends, I said it last week, and I’ll say it again… change is tough. As people, we all enjoy the safety and comfort of our routines. Transitions are disruptive by nature. Therefore, we often push back when change enters our world. Yet change is often necessary to achieve the things we want the most out of life. So how do you balance the nature of transition with growing your team?

When embarking on a transition, it’s important to consider where each team member is at in their personal and professional lives. Knowing how the transition could help them accomplish their own goals is a critical aspect of creating buy-in and long-term engagement throughout the process. If you can align the transition with their own aspirations, you could create a win-win situation where both the organization and your team members thrive.

Throughout this series, we’ve been looking at things from the perspective of the RIA owner who’s seeking the eight-figure exit. We aren’t changing course. However, I want to point out that growing your team during a transition isn’t exclusive to the transfer of your business to a new owner. In this case, “transition” could be any number of changes, including:

  • Changing Custodians
  • Merger/Sales
  • Owner Exits
  • Leadership/Management Changes
  • New Company Structures
  • New Target Demographic/Clients
  • New Service Offerings

Each transition brings its own unique challenges and opportunities. The better you understand the nature of the transition, the more effectively you can navigate it. But why does this matter to you, the RIA owner?

Disruption Is Disruptive

Regardless of the change your firm is entering into, continuity of production is crucial. However, the stakes don’t get much higher than when you’re preparing to transfer your firm to a new owner. Disruption is disruptive to all areas of your organization, and if not handled properly, it could negatively impact your RIA’s value. Let’s take a closer look.

Clawbacks and Earn-Out Agreements

Negotiating the sale of a business often involves clawbacks or earn-out agreements. These mechanisms tie a portion of the payment to the future performance of the organization. But how frequently are these actually used in the RIA space? Well, according to a 2016 study by TD Ameritrade Institutional, 20% of M&A transactions among RIAs use a variable payment loan tied to future performance.

Similarly, Succession Resource Group reports that 25% of deals in 2020 included a clawback feature. Although this number is down from 67% in 2019, it still indicates a very real need to plan for the success and continuity of your team and your RIA during a transition. If you see a sharp decline in production and growth immediately after the sale, it could cost you millions.

Profitability and Value Growth

As I mentioned before, change is often necessary to achieve the things we want most out of life. So, even if you’re not selling your company, change will be necessary to drive increased profitability, revenue growth, and even value growth for when you are ready to sell. Strategic transitions can position your firm for an eight-figure exit in the future, and increased profitability in the meantime.

However, growing your team will still be necessary for a successful change initiative in these scenarios as well. But how do you grow your team during such a disruptive time in your business? Let’s explore.

Strategies for Growing Your Team Through a Transition

Former General Electric CEO, Jack Welch, is credited with saying, “Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.” Friends, I firmly believe that. If you truly want to succeed, you must focus on helping others achieve their dreams. By nurturing their dreams and aspirations, you can create a dynamic environment that drives productivity and fuels employee retention. With this in mind, let’s look at some strategies for growing your team!

Manage Your Team’s Dreams

In the book, The Dream Manager by Matthew Kelly, we learn the story of a struggling company. With the business on the ropes, they take a new approach, creating a new leadership position… the dream manager. This “dream manager” begins holding monthly one-on-one meetings with employees to discover their personal and professional aspirations. Once he’s met each one, he works with them to create action plans with measurable steps to help them achieve their goals. The result completely transformed the business, leading to unprecedented growth and stability.

Like the dream manager, you can identify your team’s dreams and aspirations. Once you do, work with them to develop the skills and competencies that will enable them to accomplish their goals. Folks, this isn’t a wasted investment. Don’t believe me? Consider this… Zippia reports that 92% of employees say that employee training programs have had a positive effect on their engagement. They also found that companies with an engaged workforce are 17% more productive than those without.

If you’re not already doing this, growing your team can be as simple as managing their dreams! The beauty of this is that a transitional period is a great opportunity to help them grow. Craft a development plan and assign tasks that involve the skills they will need to reach their goal, while also helping to facilitate the transition your firm is going through. You can also delegate these activities to senior team members and leaders, creating a cascading effect of team growth and development while leaving you free to focus on growing the business during the transition.

Sometimes Growing Your Team Means Growing

Growing your team during a transition isn’t solely dependent on individual development. Sometimes it means creating new positions within your team. For example, you might consider creating a Client Onboarding Specialist position to enable advisors to dedicate more time to serving clients. Additionally, strategic hiring can bolster your team’s skillset and capacity. Many RIAs are beginning to understand this as well. This is evidenced by the fact that 80% of firms surveyed in the 2022 RIA Benchmarking Study by Charles Schwab say they’re planning to make strategic hires.

Adding further credibility to the report’s findings, Lisa Salvi, Managing Director, Business Consulting and Education at Charles Schwab says, “The past few years have underscored that people are truly a firm’s most important asset. And it is not surprising, based on current growth rates, the industry will need to hire more than 70,000 new staff over the next five years.” So identifying the roles you will need and making strategic hires where internal development and promotions won’t work, is becoming a much larger piece of the puzzle.

Crafting a compelling Employee Value Proposition (EVP) that emphasizes career development can attract top talent to your organization. Your firm’s EVP serves as both a recruitment and retention tool, enhancing new hire quality by up to 50% while reducing employee turnover by 41%.

Preserving Momentum & Value Through SOPs and Processes

During any major transition, it’s vital that you review your systems and processes to ensure continuity and efficiency. Standard Operating Procedures (SOPs) play a critical role in preserving momentum and value. By documenting each aspect of your firm’s workflow, you can easily delegate tasks and optimize operations.

For example, we recently had a team member leave to continue her education. As she was preparing to leave, we had to examine every task she routinely performed to look for holes that would be left once she was gone. It might seem trivial, but we discovered that only her computer was set up for document scanning, meaning once she was gone, a very simple task was going to become much more challenging for the rest of our team. Because we reviewed the systems and processes, we identified the potential problem and created a solution before it ever had a chance to rear its head.

Wrapping Up…

Friends, change is inevitable. How you respond determines the outcome. Don’t lose the momentum that got you to this point and miss out on the eight-figure exit. By focusing on developing your team, growing strategically, and preserving momentum through SOPs and processes, you can navigate a transition successfully and emerge stronger than ever.

Look, I know life is hard, but life is good. Growing your team through a transition can be frustrating, but it doesn’t have to be. With some planning, dream management, and careful review of your SOPs, you can make it at least financially simple. Hey, let’s go out and make it a great day!

Are there still vulnerable areas in your RIA that could impact your eight-figure exit? Reach out to our team to learn more about how we could help!

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