Managing Team Expectations During Transition • Financially Simple


Change is inevitable in life and in business. Proper change management can be the difference between a seamless (mostly) and prosperous transition and an utter disaster. As an RIA owner working toward the eight-figure exit, successfully managing team expectations through a transition can help you maintain the momentum you’ve worked so hard to build. But beware! The slightest misstep could cause your firm to lose hard-won value, jeopardizing the exit you’re dreaming of. That’s why today’s entry is looking at the strategies to effectively communicate change, inspire your team, and maintain your firm’s culture and momentum through the change.

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The Importance of Managing Team Expectations

People hate change. Yet change is unavoidable. Nothing ever stays the same. So how do you lead your team through a change that they likely don’t want without losing the momentum that brought you to this point? You’ve likely heard the term, “change management” many times throughout your career. However, it’s not just a clever buzzword.

Change management is the application of a structured process and set of tools for leading the people side of change to achieve the desired outcome. In other words, it is the way to manage team expectations and inspire others toward the desired goal. In fact, studies show that organizations integrating change management are 47% more likely to meet their objectives compared to those who neglect it. Similarly, Gartner reports that 73% of employees affected by change experience moderate to high stress levels. This results in a five percent decline in performance.

Moreover, Prosci Best Practices research indicates that 70% of employees prefer to hear from their direct supervisors. With numbers like these, it’s easy to see that appropriately managing team expectations through a change is necessary for the continued health of your firm. You see, employees who are most open to change have influence in the workforce and are advocates of the business. As the RIA owner, you can leverage this to empower team members to play a key role from the onset of any change initiative. But how?

The Org Chart

To set the right expectations, you must first assess your firm’s organizational structure. Why? Well, according to the 2019 FA Insight Study of Advisory Firms: People and Pay, restructuring becomes vital once annual revenue reaches around $2.2 million. At this point, many firms need to include a dedicated Operations Manager. As your own firm continues to grow, you’ve likely noticed the need for other full-time positions.

For example, by the time you reach what the FA Insight Study calls “Innovator Status” (firms with revenue around $5.98M), the need for a full-time CEO and COO emerges. You may also need to consider adding the services of technical specialists such as Certified Private Wealth Advisors (CWPAs), Chartered Financial Consultants (ChFCs), or Certified Employee Benefit Specialists (CEBSs). Therefore, as you grow, expanding the team and considering your future buyer’s perspective becomes essential for sustained production and growth.

Additionally, as you explore your firm’s organizational chart, take time to meet with each team member. During these meetings, you will have the opportunity to discuss how their roles might change. This is where managing team expectations comes into play. It’s important to explain how things will change and to provide a general timeline for the changes. Remember, the goal is to create buy-in. These meetings are a great opportunity to explain how the change could help them achieve their own career goals and increase their skills.

Managing Team Expectations: The Shareholders

McKinsey & Company reports that firms with successful leadership transitions have a 90% greater likelihood of achieving their 3-year goals. Likewise, these firms experience a 13% lower attrition risk. Friends, continuity is a crucial aspect of growing and retaining the intrinsic value of your firm. It’s why I’m always teaching the importance of well-crafted and executed succession exit plans.

Therefore, when communicating with shareholders, you must view the change from their perspective. Emphasize the qualifications of the buyer or the benefits of the change, rather than focusing on your own departure. Just as managing team expectations is an important part of navigating change, knowing how to communicate changes with your shareholders is essential. To help with this, I’ve come up with a few tips.

  • Gather your executive team. Use this time to outline the logistics of the transition and craft a cohesive external message.
  • Develop a clear communication plan. This should be developed with all key stakeholders (including your legal counsel) and include a timeline that informs both internal and external communications.
  • Craft a press release and Form 8K. Make sure these address the reason for the transition, expectations for future transitions, strategic announcements, and financial guidance, as well as all regulatory requirements. We are, after all, in one of the most highly-regulated industries in the world.
  • Hold a town hall style meeting for your team, following the press release. This is such an important step. You must give them the opportunity to hear your message and respond. Be prepared to answer plenty of questions.
  • Proactively engage shareholders. This is your chance to control the narrative and alleviate anxiety. Work with your team to schedule calls with top investors, covering analysts, strategic partners, and key investor targets as quickly as possible.

Because your eight-figure exit could depend on the success of your change management initiatives, let’s look at the critical elements.

6 Aspects of Change Management

Friends, managing team expectations during a time of change is a challenging task. If you don’t have a handle on the six basic aspects of effective change management, it’s next to impossible. So, let’s take a quick look!

  1. Leadership Alignment. Folks, I can’t stress this enough. If your leadership isn’t aligned with the goal, your efforts will be in vain. Therefore, it’s imperative that you identify the leaders who are the most important to your successful transition. Then you must create a plan to keep them engaged and aligned with the vision.
  2. Stakeholder Engagement. During a transition, stakeholder engagement is critical. Illustrating ways the change will directly benefit them is a great way to gain buy-in. You can keep them engaged by identifying ways to include them in the transition process. For example, as you merge and integrate systems it’s important to draft and update Standard Operating Procedures (SOPs) to ensure continuity, efficiency, and quality. involving your team in updating the SOPs for each task in their purview is a great way to keep them engaged in the process.
  3. Communication. Once your leadership team and stakeholders are on board, you must communicate the changes with anyone who could be affected by them (this includes clients, vendors, and more). Don’t forget that communication is a two-way street. Therefore, you must define the outcome and then receive feedback.
  4. Change Impact & Readiness. Proactively taking time to assess how potential changes will impact each level of your RIA enables you to address challenges before they arise.
  5. Training. Friends, when things change, things change. No matter how much you want to believe it will be like it was before (just with a different owner/custodian, etc.), that’s just not the reality of change. Therefore, it may be necessary for you and your team to receive additional training in certain areas in order to drive continued growth and production during a transition.
  6. Organizational Design. Back to where we began… As you approach a transition, you may need to change your organizational structure to fit the needs of your firm once the change is complete. Again, consider the needs of your team and your prospective buyer when reviewing your org chart.

Wrapping Up…

Friends, navigating change is tough. Managing team expectations to facilitate continued growth during that change is not for the faint of heart. I’m not trying to scare you. However, effective change management can make or break the transition. If you don’t get it right, it could cost you the eight-figure exit. Therefore, it’s important to begin planning long before you’re ready to make your exit.

Life is hard. Growing an RIA that can weather periods of change and hold its value can be frustrating. But it doesn’t have to be. Friends, life is good and carefully managing team expectations during this time can make the eight-figure exit at least, financially simple. Hey, let’s go out and make it a great day!

Are you facing a critical transition in the life of your RIA? Mishandling the change could cost you an eight-figure exit. But don’t worry. You don’t have to do it alone! Reach out to our team to learn how we could help.

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