Develop Your Firm’s Next Generation of Leadership

Sarah Cain shares four essential strategies on how advisory firms can help grow the future leaders of their business and their industry.
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By Sarah Cain

If there’s one thing we hear about often as business coaches in this industry, it’s how successful firms are struggling to find next-generation leaders within their team: “She’s a great adviser, and I would love for her to be my succession plan, she’s just not skilled enough in management and business development.” “He’s a great operations person, but he just doesn’t think big-picture enough to be a COO.” “She’s a fantastic accountant, but I need a CFO that can look forward and help us make decisions based on ROI.”

There’s a serious talent and leadership gap in our industry right now. Not only are we struggling to attract enough new talent to the industry, but when we do recruit amazing new talent, we’re not spending the time and energy to help them be successful and develop them into future firm leaders.

While there’s no magic pill, there are firms who are doing a great job of developing their team and have built a sustainable business that can run without the founder/CEO, not only giving that CEO more freedom, but increasing enterprise value as well.

Here are four key ideas advisers can take from those firms and implement in their own business:

Mentor Future Leaders

Be intentional about mentoring your future leaders.

A former COO I know from my time on a custodian’s operations panel was chatting with me recently about the power of mentorship in developing operations leaders. Back when she was just getting started in the financial advisory space, her firm’s owner would sit down with her regularly to educate her on the industry and the different players in the space. “This is what an RIA is… Here’s what a broker/dealer is… Here’s what a custodian is... Here are the differences, how they interact, and why they are important.” He didn’t stop her training at the basics she needed to know to process paperwork or address client service issues. He helped her expand both her knowledge base and perspective.

Don’t expect your team to learn from the school of hard knocks -- even if you did. Make it a point to regularly connect with and share with your future leaders everything you’ve learned over the years: What has worked, what hasn’t worked, how you make decisions, how you evaluate vendors, how you manage a team, and how you connect with clients and prospects.

Allow your next generation of talent to participate in strategy meetings, due diligence processes, and client and prospect meetings.

If you had a great mentor, replicate and improve on that experience. If you didn’t, be the mentor to your high-potential team members that you wish you would have had.

Broaden Their Perspective

Your future leaders need to get out of their bubble and have a broader perspective of how the industry works, what trends are impacting your business, and where the future may be taking us. It can be easy to get completely wrapped up in what’s happening in our own little corner of the world, so support and encourage your team to expand their thinking and knowledge base.

Bring future leaders to industry conferences with you so they can get a good pulse on the industry, be exposed to new ideas, and learn about the various solutions provided by vendors. Introduce them to leaders at other firms so they can learn what’s working at other businesses and bring those practices back to yours.

Share with them the important industry publications and thought leaders they should be following. Encourage them to join study groups with peers at other firms, even if it’s a local group with firms you might consider to be competitors.

Invest in Your Team

Even if you’re paying your team well, chances are your next generation of talent has a lot of competing financial demands. They’re paying back student loans, saving for a house, supporting children or elderly parents, or just trying to make ends meet in a high-cost-of-living area. While they may want to invest in their own professional development, finding $5,000 to $10,000 for a CFP, leadership development, or sales training program can be tough.

If you truly want to develop future leaders and a sustainable business, be willing to put your money where your mouth is and invest in your team’s professional development. Pay, at least partially, for their education programs; support them in the costs of ongoing affiliation and continuing education for the credentials that give your firm credibility; hire a coach on their behalf to help them develop their sales or leadership skills. You know the quote from Richard Branson: “Train people well enough so that they can leave. Treat them well enough so that they don’t want to.”

Give Them Stretch Assignments

All three of the above are important pieces to the leadership development puzzle -- but a stretch assignment allows your future leaders to take what they’ve learned and put it into practice. What’s considered a “stretch assignment” will depend on each person and their current role, but it should be a project you can delegate to them that requires them to stretch a little beyond their comfort zone.

Perhaps it’s leading the presentation for a large prospective client, planning a major event, handling initial due diligence on a vendor, leading an internal team working on a specific project, or representing the firm at an event. Look at your firm’s upcoming initiatives, and ask yourself how you can use them as opportunities to grow your team’s capabilities. As always, don’t just throw it on them and let them flounder; provide advice and guidance, check in regularly, and make sure you both debrief on what they learned and celebrate their successes.

Your Clients and Industry are Counting on You

Being intentional about developing your next generation of leaders is absolutely key in building a sustainable business that is ready for the future and able to serve your clients for years to come. A solid leadership development strategy will help you attract and retain talent, improve your firm’s enterprise value, and allow you the freedom and flexibility to spend more time doing the things you love -- while sleeping better at night.

Mentor, broaden, invest, and stretch: it’s a simple plan, but not always easy to consistently execute. Set your firm apart by deciding today to dedicate yourself to developing the next generation of leadership for your firm and our industry.

About the author: Sarah Cain, CFP, is vice president of coaching and consulting for the Carson Wealth advisory firm. She is the former COO of a large RIA consulting firm in Kansas City, and she is an associate certified coach through the International Coaching Federation, a certified professional coach, and certified business coach. She also has a certificate in corporate social responsibility through the University of Colorado, Leeds School of Business.