Skip to content

Overcoming Stagnation

few years back, I wrote that the planning profession had entered an exciting new era of hyper-rapid evolution.  And I think you know the things I was looking at: new super-smart software (including so-called “robo” technology), new integrations and features in the software world, the rise of ETFs as increasingly precise investment vehicles, e-signatures, account integration and face-to-screen meetings, the death of century old wirehouse brands due to a string of scandals, and perhaps most importantly, evolution in the way that planners do planning, including the Certified Financial Transitionist training, life planning in general, and collaborative planning. 

As I write this, I have a more nuanced view of the actual pace of this evolution.  Yes, the number of potential innovations and improvements is coming at us at a record pace.  But the actual implementation of those potentially transformative developments seems to have stalled in the profession.

During our Insider’s Forum conference, the reason became clear.  We encountered many younger advisors and operations professionals who are eager to participate in the evolution, but they told us they feel held back by an older company founder.  I now believe that the center of gravity in the profession is companies whose founders are unwilling to do the (admittedly) hard work of making significant changes, of embracing new technologies and replacing old ways of doing business.  They are unwilling to temporarily reduce profits and raise their personal hassle factor in order to invest in better ways of doing things.

The message that mainstream advisory staffs are hearing is: It’s perfectly fine for you to make these positive changes after I retire.  The problem: some of these founders never actually plan to retire.

As a result, we see younger advisors going off on their own once they gain experience, sometimes taking clients with them.  With the turnkey package offered by the XY Planning Network, this has never been easier.  Other ambitious advisors are moving over to more proactive firms, creating a wider disparity between rapidly growing firms and firms that are in a slow-growth mode or outright stagnation.

What can we do about this?  A revolution is out of the question, and violence should not be considered.  But the theme of this newsletter (and of our recent conference) is leadership, and one aspect is leading from inside, taking ownership of projects and responsibilities.  At the same time that younger advisors and operations professionals are complaining that their firms are stalled in this hyper-evolutionary environment, I hear owner/founders lamenting that they cannot find adequate successors.

It seems to me that for many firms, the solution is for the younger advisors to sit down with the firm owner and develop some concrete proposals for not just transformation of the firm, but also for succession.  Part of that proposal would be to create the firm that they (the successors) will eventually want to own.  Another, equally-important part is to identify and define the role that the founding advisor will play in that firm.  I probably don’t need to add that the transition should be made as painless as possible for the founder; that means, in practice, that there will be financial sacrifices as the firm invests in itself, but that should be offset by growth in the value of the firm and therefore some growth in the purchase price by the successors.  It should also, of course, minimize the hassle factor; the changes will be implemented by the successors, for the most part, and the founder will simply need to learn new habits.

I recognize that all of this is far, far easier said than done.  But simply recognizing that leadership is the solution should help turn a problem into an opportunity.  Creating a plan, creating a proposal, owning the potential results (literally) is a path forward for the next generation of advisors.  If you realize that you aren’t able to formulate a concrete plan, or discover that you don’t feel confident in implementing it, then that helps clarify that you are as much of a problem as the recalcitrant founder.  Solve that problem first, and the other, bigger one might resolve itself as well.