Practice Management

When should I form a team?

When should I form a team?

We have seen that financial professionals (FPs) in teams outperform their sole practitioner peers, just like people in happy marriages have been found generally to live longer, happier, and healthier lives than their single counterparts. However, it's not the team or marriage alone that creates those statistics; it's the marriage/team comprising the right people that come together for the right reason at the right time in their lives. If you are missing even one of those three variables, the risks of severe problems and/or dissolution may rise.

Some common advice is that one should not fall in love with marriage; one should fall in love with a person who is a perfect fit for you. We believe the same thing holds true for adding a new team member: fall in love with a person who's a perfect fit for you, your practice, and your clientele.

Keep these considerations in mind when you consider forming a team:

1. At the right time

Forming a team or adding a new team member should be a last resort — never a first resort. Whenever you add a new person to your life (a spouse, a child, a friend, or a partner), it often creates another level of responsibility and complexity, and the benefits should far outweigh the cost. In our view, you should make sure you are where you need to be developmentally and structurally, that you've been in the business long enough to understand your own particular strengths and weaknesses, and that your practice is on solid footing so that the transition is as smooth and seamless as possible.

2. For the right reason

You likely always want to forge any personal and/or professional relationship from a position of strength. Forging a team with three individual fourth- and fifth-quintile producers probably will not miraculously turn them into first-quintile performers. Before you consider teaming up or adding team members, we believe you must enhance your practice structurally, systemically, and educationally. You can then look for someone whose talents, skills, and capabilities complement your own. This is how you create synergy in the classic formula of 1+1 = 3.

3. With the right person

For any relationship to have both synergy and sustainability, we believe it must be built on a common philosophical foundation with a complementary set of talents, skills, experiences, and passions. Let's take these two concepts one at a time:

Common philosophical foundation: Just as a home built on an unstable foundation goes unnoticed until the passage of time and severe storms reveal its weakness, we believe the same is true in relationships. They might look really great on the surface, but a nice façade can only mask structural challenges for so long. In our view, you must have thoughtful and frank discussions about issues like mission and vision, collaboration and delegation, wealth management and investment management, client service and compensation, and, ultimately, a commitment to work/life balance. In our experience, the majority of teams fail because they are not philosophically aligned around the core foundational tenets of the practice.

Complementary talents: The single most common mistake we see is team leaders "hiring in their own likeness," or as we like to call it, "the Mini-Me Syndrome." With a nod to Austin Powers, this is when we hire someone who is exactly like us in every way — except 1/8 our size! Given the breadth and depth of responsibilities and capabilities necessary to deploy a comprehensive wealth management and/or institutional practice, a diverse talent pool is absolutely vital to your long-term success. We believe your team will need strategic thought and tactical application, business attraction and retention, high-touch and high-tech capabilities, and, where possible, demographic and cultural diversity of insight. In our view, when it comes to talents and skills, you don't need your counterpart; you need your counterpoint.

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