It seems as though succession planning is covered in the major news outlets every day now. It is true that we are a graying/grayed profession, and there is a lot of debate on the best way to go about alleviating the problem of the next generation continuing on with what the founding generation started. This month’s article is the first post in a three part series addressing the succession planning issue that many of the founding members of firms are facing and often unprepared for.
We find that when tackling their succession challenges, most firm owners go out and try and find someone just like themselves to take over the business they founded. This is “logical”, because after all, it worked for them! So the firm owner sets out to locate someone like this: Type A, entrepreneurial, extroverted, and sales oriented.
Consider a different approach instead. Seek out candidates who have these three qualities: Follow through, sense of urgency, and innovation. You might not expect it, but candidates with these qualities that we have placed over the years have become successful firm owners. Here’s why:
• Follow Through – Often found alongside high integrity, it is simply the art of doing what you say you are going to do. Unfortunately, this is a rare characteristic exhibited today by members of all generations (WW II, Baby Boomers, Gen X, Gen Y) in the workforce. As a society, it has become very commonplace to brush off upholding a commitment by saying we were “too busy”. Technology has created efficiencies in the workplace, but it has also created additional demands or distractions for our time. John Wooden once said, “If you don’t have time to do it right, when will you have time to do it over?”
Identifying someone strong in follow through is difficult, because everyone wants to think they will do what they say they are going to do. When screening for this, look for individuals who specify their goals on paper and/or in a public format, such as ‘sitting for CFP certification examination November 2015.’ The number one reason people don’t specify goals or tell others about them is to not to have to deal with the fall out when they are not completed, and conversely those who are willing to publicly state concrete goals are more likely to be ready to follow through on them.
Leadership application: A true understanding of the fact that the client is the ultimate boss that everyone must answer to. Also, facing the consequences when something goes wrong internally or externally and taking the phone call from the angry client or meeting with the disgruntled team member.
• Sense of Urgency – A mindset to the effect of, “if I don’t get this done for ____ by _____, it will be a detriment to the business.” The service level that financial planning firms provide – and that clients demand – continues to creep up. For instance, many of our advisory firm clients who were not preparing taxes a few years ago, now feel the need to do so.
With this increased workload, someone with a sense of urgency is well positioned for success. Urgency breeds initiative, and there are several ways to screen for this characteristic from interview questions, such as: “tell me about a time where you had to delay a deliverable.” Notably, though, candidates could prepare for these types of questions, so it might give you a false sense of their urgency. Consider also building competing deadlines into your screening process (to see if the candidates meet them), and/or adopt affective assessments such as StrengthsFinder, Caliper, etc.
Leadership application: Keep in mind, there is a fine balance between getting work done efficiently and accurately, and doing so in a manner that is so anxiety-ridden worrying about getting it all done that it leads to burnout. Someone with future firm owner leadership qualities will be aware of this, and manage it effectively for themselves and any team members they supervise.
• Innovation – The financial planning profession has evolved immensely over the course of just a few short years, and the businesses that adapt will thrive. Sure there are firms that are doing the exact same things they did ten years ago, but they are in survive versus thrive mode.
Whomever is leading the firm of the future must be comfortable taking risks and trying new things. This does not mean the future potential successor has to have the same risk tolerance as the current founder. The challenges your firm will face over the next thirty years will be different than the challenges you faced over the previous thirty.
When reviewing potential candidates, look for people who have taken a risk on something and you might have to look outside the profession. It is human nature to want to focus on our successes, but you will learn much more about them when they discuss their failures.
Leadership application: If this is out of your comfort zone and/or are not sure where to start, consider attending the FPA Retreat conference, where you will be surrounded by hundreds of innovators in the financial planning profession.
This may seem rudimentary, but many candidates lack these attributes in general, and few have all three, so finding someone can be challenging in a sparse talent market as the financial planning profession currently faces. Business development was omitted because if someone exhibits a sense of urgency, they will find a method to generate the business the firm needs to grow (though it may well be different than the way you did it!).
I encourage those seeking potential successors to rethink the current emphasis on trying to find an exact replica of themselves, and instead explore candidates who might be wired a little differently.