Avoid a Grand Poobah Trap
If your practice revolves around a lead advisor, you may be headed to big problems. Here’s a way that works much better.
If your practice focuses on a lead advisor, you may be headed for big problems. Here’s another way that works much better.
Most junior advisors don’t want to hang around waiting for their boss to retire. More often than not, a junior advisor leaves to start his own practice or goes to another firm.
Most financial advisory firms, both large and small, have lead advisors who manage client relationships and who are surrounded by underlings who help them serve those clients.
These advisors position themselves as wise sages, and most matters concerning clients must go through them. They are the Grand Poobah within their firm — they run the show.
In general, a Grand Poobah is someone who has a worthless title and an inflated sense of self-importance. (The term originated in the 1880s in Gilbert and Sullivan’s comic opera “The Mikado,” although you may remember it from Fred and Barney’s secret lodge society in “The Flintstones.”)
Most advisors are not like this, yet some structure their practice under a lead advisor as their business matures. It’s not the best model. How can you avoid falling in the Grand Poobah trap?
There are a number of problems with this approach: the egocentricity of the advisor; a lack of clear career paths for support staff; and overreliance on a single person, who could suddenly disappear because of death or incapacity.
To be sure, many lead advisors work hard, care about their employees and clients, and worry about how to transfer duties to the next generation.
But there are other lead advisors who think others couldn’t possibly do the work as well as they can and feel they are not easily replaceable. Their practice gives them purpose and validates their worth. For some, this evolves into a sense of power and self-importance. It is not easy to extract oneself from this situation.
As a lead advisor’s workload increases, junior advisors are hired to increase capacity. The junior advisor may be in the background for years — running reports, researching client questions, taking meeting notes and various other duties.
Yet, they do not manage client meetings. Over time, they are encouraged to develop their own books of business and they may be handed the less profitable clients to manage.
The junior advisor is often given an additional carrot — a vague promise that one day they will take over the
lead advisor’s practice. Think about the problem with this. Most advisors are hitting their stride in their late 40s and early 50s.
They hire an energetic 30-year-old junior advisor. That young advisor toils behind the scene for years. If they are motivated and smart, they can learn most of what they need to know to be a lead advisor in five to 10 years. Now their boss is 60 and they are 40.
The beauty of the financial planning profession is you can work for a really long time. Most junior advisors don’t want to hang around waiting for their boss to retire. More often than not, the junior advisor leaves to start their own practice or go to another firm.
Sadly, the Grand Poobah is left in the lurch and their succession plan is in ashes. Their years left in the workforce are numbered and they don’t have a lot of time to regroup.
An Ensemble Model
There is a common-sense answer — move to a true ensemble model. Instead of forcing a junior advisor to toil in the background, make this advisor the lead for a particular component of the client’s financial life.
I started out as a solo practitioner. As my practice grew, it was unsettling to me that so many people relied only on me for their financial well-being. Life can be precarious.
I also realized that I loved financial planning but did not enjoy the nuts and bolts of managing investments. Finally, it was challenging to manage clients alone as my involvement in leadership and education blossomed.
To me, the perfect answer was hiring out what I did not enjoy. My first hire was an investment manager. He did the investments and I did the planning. After making certain that the clients understood how we worked together and were reassured they would be well cared for, they embraced this change.
My next hire was another financial planner. She personified why younger advisors leave firms — for more than a decade she had worked for a lead advisor who had no intention of quitting any time soon.
The beauty of an ensemble approach? There is a deep bench, clients know they have a team they can rely on and it is difficult for one person to leave and take clients with them.
We cross-trained to create a consistent planning process, then she took over the insurance and projection planning for each client. It took about two years to get her fully integrated, but, again, the clients were delighted with this expansion.
Our most-recent hire is a 25-yearold financial planning graduate. He came with some experience but was still quite green. We immersed him in the insurance planning, and he is now working directly with clients in this realm, though he is not yet having meetings on his own.
His current project is to do all the college planning and he will lead the meetings on this subject.
Additionally, he will do the education for employees holding the 401(k) plans we manage for our clients with businesses. Our goal is for him to start having his own meetings next month, less than a year after he was hired.
We are all cross-training, so we can fill each other’s roles at the drop of a hat. The beauty of our approach? We have a deep bench, the clients know they have a team they can rely on, and it would be difficult for one person to leave and take clients with them.
How is this working out for our 25-year-old? He is delighted with his significant responsibilities and shares the details of is role with his cohorts at other firms. They are envious.
It should be easy for firms with the Grand Poobah model to make this change. Once your younger planners can be prepared to take over one part of the planning process, announce to your clients that you are going to an ensemble approach and let it run from there.
Your clients will thank you, you’ll retain the next generation and the world won’t fall apart the day you are no longer there for the many who depend on what you do. FP
As in sports, cross-training to fill multiple roles in an advisory firm is a valuable training technique.