This case study is based on the situation of a client of the Covenant Group. Names and details have been changed to preserve privacy.

To anyone looking at Henry Wells’s practice from the outside, he was a very successful advisor.

After 15 years in the business, Henry had a significant number of loyal clients, a healthy amount of assets under management and a consistently good annual income. He was well regarded by his peers, his sponsoring firm and product suppliers. His administrative-support team had been with him for a number of years, and he enjoyed a strong reputation in the community as a solid businessman.

So, why was Henry telling me something was missing — that he wasn’t where he wanted to be?

“I can’t fully explain it,” Henry said. “I just have this sense that I should be doing better.”

“What does ‘doing better’ mean, Henry?” I asked. “Is it more revenue, more clients, more assets?”

“Those things would all be great,” he acknowledged. “But they are only ways of keeping score. The truth is that I feel I have reached a plateau in my business and I am stuck. I can’t seem to break through to the next level, even though I know enough about how to run a successful practice to fill a book.”

“You shouldn’t be so hard on yourself, Henry,” I offered. “At some time in their careers, many successful advisors find themselves at a point at which they know they could be doing more but they can’t find the key to getting there. In fact, it is not unusual for someone who has been in the business for as long as you have to experience this several times. Let me ask you: have you ever felt this way before?”

“I guess, now that I think about it, I have,” Henry admitted. “The first time was at the end of my second year in the business. I was feeling that perhaps this business wasn’t for me. I had been working extremely hard to launch my practice. There was so much to learn and do. But I did everything I was told and, while I was making progress, it was painful. I didn’t feel I was achieving the results I should have been, given all the effort I was putting into it.”

“And can I guess what happened next?” I asked.

“Sure,” Henry said, “go for it!”

“That’s when you decided to hire your first assistant,” I suggested.

“You’re right!” he said. “How did you know?”

“It’s pretty common for new advisors who are serious about building their businesses to reach a stage of development in 18 to 24 months when they max out on what they can do themselves. Up to that point, it was largely their energy and determination that powered the practice. Eventually, however, they run out of steam trying to do everything themselves — from sales to marketing to administration to client service to compliance — and suddenly the business looks much less attractive.

“One of two things normally happens at this point,” I said. “Advisors decide the struggle isn’t worth it, so they leave the business. Or they recognize that they have to change how they operate. They bring in an assistant, perhaps part-time at first but soon full-time. After that, they wonder what took them so long to make that decision. You are obviously still in the business. So, I guessed you followed the latter path.”

“You have it right,” Henry said. “Hiring an assistant was a tough thing to do because it was money right out of my too-slim commissions. Within six months, though, I was not only making up the extra expense, I was growing my business at a much faster rate because I had more time for prospecting and working with clients.”

“You said you’ve had this sense of frustration more than once, Henry,” I said. “When did it happen again?”

“About three years ago,” he answered. “It was just before I made the decision to shift my practice from transaction-based to fee-based. In fact, I’d have to say it was the catalyst for that change. For at least a year prior, I had a growing sense that fee-based compensation was more appropriate for my clients and the way I wanted my business to evolve. Finally, one day, I just said, ‘That’s it. Let’s make the switch.’

@page_break@“We put a plan in place to make the conversion and, within a year, it was done,” he explained. “We lost a few clients along the way, but today I am very comfortable with the quality of the work we do and how we get paid. And our business actually began to grow more quickly, largely because our clients began to give us referrals to people who preferred the fee-based approach.”

“Good for you!” I congratulated Henry. “Have you noticed any similarities in the two situations you describe?”

“I am not sure I know what you mean,” he replied.

“Well, it appears to me,” I said, “that in both instances, you had reached a ceiling of complexity in your business that was preventing you from getting to the next level. You analysed what was needed and eventually made significant changes in the way you managed your practice. These changes, in turn, allowed you not only to get to a better place but also to accelerate your growth. I think you are at one of those inflection points now.”

“So, you think I need to change my modus operandi again?” Henry asked, somewhat anxiously.

“No,” I relied. “You have a great practice today. However, like all great businesses, you have to re-evaluate what you are doing and how you are doing it. Every successful enterprise has to re-examine, re-invent and renew itself periodically to stay healthy. Your time has come.”

“So, what things should I be looking at?” Henry asked.

“This is a wonderful opportunity to reassess your practice from top to bottom,” I explained. “Begin with a review of how you define yourself and what you are trying to accomplish in your business. What is your long-term vision for your practice? How big do you want it to become in terms of revenue, AUM, number of clients, support staff, etc.? What role do you personally want to play: rainmaker, technician, marketer, manager? What is the value proposition you offer clients and prospective clients? What opportunities exist in the marketplace for you and the way you do business? What could threaten your success and how do you mitigate those threats?

“I’d think about your ideal client profile and target markets,” I continued. “Do they fit with your long-term vision? Does your marketing program appeal to the type of client you want to attract? Is your sales process consistent with the way members of your target market make decisions? Is your team equipped to deliver on your service promise?”

“Whoa! That’s a lot of questions,” Henry jumped in. “Can I assume that you have some sort of process to guide me through this?”

“Of course,” I said with a laugh. “But what’s really important is the depth of your intention and commitment. Inventing the ‘new and improved’ Henry Wells may require some hard decisions. Are you prepared to make choices, even if it means giving up on some of the things you now hold sacred?”

“I’ve done it in the past and it has always served me well,” Henry answered. “I don’t see why this time should be any different.”

“OK, then, let’s set a date to get started with the investigation.” IE



George Hartman is a coach and facilitator with the Covenant Group in Toronto. He can be reached at george@covenantgroup.com.