The Value of Your Team – Episode 25
Greatness rarely, if ever, results from the efforts of just one person. As an advisor, the people you surround yourself with—your team—play an enormous role in the outcomes you’re currently enjoying (or not enjoying, as the case may be).
With that in mind, here’s a research-based look at how advisors view the strength and importance of their teams.
Spoiler alert: There are many areas of opportunity for advisors to build better teams—and, by doing so, achieve a much higher level of success.
KEY TAKEAWAYS
- Most advisors see their teams as important to their client acquisition and retention efforts.
- Many practices have a collection of smart people, but not necessarily cohesive teams.
- High turnover—a problem for many advisors—can be a productivity killer.
THE ACCIDENTAL CEO
First, however, let’s acknowledge an important point: You probably didn’t become a financial advisor so you could spend your time hiring, training, managing and motivating a collection of employees. Most advisors got started because they wanted to help people make smart financial decisions. The role of leader is not one that most advisors volunteer for. And yet, that’s exactly the role many of you have been thrust into as a result of your growth and success. Essentially, many advisors find they’ve become “accidental CEOs”—with little formal training on how to steer a ship full of people.
Not surprisingly, then, advisors often struggle to build and manage exceptional teams that execute consistently.
The good news: It’s well within your grasp to lead your people and build a “dream team” of exceptional talent committed to their own success, the success of the people around them and the success of your practice.
TEAM POWER
CEG Insights research reveals just how important teams can be in driving some of advisory firms’ most crucial key performance metrics—and how a lack of team cohesion can damage firms’ prospects for future success.
Take business development. The vast majority of advisors (85.7%) report that their teams play an important role in attracting new affluent clients, with 44% calling their team crucial in bringing in new business (see Exhibit 1).
Exhibit 1: Importance of Team in Attracting New HNW Clients (By total)
Likewise, more than 90% of advisors say their team members have either a somewhat positive impact or a significantly positive impact on client retention.
Clearly, advisors see that having the right talent in place can foster long-term client relationships and drive advisory practices’ overall success. By leveraging diverse skills and expertise, advisors can provide comprehensive solutions, faster response times and tailored approaches to meet each client’s unique needs.
Team-building challenges advisors are facing
Despite these reassuring findings, there is much room for improvement among advisors and their teams (see Exhibit 2). For example:
- Teams aren’t operating at the highest level. A mere 8.1% of advisors feel their team has reached the pinnacle of becoming a dream team—meaning that teammates actively help each other excel while also driving the practice toward its overarching goals. This stark reality highlights the untapped potential for enhancing teams’ co-elevation dynamics and productivity.
- Team cohesion is lacking. Strikingly, 42.9% of advisors report having outstanding individuals on their teams, but who lack the necessary cohesion as a group to work effectively toward shared objectives. This disconnect between individual talent and collective performance underscores the importance of fostering a collaborative and goal-oriented team culture.
Exhibit 2: Operational Level of Team Performance (By total)
These and other team-related challenges are having negative consequences for too many advisory firms today. For example:
- 9% of advisors told us they’ve suffered a significant loss of assets under management because of how a team member acted or behaved.
- Given that, it’s not surprising that 39.2% of advisors reported a significant loss of revenue due to team member issues.
TURNOVER BLUES
Another challenge for a surprisingly high percentage of advisory practices is turnover. More than one-third of advisors are experiencing an annual turnover rate of between 21% and 30% (see Exhibit 3). An additional 29.6% of advisors report a 10% to 20% turnover rate.
Think about how deadly turnover can be to productivity. Every time you replace one employee with another, there’s an onboarding/ramp-up period during which you can quickly lose a great deal of operational effectiveness and efficiency. If you’re turning over one-third of your staff every year, that’s an enormous amount of erased productivity.
These figures underscore the importance of understanding the factors contributing to employee departure, and implementing effective retention strategies.
Exhibit 3: Annual Team Turnover Rate (By total)
CONCLUSION
This week’s podcast examines even more ways in which your people may be essential to your success—right now and in the years to come. And don’t miss next week’s episode, which will offer strategies to build a dream team—a well-oiled group that works together to elevate themselves, their fellow team members and the advisory practice as a whole to a higher level of success.
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