Friday, September 2, 2011

Elite Advisor Teams are Raising the Bar

Atlanta: "It seems as though everyone on our team is working feverishly," explained Walter and then adding, "I know this is the perfect environment for change, but my partner and I just can't seem to get started. What does your research say about these elite teams and how they're handling this ongoing crisis?"

It seems as though I've been answering some version of Walter's question since the financial crisis hit in 2008, with the recent volatility serving as a reminder of the basic truism; within crisis lies opportunity. For elite teams and advisors this opportunity centers around strengthening the loyalty of their affluent clients and acquiring the friends, colleagues, and family members of their affluent clients. Elite teams have mastered this relationship management - relationship marketing nexus.

Before peeling back the onion and getting into some of the details of elite financial teams, let me start with sharing some of our 2011 Q2 findings. On average, advisors on elite teams have much stronger client loyalty, (71 percent to 26 percent), bring in nearly 3xs the new assets, and have a significantly higher level of career satisfaction, (61 percent to 40 percent).You don't have to take too deep a dive into the details to understand why these elite teams are able to perform at higher levels in these challenging times.



However, there are a handful a useful insights - for instance, a much greater percentage of elite teams are in a vertical structure (senior advisor functioning as the team leader) as opposed to a horizontal structure (equal partners); 59 percent vertical and 32 percent horizontal. As I explained to Walter, effective team leadership is the foundation of elite teams and is what enables them to be proactive and opportunistic in times of crisis. Walter's team is horizontal and they've yet to address the team leadership issue.

Our research has also identified a large gap between elite teams and the general population of teams in terms of roles and responsibilities...

Elite Teams 77% clearly defined roles and responsibilities

All Teams 45% clearly defined roles and responsibilities

Our only surprise in this finding was that only 77% of elite teams claimed to have clearly defined roles and responsibilities amongst team members. We would have thought that figure would have been higher, although this could be explained by the fact (2011 financial advisor research) that elite advisors strive for excellence and tend to be more self-critical, coupled with the fact that 32 percent of the elite teams are horizontal in structure, which makes role clarity more challenging. Regardless, there is a large gap between elite teams and the rest of the field regarding clearly defined roles and responsibilities. This is a factor in the disconnect of "everybody working feverishly" in Walter's team but not being able to capitalize on the current environment.

One other telling area involves "linking individual performance to the team's goals" - only 9 percent of the general population of teams are performing extremely well in this area as opposed to 25 percent of elite teams. This highlights a number of issues:

1. Elite teams are far from perfect. Many can improve the effectiveness of their team leadership, roles and responsibilities can be fine-tuned, and a better effort can be made in communicating how individual team members impact the team's goals.

2. All teams would benefit from re-visiting their goals, making the necessary current crisis adjustments (relationship management and relationship marketing; increasing new client acquisition goals) and communicating this repeatedly to all team members.

3. Every team, elite or general, and every solo advisor, can use this current environment as a catalyst for improvement.

4. Although elite teams aren't perfect, they are also far ahead of the rest of the field in virtually every metric measured.

Our expectation is that the elite teams will continue to improve and further distance themselves from the field. However, every advisor and every team should strive to improve. Couple the expectations of today's affluent investor with the heightened skepticism fueled by the financial crisis, and more wealth management teams and solo advisors need to be working towards achieving elite status.