Building a Committed Team: What’s Your Strategy to Get the Right Team for Your RIA?

September 5, 2023

Building a successful Registered Investment Advisor (RIA) requires careful planning and a dedicated team. Having grown multiple businesses that I sold for profit, I understand how important it is to have the right people on board. In my previous entry, I began looking at how to grow your team through the eight-figure exit. I’d like to go a little deeper in this discussion. So, join me as I look at building a committed team for your eight-figure exit!

Follow Along With The Financially Simple Podcast!

This week on The Financially Simple Podcast:

(1:30) Your company will change

(4:55) Who do you need in an RIA?

(9:30) Why does it matter in light of the eight-figure exit?

(11:05) Assessing your team’s competencies

(14:55) Developing an assessment plan

(16:12) Creating micro-alignment for the eight-figure exit
(18:13) What’s the strategy?

Building a Committed Team That Thrives Amid Change

In the dynamic landscape of business, growth isn’t just a linear progression; it’s a transformation that demands continuous adaptation. In fact, author and CEO, Philip Palaveev, put it best when he said, “In order to grow, a firm needs to involve more people. With the arrival of more and more professionals, old structures become inadequate, and new forms of organization structure must emerge to unlock the ability of the firm to continue to function at a larger size.”

As you welcome more professionals, the need for organizational metamorphosis becomes inevitable. The old ways of doing things become stumbling blocks to progress. Likewise, the influx of new perspectives, skills, and responsibilities emphasizes the need for fresh organizational structures. As you begin making the necessary changes, you can unlock your firm’s latent potential, enabling it to function with the agility and efficiency needed at a larger scale. Friends, what got you here, won’t necessarily get you there.

Supporting this imperative for evolution is data from McKinsey & Company, a global management consulting firm renowned for its business insights. Their research paints a striking picture: a staggering 87% of companies acknowledge existing skill gaps or anticipate their emergence within a mere few years. Friends, this finding is an indication that growth isn’t merely a matter of accumulating more staff; it’s about strategically assembling the right team that can navigate the challenges and capitalize on the opportunities growth presents.

What It Means For Your Eight-Figure Exit

In the context of your RIA’s journey toward the eight-figure exit, this should inspire an important question: How do you guarantee that your team is tailored to achieve your goals? Folks, I’m not talking about getting you to the eight-figure exit. No. I’m talking about building a team that’s committed to getting you through the eight-figure exit. So, how do you build a committed team? Not only will you have to seek out the best talent and get them on the bus, you also need to make sure they’re in the right seats.

As we continue, we’ll explore how aligning roles and responsibilities with individual strengths and personality types can be the compass guiding your team composition. This strategic alignment can optimize your team’s performance and enhance its appeal to potential buyers. Let’s take a closer look at what it takes to comprehensively assess your team’s competencies to chart a path of growth that resonates with the unique aspirations of each team member.

Match Roles with Personality Types

Friends, it might sound strange but some personality types are better suited for certain roles than others. That’s why using personality assessments such as the DiSC profile can be helpful. Understanding how each role corresponds with various personality types and strengths is paramount. For instance, roles such as Operations or Compliance require meticulous attention to detail (C, S). I often say these people like to look at pennies. They’re detail-minded. Therefore, Conscientious and Steady personality types are often well-suited for these roles.

On the other hand, sales and marketing necessitate creativity and sociability (I, D). They’re influential, or dominant personalities. It makes sense if you think about it. Your sales and marketing leaders need to be fun, creative, and charismatic. If they hear, “No,” from a client, it’s not a big deal to them. They simply move on to the next. Finally, Leadership and People Management thrive on connection and vision (S, D), while Legal & Finance thrive on details (C).

The implications for RIA owners and potential buyers are profound. A cohesive team aligns strengths with roles, which not only optimizes performance but enhances attractiveness to potential buyers.

Assess Your Team’s Current Competencies

Knowing that certain personalities are better suited for certain roles within your RIA is only one part of building a committed team. While it is an important detail for the future structure of your organization, you must also know where your team is right now. Are they right for the roles they’re currently in? Do you have team members that used to be “A” players but have now become “C” players due to changes in your firm? Friends, as things change, things change. Therefore, you must assess your team’s competencies.

Conducting semi-regular assessments of your team can help you identify future staffing needs, as well as training and development opportunities. Competency assessment is pivotal in reshaping your team for success.

To evaluate skills and address gaps, consider these steps:

Understand the skills to be assessed.
Match job requirements against performance data.
Choose assessment methods.
Develop a comprehensive assessment plan, encompassing goals, timelines, assessors, and guidelines for consistency.

So, what assessment methods can you choose from? The most common types are self-assessment, peer assessment, supervisor assessment, or performance appraisals where the employee’s performance is measured over a pre-determined period. Additionally, you could use an outside software or firm to conduct competency analyses. Although this last option will cost you a little money, it is my favorite method because it can tell you whether the employee has the competencies and personality profile to perform a particular job at a high level.

However, this shouldn’t be a completely self-serving action. Instead, acknowledge your team’s individual career aspirations and use this as an opportunity to help them reach their own goals. Your team is more than a function of your business. In fact, a study by Gartner found that 82% of employees say they want to be seen as individuals, yet only around 45% believe their organizations achieve this. Understanding your team’s strengths and passions fosters efficiency and purpose.

Why Does This Matter In Light of the Eight-Figure Exit?

Now, some of you are probably thinking, “Justin, what does any of this have to do with the eight-figure exit?” Well, as a business owner, you’re likely concerned with retention of your key employees and integration of your RIA into the buyer’s business. But why? Friends, this entire series has been looking at how to achieve the exit you desire.

You’re working to grow your business to make it attractive to prospective buyers while maximizing value. Therefore, you want to hold on to the equity you’ve built along the way. That’s why it is so important to be able to integrate into the buyer’s company while retaining your top talent. If you don’t have the right people in the right seats, the buyer is going to take notice. They might say something like, “Look, our CFO is much more talented than your CFO. We have duplication here. We don’t need your CFO.” So, if you don’t focus on building a committed team for your eight-figure exit, you could lose some of your trusted colleagues.

What’s Your Strategy?

“The growth of your firm relies on your strategic plan, your organizational structure and your human capital practices. Build your business strategy first, to get a clear understanding of what you want to deliver to clients. But then clarify your organizational structure to make sure you have the right people doing the right things.” – Kelli Cruz, Founder and Managing Director, Cruz Consulting Group

Crafting a growth-oriented strategy involves marrying your business plan with your organizational structure and human capital practices. Start by understanding what you aim to deliver to clients and then shape your team accordingly. So, how do you build a team for your eight-figure exit? Here are a few key steps:

Present: Ensuring the Right People Are in the Right Seats

Assess your current team’s competency in their roles. Rank players based on their proficiency, aligning strengths with positions. Remember, when you first started out, you probably had one employee doing the work of several positions. As you grow, it becomes necessary to refine these roles and ensure you’ve got the right people in the right seats.

Future: Planning for Optimal Utilization of Skills

Create a growth plan that positions employees where their skills can be maximized. For instance, an employee currently in Marketing might excel in Human Resources in the future. Also, keep the individual team member’s professional desires in mind. If they see the change as a benefit to them, they’re more likely to become committed to it.

Develop a Forward-Looking Org Chart

Craft an organizational chart projecting your firm’s needs five years ahead. This visual tool enables experimentation with different growth scenarios and clarifies skill requirements. Additionally, this can help you better understand the trajectory of your RIA and what your staffing needs will look like once you’ve reached certain growth milestones.

Align Team Aspirations with Firm Trajectory

Once again, this is a two-way relationship. Translate your forward-looking org chart into a powerful motivational tool. Show each team member their potential trajectory within the organization, reinforcing their alignment with the firm’s growth and their personal goals.

Draft a Contingency Plan

While charting growth is essential, remember that flexibility is key. As the owner, avoid over-promising based on static projections. Contingencies must be in place to accommodate shifts in growth trajectory. For example, when you show your team the projected org chart for five years down the road, you’re basing that on the assumption that your business continues on its current trajectory. However, they need to understand that if growth suddenly slows in the next two years, that could prevent you from having each player in their projected positions at the five-year mark.

Therefore, don’t overpromise and have a contingency plan in place. This can help keep everyone working toward the same goal and avoid any negative feelings if transitions don’t happen at the expected pace.

Wrapping Up…

Friends, building a committed team for your RIA’s success demands strategic acumen, an understanding of individual strengths, and a commitment to adaptability. It’s going to be a long and difficult journey that requires a lot of work. However, if you do the work, you could be rewarded with the eight-figure exit you desire.

By aligning roles with personalities, assessing competencies, and designing a forward-looking organizational structure, you’re creating a powerful foundation. Remember, a well-constructed team fuels your journey toward the eight-figure exit and beyond. As Winston Churchill wisely said, “To improve is to change; to be perfect is to change often.” So, embrace the change, optimize your team, and march confidently toward success.

Look, I know life is hard and change can be frustrating. But life is good and change done correctly, can be the key to achieving your goals. By taking the time to assess your current team, place the right people in the right seats, and develop a sound strategy for integrating into a potential buyer’s business, you can make building a committed team at least financially simple. Let’s go out and make it a great day!

Are you ready to begin the work of building a committed team to get your RIA through the eight-figure exit? Reach out to our team to learn how we could help!