Journal of Financial Planning: August 2020
Adam Kornegay, RCC™, is the Marketing and Messaging Strategies Coach for the FPA’s Coaches Corner and Director of Membership for FPA of East Tennessee. He co-founded Pathfinder with his mother, Susan Kornegay.
Zach Ursiny is an executive coach who specializes in the psychology of top performance and communication in financial services. He works with his father, Tim Ursiny, Ph.D., at Advantage Coaching & Training.
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Increasingly we hear from financial planners who are thinking about or taking initial steps toward bringing a family member into their practice. Some are looking to expand their team to meet the needs of their growing business; others may be more concerned about providing continuity for clients and an exit strategy for themselves. Not surprisingly, for some it’s a win-win, but for others it can be a recipe for disaster.
Over many years of working with family teams—and since both of us are part of family teams—we’ve identified six essentials for building and maintaining successful family teams: (1) a universal framework for communication; (2) a shared vision for the future; (3) a transformational client experience; (3) a marketing message that leverages the family’s strengths; (4) clearly defined roles and responsibilities; and (5) a well-planned legacy strategy.
Universal Framework for Communication
Effective communication is the foundation for any well-functioning team, and family teams are no exception. It is not unusual for family members to let their guards down and slip into their natural communication styles when at work. After all, it is what they have done their entire lives.
Communicating with respect and professionalism is particularly important as it demonstrates family members’ values to clients and to the rest of the team. Establishing rules of engagement is the best way to ensure consistently effective communication.
Rules of engagement are an agreed-upon set of guidelines for interacting. They establish standards for handling questions such as: When is it okay to discuss business when spending time with family outside the office? What is the protocol for dealing with personal matters? Even something as simple as what to call each other at work in a parent/child relationship can be awkward. For example, do you call him “Dad,” “Dave,” or “Mr. Johnson”?
You can also use the rules of engagement to address conflict. A team without conflict is a team without passion. If you are passionate about what you do and how you do it, you are likely to butt heads with other members of your team from time to time. Conflict isn’t necessarily bad. In fact, it can be extremely healthy for a family team. It all depends on how you manage the disagreements and differing opinions, so the practice can learn and grow from them.
When conflict arises, address it directly using your rules of engagement. Each person should identify specific examples or situations, rather than vague complaints, overgeneralizations, or personal attacks. Then each person can propose a solution to resolve the conflict. By focusing on the specific issue at hand and not the person, family members can work together for a successful resolution.
Shared Vision for the Future
Remember family road trips? Everyone piles into the minivan, SUV, Conestoga wagon, etc., and they head off toward their dream vacation spot, such as Yellowstone or Disneyland. Every member of the family knows where they are going and eagerly looks forward to reaching their destination.
A family team vision works the same way. It is your dream of what the future could look like. A good family team vision clarifies the decision-making process. When evaluating various choices, you can ask yourself, “Does this bring our practice closer to or farther away from our vision?” Ultimately, a clear vision allows the family team to enthusiastically say yes to actions that will help the practice grow, while confidently saying no to everything that will pull you away from what matters most.
If you don’t currently have a strong family team vision, start building one. Gather key members of the team and collectively answer the question: Knowing what we know now, if we could wipe the slate clean and design the business we all want, what would it look like?
A good vision should focus on what could be accomplished in the next three to five years. It might be easy to draft a lofty, aspirational vision that looks far into the future, but a lot can happen in five years, let alone 20.
Your vision is just for you and your team, so it doesn’t have to be fancy with lots of corporate-speak. Use regular language to create a picture of exactly what it looks like and what it will feel like when your vision is achieved.
Some areas you may want to consider in defining your vision include:
- In your ideal practice, whom do you serve? Describe your ideal clients.
- How do you serve them? What value and experience do you provide and what does it take to deliver that value and experience?
- How well does your team function together?
- What does your ideal practice look like from a quantitative perspective?
- How will you have achieved your desired growth?
- How does achieving this vision bring fulfillment to you and your team?
The better the entire team understands and embraces your vision, the more likely everyone will pull together to make it a reality.
Transformational Client Experience
While it may be shocking to read in the Journal, most clients are not really looking for a “financial plan.” They don’t want a plan any more than someone signing up for Nutrisystem wants to buy a case of diet shakes.
Instead, clients want to see a difference in their lives. Most will say they are looking for confidence and peace of mind that they will achieve their measure of financial security and success.
Financial planning can fulfill basic needs such as saving time or becoming more organized, but good planners also address emotional needs, such as alleviating anxiety or core money fears. So, a financial plan is actually the means to an end of reducing worry in the face of uncertainty.
The stated aim of FPA is to “elevate the profession that transforms lives through the power of financial planning” (emphasis added). Financial planners change their clients’ lives by delivering motivation, hope, a sense of accomplishment, and opportunities to help others.
Here are three steps to ensure your family team provides a transformational client experience:
Explicitly frame the value that you provide. Identify specific examples of how clients’ lives have been changed. For example, how has your planning work resulted in an earlier retirement or a fully funded college education or the ability to significantly increase philanthropic contributions for your clients?
Create a consistent process for advice and service that emphasizes the transformation, rather than the steps to get there. Focus on the benefits, not just a list of services.
Set and affirm expectations throughout the client journey. Remind your clients of the progress they have made regarding their emotional challenges as well as how they have been able to help others along the way.
Marketing that Leverages the Family’s Strengths
The first step in developing a relationship with a prospective client is creating a genuine connection. Clients want to know and trust their financial planner. Generally, we connect most easily with people who share our interests and values.
This is where family teams have a unique opportunity. Many, if not most, adults have children, and everyone has a parent. As such, a family team has an immediate opening to make a strong personal connection with potential clients.
You may have a family-focused niche. For example, your clients may be owners of family-run businesses, families with special needs children, or high-net-worth, multi-generational families. In these cases, the opportunities for connection are particularly strong.
Clients also want stability. According to various studies and publications, the average age of financial planners is somewhere between 51 and 55 years, with more than one-third expecting to retire in the next 10 years. Clients don’t want to worry that their planner will retire before they do. A family team affords longevity and continuity for their clients. As a result, many family teams have clients that span multiple generations.
Lastly, clients want a planner with similar values. A family team communicates the priority of family and legacy.
Obviously, your marketing message should clearly emphasize family. For example, your tagline could be, “Our Family Caring for Your Family.”
Your marketing message can then follow this outline: (1) describe the clients you serve (families or otherwise); (2) demonstrate your understanding of their needs, concerns, and challenges; and (3) articulate how you are different from other planners by highlighting your team’s emphasis on stability and values.
Here’s a simple example:
At Johnson Financial Planning, our clients look a lot like us—parents and children planning for the future. You may be wondering how much you can give to the next generation without jeopardizing your retirement plans or how to preserve a family legacy of philanthropy.
Our team is led by Dave Johnson, CFP®, and Janet Johnson Smith, CFP®. Together they meet with every client, as each brings a unique perspective based on Dave’s history as a father, grandfather, and research analyst, and Janet’s background as a daughter, mother, and wealth planning specialist.
Clearly Defined Roles and Responsibilities
It’s important to recognize that each team member has his or her own strengths. Although the new family partner may not possess the same experience and knowledge as the others, he or she can and should be encouraged to develop their own skills and areas of expertise, adding to the value the team provides to clients.
One of the best ways to define roles and responsibilities effectively is storyboarding. Storyboarding helps organize all aspects of your business top to bottom in a way that allows creativity to enter the conversation. Here are the steps:
List each relevant responsibility or task on separate Post-It notes. Examples include designing financial plans, analyzing investment strategies, and conducting review meetings.
Cluster the various responsibilities into categories that make sense to you and your team.
Title the clusters and decide who will be the guardian for each one. The guardian is responsible for making sure those tasks are completed or delegated to the right person.
When storyboarding, define roles and responsibilities that fit your business rather than trying to fit your business around your family’s dynamics. Then you will have more effective roles and clarity around expectations.
A Well-Planned Legacy Strategy
One of the most powerful aspects of a family team is the opportunity to build a lasting legacy. One generation passing along a small business to the next is a quintessential American dream. It can create a sense of excitement, passion, and energy for the family team as well as provide continuity and peace of mind for their clients.
While all business transitions have many issues to address, it can be both an opportunity and a challenge when the transfer is between family members. Often, each team member has unspoken assumptions about what will happen and when. As a result, tension and resentment can build. To reduce uncertainty and reinforce the team’s vision, we recommend holding legacy planning discussions at least quarterly.
Here are some questions to consider:
- What skills and knowledge does the junior planner need to acquire?
- How can the senior planner help lend credibility to the junior planner?
- How can the team leverage the experience of the senior planner?
- When does the senior planner expect to reduce his or her day-to-day involvement?
- How will the team share its plans with clients?
By discussing these topics early and often, the team can create a lasting legacy that honors and celebrates the family’s dedication to serving its clients.
Conclusion
Family teams have tremendous advantages as well as opportunities to be extremely successful.
Careful preparation, including attention to these six essentials prior to bringing in a new family member, can make a major difference in the team’s ultimate success. But it’s never too late for existing family teams to apply the same principles to enhance their own business.
By carefully and intentionally thinking about who you are, what you do, and how you can continue to provide value, your team can build its reputation as a thriving, successful family business both before and after the senior partner transitions out and for many years to come.