Structure Your Team for Success

A guide for financial advisors looking to scale their business with less stress
A guide for financial advisors looking to scale their business with less stress
Hubly Twitter icon Hubly LinkedIn page iconHubly Youtube page icon

The biggest trend in financial advisory firms today? It’s all about people. For the first time in the report’s history,  in  Schwab’s  2022 RIA Benchmarking Study, “recruiting staff to increase the firm’s skill set  and  capacity  ranked  as  the  top  strategic priority” for RIAs of all sizes.

The report found that “based on current growth rates and the number of RIAs, the industry will need to hire more than 70,000 new staff over the next five years” — a number that doesn’t even account for attrition due to retirement, or to advisors who jump ship or leave to start their own firms.  

Firm owners clearly see the need for quality staff. But do clients? Despite  broad  distrust  of  the financial  services  industry  overall, “consumers trust their primary financial provider,” according to a 2020 McKinsey report.

A 2022 Vanguard study echoed this, reporting that, compared to robo-advisors and other digital investing  products, “human advisors increase investors’ peace of mind by 56 percentage points.”

In other words, for firms that want to expand, and advisors that want to grow their careers, people matter; relationships matter — perhaps more so than ever before.

In a time of perceived  economic uncertainty,  there is nothing more valuable than the reassurance of working with someone who can take the time to understand a client’s needs and deliver excellent upfront service.

This is an important  consideration  when  hiring for both the back and front office. Highly capable operational staff,  empowered with tools that make their jobs easier, will free up advisors to offer the high-touch service clients desire.

The Problem of Complexity

Why ‘people power‘ doesn’t always translate to sustainable growth

Lisa Salvi quote

One thing financial advisory firms discover is that growth doesn’t necessarily scale linearly as more people are added to the team; double the HR costs doesn’t translate to double the revenue overnight. New staff still need to be integrated into existing processes — and if those processes can’t support an increased workload, the transition will come with significant growing pains. 

To understand why this is, we need to look at the typical progression of a financial services firm. 

In many cases, this starts with a single person — you. In a 2021 report, IBISWorld estimates that 75.4% of industry operators are sole proprietorships (ie, single-advisor firms). For these firms, the first hire is often a financial planner.

In a two-person shop, organizing work and managing client tasks is simply a case of delegation; you’ll need to be adept at handling one-off tasks and confident that your employee can manage them, too. The complexity comes when a second planner or a back office team member is brought on board:

At this point, we see specialized roles emerge in the back office — here, Troy is responsible for one set of clients, Ally is responsible for another. This is generally manageable, though issues may arise when, say, one planner calls in sick or goes on leave; reassigning tasks while still maintaining the same level of client care can prove a challenge unless clear policies and process documents have been established beforehand.

When to Bring on a Second Advisor

Most solo firms generally don’t grow beyond a few supporting employees; this, as the IBIS the report concludes, “limits the amount of work any one establishment can handle, as there is only so much scalability in workload an employee can achieve.”

So the next step for ambitious, growing firms is to bring on an additional advisor or two, which is where things really start to get complex:

In the example below, multiple team members are juggling multiple responsibilities and competing priorities; operational staff are shared between advisors, leading to confusion, lack of accountability and an increased risk of things falling through the cracks.

Assigning work becomes its own job; without someone to match the task/project with the right person to complete it, ops teams will struggle to keep up and client service will suffer as a result. And when client satisfaction drops, the firm finds itself unable to maintain the pace of growth it wants, no matter how many additional resources are thrown at the problem.

What Does a Well-Organized Team Looks Like?

Two models for two stages of growth

The most common workaround to the complexity problem we see above is that one person in the firm will become the ‘air traffic controller’ — the person, typically an operations manager, responsible for making sure the right tasks are routed to the right person.

This gives us a team structure that looks like this:

operations lead financial advisory firm

This setup may work for some firms, but we can see that there’s a clear bottleneck in the way work moves through the organization — all client tasks go through the air traffic controller. Ultimately, when too much responsibility falls to one person, it leads to increased risk and reduced ability to scale.

So what’s the answer? At Hubly, we have found, in working with hundreds of firms that have successfully made the transition from a sole proprietorship to a multi-advisor shop, that the most effective next step in scalable growth is to create what we call ‘service teams.’

Service Teams

The 'client-first' firm

Whereas a traditional firm centers around the advisor, service teams center around the end client. Client data from your CRM, or a workflow management system like Hubly, triggers the request for work — an action item coming out of a review, an approaching milestone, or an annual requirement for tax prep or retirement planning, for example.

Then, based on standard operating procedures (SOPs) you’ve set out, that work is then routed to the appropriate team member to be completed on the appropriate timeline.

Critically, in a service team, accountability no longer rolls up to either the lead advisor or through the ‘air traffic controller.’ Instead, everyone knows
what their responsibilities are and receives the appropriate alerts when they have a new action item assigned to them.

Well-designed service teams can eliminate common bottlenecks, minimize key person risk and ensure things don’t fall through the cracks. As the firm grows, more teams can be added without individual team members being spread too thin.

service team financial advisory firm

As we can see from the above diagram, a firm’s tech stack takes on a key role in automating SOPs and building repeatable, process-driven workflows in the service teams model. Skip ahead to the Back Office Automation section of this ebook for a more in-depth discussion of this — and a look at the role software like Hubly can play in scalable practice management.

How Do Service Teams Work in Practice?

In the service teams model, each client has a lead advisor and a back office support team (in a more straightforward configuration, a financial planner and a CSA). Each member of the team has clearly defined roles and responsibilities for that client. 

If we look back to figure two, which represents a common setup for a solo firm, we see something that looks similar to a service team. The critical difference is that in this model, the ‘air traffic controller’ delegates tasks between planners and other back office staff, more or less at random. With a service team, team members form a distinct group centered around specific clients; tasks are no longer assigned randomly — it’s always clear who is responsible for what, and there is much less of a chance that things will fall through the cracks

These distinctions may seem subtle in a small office, but once things start to scale and more advisors come onboard, you really see the value of team-based organization. Here’s what an org chart looks like for a multi-advisor firm organized into service teams:

Service team structure financial advisory firm

Benefits of service teams

The Ensemble Practice

Moving past the 'lone-wolf' mentality

In our experience, service teams work best in RIAs with up to 10 employees. Beyond that, growing firms would do well to adopt a shared ownership model, commonly known as an ‘ensemble practice.’

Ensemble practices are highly integrated, often with a degree of a shared bottom line — which can mean different things to different advisors. For some it’s the complete share of revenue. For others it’s shared infrastructure, resources, strategy, or all of the above. 

In one common arrangement, a multi-advisor firm will have one advisor who specializes in retirement, one in tax planning, one in insurance, etc., with additional staff available to support them all; this allows for the sharing of expertise and helps deliver a more comprehensive experience for the client, without referring outside of the firm.

Not everyone in an ensemble firm will specialize, of course, but it’s not unusual for team members to lean more on one advisor for certain subjects of expertise.

Key Features of an Ensemble Practice

An ensemble practice requires a shared vision, and a broad strategy for bringing that vision to life. Advisors follow the firm’s methodology and best practices, rather than vice versa. As we mentioned above, in many cases this centralizes various specialized tasks and functions — one advisor will be responsible for tax planning across the firm, while another handles investment planning. Meanwhile, the back office triages corresponding client tasks based on expertise, workflow and availability.

Making sure all this works requires clear leadership; in a small ensemble practice, this typically involves one person serving as a CEO or COO; in a more mature practice, individual departments dedicated to operations, marketing, planning, etc., emerge. 

Often, compensation frameworks change to align with this model. A successful ensemble practice requires incentives for advisors to prioritize the success and profitability of the firm over their own interests. Leadership and advisors may receive a salary, or salary plus a percent of profit sharing, or other variable compensation.

Finally, the move to an ensemble practice requires standardized workflows. When these processes live in a centralized hub instead of an advisor or ops person’s mind, the organization can accommodate growth more easily — whether it’s training new staff or a larger expansion/acquisition.

Benefits of service teams

Key Process Flows

Moving from a solo firm to a service teams or ensemble practice model requires looking carefully at how your business works and mapping out key process flows. A key process flow is, as the name implies, a visual representation, typically a flow chart, showing how work moves through the various functions/departments of your organization.  

Taking the time to map out key process flows will help you do three things, each of which is critical to creating service teams or moving to an ensemble practice:

  • Understand inputs and outputs
  • Identify bottlenecks and optimize processes
  • Improve ownership and accountability 

A typical key process map for a growing firm

Key process maps are both an investigative tool — they tell you about how your business works today — and a blueprint — they help you define how it should work in the future. And while every firm and every advisor is different, we’ve found that the most successful generally organize themselves in a similar way.

Here’s what a key process flow map looks like for an ambitious financial advisory firm with between $500M and $1B in AUM. (You can download your own copy here)

Key Process flow financial advisory firm

In this model, business starts with the marketing function, which is responsible for bringing leads and referrals into the funnel. These leads move into the sales process to see if there’s a fit between the potential client and your firm. In many smaller organizations, an advisor handles both of these functions; as you grow and scale, look towards building them out with dedicated staff and resources. 

After the client signs a contract, financial planning begins; here, an advisor will work with the client, gathering data to understand their goals and building out a plan to achieve them. With that done, work branches off in two directions: the back office starts to execute on that plan, while the advisor moves into ‘retention mode’ — ongoing client service and regular reviews, which in turn creates more tasks for the back office. 

In an ensemble practice, specialized tasks emerge in the back office. One team of staff may handle investment management, taking care of the paperwork around opening and transferring accounts, RMDs, Roth conversions, etc. Another team may handle ongoing case management for taxes, estate planning, etc, while still another may be dedicated to ongoing service requests, such as trades, money movement, account updates and other admin work. 

When the back office is working efficiently, using standardized processes to handle volume and keep things from falling through the cracks, it will deliver value across the organization — clients will enjoy a seamless experience and advisors will have more time to dedicate to clients, which will increase retention and create referrals, case studies and social proof that feeds back into sales and marketing. 

Back Office Automation

Getting the most out of your ops team

Your back office is critical to your success as you grow. We can see this by looking at key process flows, but we’ve also seen it in practice in working with quickly scaling firms. So what prevents back office staff from working effectively as a team?

  1. Lack of structure — undefined roles and lack of clarity around who is responsible for what
  2. Convoluted processes — too much back and forth required to complete what should be simple tasks
  3. Inability to delegate — individual team members who don’t want to give up control and take on too much as a result
  4. Imperfect technology — systems that are too complex, or that don’t make it easy to follow up on tasks/projects

Solving these problems will put your firm in an excellent position for growth. #1 should be resolved by creating key process flows — in the process of doing so, you’ll need to assign roles and clarify responsibilities. Addressing #2-4 requires leveraging technology to your advantage. 

The fact is that much of the work back office teams do is manual, repetitive and prone to error. And much of it can be automated with workflows, which is where Hubly comes in. 

Hubly is a game changer

Automated Workflows With Hubly

We created Hubly to address the automation problem faced by growing financial service firms. Hubly leverages data from your CRM and allows you to build customized, automated workflows around key back office and client service tasks.

Hubly's best-practice workflow templates make back office tasks simple, transparent and repeatable; from there, team members can delegate with confidence, since these workflows will contain in them the institutional knowledge required to complete a task. This, in turn, will enable your growth, as it will make it possible to bring on new staff with less training and a faster onboarding time. 

What's Next?

System built for financial advisors

Start building future-proof processes today

Moving from a solo shop to a growing practice requires a lot of things: you’ll need to think about your business in terms of positions, not people. You’ll need to map out those positions in terms of how work flows through your organization. And you’ll need to invest in technology that will enable that work to flow in a way that is efficient, transparent and scalable. 

Beyond that, what comes next? Formal departments? Federal accreditation? A board of directors? Growing your business with an acquisition? 

Whatever the future holds for your organization, by focusing on the fundamentals we’ve covered in this paper, you’ll be in an excellent position to grow on your own terms.

Want to get started with Hubly? Book a call today


Continue reading

Ready to discover a
better way to work?

Schedule a call with a Hubly expert today
"Our workflows are more efficient because of Hubly, and dare I say fun!"
-Vincent R. Barbera, Newbridge Wealth Management