April 8, 2014

Should You Stay as a ‘Single Advisor’ or Scale Up as a ‘Full Service Firm’

Suresh Sadagopan
CEO, Ladder7 Wealth Planners Pvt. Ltd.

So there is debate of Practicing Professionals (Single Advisor) vs. Full Service Firms (Multiple Advisors) Some people think that financial planners and advisors as practicing professionals are better than those running a full service firm. The general view I have heard is that when someone is practicing in the profession, they are more passionate, client-centric and closer to their clients.

Whereas advisory firms are seen as running a business where they are somewhat aloof from their clients and their service lacks the personal touch. I have also heard people have less charitable views about firms… some hold the view that the profit motive predominates, the clients interests are not fully taken care of and that the client experience is generally inferior to that offered by individual practitioners.

Individual financial planners and advisors are pretty involved in their profession – no doubt about that. They love interacting with clients, doing work for them and are happy to see them achieve their goals. They have that personal connection with their clients. Many individual advisors believe that they alone can deliver that special quality of service to their clients. This belief solidifies over time and becomes an article of faith.

While it would be a fact that they would be able to provide excellent services to their clients, it is not right to conclude that no one else can provide as good a quality of service, as the financial planner himself/herself. And therein lies the debate of the individual financial planner who personally services 50-100 clients, probably with the help of skeletal staff versus a firm which has hundreds or even thousands of clients and full complement of planners, para-planners, analysts and support staff.

Advantages of the Lone Rangers

Individual planners generally believe that no one can service their clients as well as themselves. Their clients are also more comfortable with working with the financial planner directly. The planner knows their entire situation and hence the client does not  have to explain what they expect, from the beginning, every time.

The planner is already aware of what the client wants, what their dreams and fears are, their past and present, their preferences – everything. The client would consult the planner for every small decision. If the individual planner is feeling that their position with the client is irreplaceable, there is lot of truth in it.

But, it is not the entire truth. Also, there can still be alternatives, which are equally good for clients and even for some planners. Let’s see what they are.

Advantages of the Full Service Firm

A full service firm has the advantage of good people, systems and processes, technology support, research support, documentation and compliance, etc. Many of these firms have the wherewithal to recruit good quality people and train them to become some of the best in the profession. Also, a firm has a certain aura of solidity and continuity, which an individual cannot match.  Because of all these advantages, it seems logical that firms hold some of the best positions in the profession too.

Ironically, it is not always so. Though the advantages mentioned above are enjoyed by the firms, they are not always as successful as the individual planners when it comes to clients rooting for them. The big firms indeed have good quality people. But, in many cases the level of commitment to the client is not at the level of the individual planner. The employee planner does not “own” the client the way the individual planner does.

The individual planner looks at the client over their lifetime and the decisions that they take and their recommendations stem from this long-term, client-centric thinking.

Those working in a firm have “performance” pressures and may have to take sub-optimal decisions sometimes, to show results. Their preoccupation is to prove themselves and move ahead in the firm or outside the firm. Hence, they are not thinking about clients the way individual planners are thinking.

Hence in these firms advisors do change and the client changes hands to other advisors. This is a disconcerting experience, even if the next advisor is equally good. Many times, the advisor quality also varies. Both the client and the advisor need to get used to each other and have to tune in to the same frequency.

However much the client situation is documented and available for the new advisor to go through, there will always be things which the new advisor will further need to know. Inevitably, the new advisor will ask information which the client has already shared with the previous advisor. This will result in resigned acceptance of their lot, fatigue and resentment.

Hence, even though the firm has a lot going for it, its advisors never seem to be able to match the individual advisors.

How Can Firms Overhaul the Client Experience?

Firms have a lot going for them, as already seen. In many cases, they are just frittering away their advantage.  Employee turnover is a major problem for firms. If they want to give the experience that individual advisors give their clients, they need to do a few things right.

  1. The firm should recruit qualified financial planners from the same general geographic location as the clients. This would give the advisor an edge from the start. He/she might even know the client.
  2. Give the advisors a growth path, where the advisor grows as the client grows. Good clients should continue to stay with the advisor and be serviced by the advisor, even if the advisor moves up the ladder in the firm.
  3. Work hard on enduring relationship between client and advisor. Advisors should be incentivized based on the quality of the relationships and the trust earned. These metrics can be measured through client satisfaction surveys.
  4. Ensure that the advisor stays with the firm, by making him/her a stakeholder in the firm. Make the process of staying with the firm more rewarding, than leaving. Since the advisor is from the same area and is seeing growth, the advisor would be happy to stay with the firm.

In this model, there is no limit to the number of clients who can be serviced well – it is only limited by the number of great advisors one gets into the firm.

By implementing these, there is a good chance that great advisors stick with the firm. This will be doubly beneficial to clients. On one hand they get the comfort of dealing with a good quality advisor for years… on the other, they get all the advantages an institution can offer.

Advisors Scaling Up

Some advisors  are quite content with the clients they manage. They do not want to get into people management. Others don’t mind expanding, but do not want to compromise on the client experience.

But, it is possible to imbue advisors joining in with an individual advisor, with the same sense of values the advisor stands for and train them on the standards expected from them in client service and engagement. The advisor needs to pick the right people, with the right attitude for the job. In a sense, the recruitee will be a clone of the advisor himself/herself.

Rembrandt, the celebrated Dutch painter, had done much the same thing in connection with his paintings. He was able to attract gifted pupils who were willing to work under him. Many of the paintings were done by the pupils partially/fully under his supervision and were virtually indistinguishable from a painting by him. This gave him scale and the number of paintings attributed to him is in hundreds.

The advisor just needs to replicate Rembrandt’s style. The individual advisor should focus on getting the right people who can deliver, rather than getting stuck in a “Only-I-can-do-it” mindset.  This will ensure scale and legions of satisfied clients. Individual advisors, who had always wanted to provide their high quality services to a larger segment of the population, will now find a way of fulfilling their inner desire. This way, the practice can expand, but not at the cost of the client experience.  They can expand into institutions and yet have the client connection like in a practice. You can have your cake and eat it, too!

The article was earlier published on Financial Planet.


Authored by,


Suresh Sadagopan

Ladder7 Financial Advisories

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