36 INVESTMENT ADVISOR MARCH 2019 | ThinkAdvisor.com
things or for preventing the successor
from moving the business forward.
For the relationship between the firm
owner and the new CEO to flourish, it’s
crucial that the CEO have some understanding of the above — that is, where
the owner is coming from. For instance,
realizing that an owner can view proposed changes as personal criticisms,
the CEO should be tactful about how he
or she talks about the way things are vs.
how they might be improved.
The new CEO also should give the
owner time to adjust and not make too
many changes too quickly or simultaneously. It’s important to keep in mind
that the current state of the business
reflects how the owner got the firm to
this point. It’s the CEO’s job to build
upon that foundation and make the
business even better. Tactfulness will
go a long way.
It’s also important for the CEO to
understand the owner’s potential feelings of lost control or difficulty with
a faster pace. New CEOs usually are
excited about their new jobs and eager
to show what they can do to improve
the business. But at the same time, a
new CEO won’t get very far without the
owner’s buy-in to new initiatives.
For the most part, changes to advisory
businesses aren’t particularly time sensitive; the competition isn’t likely to get
a quick jump on you. Therefore, slowing the pace to keep the owner feeling
comfortable isn’t going to hurt anything
except maybe a new CEO’s ego.
NO MINI ME’s
Finally, firm owners often make the
mistake of hiring a CEO who is “like
them.” There are basically three
types of advisory business own-
ers. The first are entrepreneurs who
like the thrill and tend to be creative
and enthusiastic, which makes them
natural rainmakers. Next, there are
executives who like to follow steps
and rules, creating processes and strat-
egies. Lastly, there are the technicians
who really just want to be financial
advisors. Most advisors are some com-
bination of all three, with one trait
Understanding these tendencies can
be helpful. Most firm owners tend to
want to hire a CEO or find a successor
who has the same inclinations as themselves. Not only does this reduce the
firm’s diversity in leaderships abilities,
but it increases the likelihood of conflicts between owner and CEO.
The first step in hiring and finding a
successor CEO should be to identify the
style of the firm owner: entrepreneur,
executive or technician. The new CEO’s
style should be different, and the combination will make the firm stronger.
Also, an owner advisor shouldn’t be
surprised if there is new enthusiasm in
the business culture after the new CEO
starts. As with the beginning of most
new relationships, people tend to get
excited when they see new potential and
possibilities. The whole culture seems to
open up with energy that’s contagious.
It’s important that firm owners don’t
take this new enthusiasm as a criticism
of themselves. It’s not — it’s simply
a reaction to change. Also, it can be a
huge boost to the business, so owners
should embrace it and use it to achieve
more of their goals.
Despite these challenges, finding and
hiring successor CEOs can have many
benefits for a business. Full-time management allows more time for controlling spending, streamlining operations,
developing a great culture and having
more robust marketing.
Finally, it’s important for a new
CEO to understand that her/his perspective is different from the owner’s.
This firm is the owner’s life work.
They built it. Now, they are letting go,
and it’s hard.
A new CEO needs to take time to
understand what the owner is going
through. Taking smaller steps will help
him or her work through this transition
with the owner. This dynamic also is
seen in mergers when young advisors
come in. The founder, who is going to
retire relatively soon, may not recover
financially if bad decisions are made
and is anxious. Although it’s a different
timeline, the best advice is not to push
owner advisors. Instead, CEOs should
work with them to reach their goals and
minimize their risks.
Angie Herbers is an independent consultant to
the advisory industry. She can be reached at
Most firm owners tend to want to hire a CEO
who has the same inclinations as themselves.
Not only does this reduce the firm’s diversity
in leaderships abilities, but it increases the
likelihood of conflicts between owner and CEO.