To my father, who spent 25 years in the US Army, two tours of duty in Vietnam, and who moved us from place to place and taught me perseverance and resilience. I remember a conversation later in life, when he said, “I'm sorry I wasn't able to do enough for you.” I responded, “You gave me some important gifts that no one could ever take away, a sense of attitude, belief, and commitment.” For all military veterans, I salute you!
To my mother, who was always there to provide encouragement when needed. You led one of my first teams, a group of cub scouts! I still remember the scout oath, which began with, “On my honor, I will do my best.”
And to my wife and everyone who is battling cancer. Keep up the good fight and may God continue to bestow His blessing on all of you.
Curtis
To my daughter Courtney, who encouraged me to take the leap of faith and cross the invisible bridge 10 years ago and start Supernova Consulting group. She has acted as mentor, muse, and editor on much of my writing. To Greg Perry, who has been my editor for the last 10 years and tragically lost his life recently. If I was the brain of The Supernova Advisor, he was the voice. His style, energy, writing skills, and constant encouragement will be missed. To Cindy Beuoy, who has constantly pushed our team at Supernova forward and held us accountable for our roles and responsibilities. Supernova would have been a fading star long ago without her support.
Rob
Copyright © 2018 by Curtis C. Brown, Jr. and Robert Knapp. All rights reserved.
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This book is about teams creating their “mojo” and becoming the best that they can be. The authors provide an easy road map or pathway for team success. If your team is challenged with performance or issues of dysfunction, this book has answers for you. Whether you are at the initial stages of forming your team, expanding your team, or looking to enhance the team's competencies, there is plenty to be gained by reading this book.
As we approach a new age of evolution in the financial services industry, old practice models are giving way to more dynamic and agile team‐based models to enhance productivity and performance. Curtis Brown and Rob Knapp were always innovative and creative throughout their leadership careers at Merrill Lynch. I have known them personally for more than 30 years and have seen them evolve their thought leadership over the past three‐and‐a‐half decades of industry experience. The age of the sole practice advisor is giving rise to advisor teams, which is a natural evolution for the industry.
The discussion of the Force Multiplier Effect provides thought leadership as to how a collaborative team model can amplify a team's capabilities. These strategies and tactics can ensure that teams can leverage strengths to counteract marketplace threats to their advisory business models.
Unlike many consultants, Brown's experience was shaped by training and skills developed managing and leading efforts for Merrill Lynch in Washington, DC; Michigan; New Jersey; California; and Florida and working in the C‐suite for the chairman and president of Merrill Lynch. There we were reunited again while I was an executive vice president managing Global Systems and Operations for a firm that established its footprint in 58 countries. My own career spanned 40 years of private client experience as both a branch and complex manager as well as a regional director and later as an entrepreneur.
I gave Brown his first assignment as a resident vice president in Ann Arbor, Michigan. Our paths would cross many times throughout his illustrious career. Brown's leadership was recognized three times by senior management as one of the top executives in the firm and once as the number one executive as measured by six different strategic objectives. This was a feat that not many executives in the firm were able to accomplish. He views most of these accomplishments as attributable to forming and creating dynamic teams throughout his career. While on a special assignment working for the then chairman of Merrill Lynch, David Komansky, and then president, Herb Allison, Brown had the challenge of working with some of the brightest and most capable executives in the firm as well as being an interface with the company's board of directors.
Brown's view of advisory teams – from the small branch to large branches to regions and the executive suite – gives him the experience and insight to see issues from both an advisor and a leadership perspective.
Knapp also worked for me in the Midwest by managing many offices. He is a former managing director of Merrill Lynch and the architect of the Supernova model he developed with a team of financial advisors and leaders at Merrill Lynch. He is the author of The Supernova Advisor, which has received much critical acclaim in the industry and was the subject of a dissertation by graduate students at MIT and a case study by a Harvard University professor. Rob's passion for coaching talented individuals to reach exceptional levels of performance has solidified his reputation throughout the financial services sector as a visionary and creative leader. He created Supernova Consulting Group, LLC, with the purpose of improving the client experience worldwide. Rob's former managers are consistently recognized for their accomplishments in developing teams, serving clients, and generating revenue.
Brown and Knapp are “spot on” in their view that to embrace change one must first have the right attitude to step outside one's comfort zone. The authors characterize the industry challenges aptly: Price compression, changing regulatory environment, demanding clients, and technological disruption – all reasons for teams to “raise their game” in this hypercompetitive industry. They provide a steady flow of information, strategies, and tactics to help teams become more effective. At the end of each chapter the authors provide a call to action or team challenge to put thoughts and ideas into practical use.
The authors' use of real‐world examples and experiences figure prominently as they tie in the practical application of team collaboration that a reader can understand. I particularly enjoyed the discussion around collaboration and how teams can obtain leverage by working together to accomplish an improved client experience. Brown and Knapp draw analogues outside the industry in their description of the precision of the Navy's flight demonstration team, Blue Angels, and a trauma surgery team.
Brown and Knapp offer up solutions to team dysfunction and identify the issues that impede team performance. If your team struggles with matters that impact performance, the authors present proven solutions to move your team forward.
Teams often struggle with leadership challenges; Brown and Knapp offer advice for improvement. Teams are like intrapreneurial businesses inside larger organizations, and the elements for building a practical business plan and strategy document are discussed in‐depth. As demographic shifts occur in our industry, the authors make the case for adding diverse team members to avoid “groupthink” and take advantage of the opportunities associated with niche markets.
The authors devote an entire chapter to the manager/leader. For managers responsible for coaching and developing teams, this book is a tremendous resource. The manager is responsible for creating the right environment for teams to thrive. The manager plays an integral role in helping teams leverage the capabilities of their firms. I suggest you give a copy of the book to your manager.
The overall message of the book is that teams can get better and become more effective, even in the face of so many challenges. Brown and Knapp have created a handbook on teaming that anyone contemplating forming a team or improving team performance should have in their repertoire of must‐read books.
Rob Knapp's first book, The Supernova Advisor, provided great practical concepts for productivity improvement ideas for financial advisors. Most of those concepts revolve around advisor team improvement strategies. This book focuses specifically on team effectiveness strategies. It answers the question, “How do we continue to help teams be more effective?” Many of the concepts have materialized because of our firsthand experiences coaching and leading teams for more than 37 years at a major investment firm, entrepreneurial pursuits, and coaching financial advisors at many firms across the country.
We want to build on the training learned in The Supernova Advisor and help current advisor teams develop the strategies and tactics to become more efficient. When team members go through the program together, what emerges is a consensus view as to how a team can improve productivity and deliver its value proposition and improve the client experience.
Throughout this book we are sharing experiences gained by seeing teams both succeed and face many roadblocks during their journey to success, and productivity improvement as well as learning to deliver a client experience that went beyond a basic commodity experience. Our firsthand knowledge came from coaching several hundred teams over the past several decades, coupled with years of corporate experience being involved with teams being assembled without thought given to team alignment, business plans, or strategy. We experienced teams falling into dysfunctional traps without a framework or guidance to make midcourse corrections. This is a key focus of our consulting practice.
The motivation for the book came about after doing much research about teams and not finding a current book that addressed the issues that were more specific to financial advisor teams. However, many of the ideas and concepts discussed can go beyond organizational silos and provide relevance to other sales organizations.
We also discovered if we could get teams to capture the collective wisdom of their knowledge and experiences, they could improve their chances of success. The Wall Street culture, the one we grew up in, didn't foster collaboration and the Force Multiplier Effect described in Chapter 7, “Team Collaboration,” to the best benefit of the team or the organizations that employed them. This isn't necessarily a knock on these organizations, however; the sole practice model was largely based on individual performance, not team performance, and, as such, you were rewarded accordingly. The former model didn't foster collaboration.
Chapter 15, “Wealth Management in the Digital Age,” was a challenge to write due to the speed at which change and disruption is occurring in the financial services industry. Teams must consider that these changes are like a “sea of permanent white water” for those of you who have ever been rafting on the Colorado River and experienced the calm, the speed, and the turbulence associated with this type of adventure. Also, discussing diversity is a challenge given most people's proclivities to form teams with like‐minded individuals without consideration given to exploring differences that might create improved performance.
Most of what was written comes from our collective experiences. However, there were numerous articles to be found online and many periodicals from well‐known universities as well as many books that helped us frame the concepts. Some of the information simply came from discussions with financial advisors on teams over the years.
Teams are the principal building blocks of the strategy of successful organizations. The focus of your organization may be on service, quality, cost, value, speed, efficiency, performance, or any other similar goals, but teams remain the central methodology of most organizations in the private, nonprofit, and government sectors. While our focus is on financial advisor teams, there are many areas and discussion points that are applicable to teams outside the financial services industry.
The fact remains that when a team becomes more aligned, a commonality of direction emerges, and the individual energies harmonize. This way there is a shared vision as well as an understanding of how to complement each other's efforts. This is where the real leverage occurs.
Vertical teams and horizontal teams can transcend organizational silos and boundaries if properly focused and supported. Building collaborative teams can improve the client experience.
The financial services industry has become very challenging for a host of reasons. The role of the financial advisor has become increasingly more challenging because of several factors:
In this new reality, advisors must build, lead, and manage their business through team dynamics. This goes beyond just an assembly of individuals thrown together because they like each other or have similar business strategies. More emphasis will need to be placed on creating the right team scenarios, coaching them, and providing the best opportunities for leverage and success. Supernova has decided to take team training and development to the next level by offering additional training for teams to improve productivity.
In 1965, Bruce Tuckman1 identified five phases of team development as Storming, Forming, Norming, Performing, and Adjourning. Supernova focuses its training on team effectiveness strategies for advisors:
I have had the opportunity over three decades to work with a variety of professionals in both a corporate and nonprofit environment. Sometimes my role was leader and at times it was follower. People come into your life and provide inspiration. I choose to find the good in everyone. We are all the sum total of what we experience in life. I always tried to take a few golden nuggets from all those individuals I worked with over many years.
Finally, I want to acknowledge all the coaches who try to help individuals reach their true potential every day.
For those of you whom I have crossed paths with, I hope we touched each other in a special and positive way.
My mentors over the years are too numerous to mention. However, I would be remiss if I didn't name a few: David Komansky, former CEO of Merrill Lynch; Edward Goldberg, former EVP, Merrill Lynch; Jim Shoaf, former head of National Sales, Merrill Lynch; Ernie Moeglin, former district director, Merrill Lynch; Winthrop H. Smith, former EVP and head of Merrill Lynch International; Alan Sislen, Merrill Lynch; and Jim McCarthy and Andrew P. Edlemann, who gave me my first job at Merrill Lynch in San Francisco.
Some special thanks to Ed Goldberg for writing the Foreword. Thanks for being my friend.
Ronald Brown, PhD, gave me great insight to write a chapter about diversity and inclusion for teams.
Andre Campbell, MD, provided great content on shock trauma surgery teams.
Bruce Dillard, thanks for your service and guidance regarding the Navy's flight demonstration team.
Debra Frazier, thanks for sharing a valuable story.
Thanks to Cindy Beuoy at Supernova Consulting for your great ideas.
Also, thanks to Sydney LeBlanc for copyediting, catching my typos, and pushing me to completion of the manuscript.
To all my coaches and leaders along the way, who have taught me the value of teamwork. To my tennis coaches, “Bud” Knapp (Dad), Jack Lynch, Phil Swanson, and Jim Leighton, who taught me the value of hard work, persistence, love of the game, patience, perseverance, and learning by coaching others.
To my naval flight instructors and commanding officers, who taught me the value of respecting all members of the flight crew, the value of all teammates' contributions, the importance of attention to detail, and the commitment to excellence at every level. That work, athletics, and the joy of learning and growing can go together to make you a better aviator. That you can learn as much from what not to do, as what to do.
To my mentors, leaders, bosses, and teammates at Merrill Lynch and Supernova, who taught me that with real focus and commitment you can achieve heights of success not even imagined. That nice guys can finish first and winning is a process that goes on forever. That commitment to excellence isn't just a slogan on a wall but a mantra to get up to every day. That if you instill the right values into your team, those values can live on after you in spite of difficult times and adversity.
“By seizing the opportunities that disruption presents and leveraging hard times into greater success through outworking/outinnovating/outthinking and outworking everyone around you, this just might be the richest time of your life so far.”
— Robin S. Sharma, Global Leadership Expert, Bestselling Author
In the financial services industry, the age of the sole practitioner advisor is a business model with many inherent challenges. The sole practitioner has been replaced by financial advisor teams that provide leverage to client relationships and can provide more than a commodity client experience. The key differentiating factor is for advisors to provide a service model that is unique and that focuses on the client first. Let's examine some of the trends and/or threats to the industry as well as an advisor's practice that fully support the rationale for creating effective teams.
So how did we get here? A little history is in order. In May 1975, brokerage industry commissions were deregulated. It brought new competitors into the market and basically broke up the monopoly on securities pricing. The downside to this free market pricing scenario is that the industry has not been able to raise prices since that time frame. Innovative firms adjusted by creating proprietary products that, for quite some time, eliminated any reason to raise prices. This was, in large part, because proprietary products had considerably higher fees or sales commissions associated with them. The industry was very innovative in generating new mutual funds, public partnerships, private placements, lending, and many hybrid products that helped to stem the tide of increasingly growing operating costs associated with running the business. Unfortunately, many products didn't live up to client expectations and there were inherent conflicts associated with this innovation.
With operating costs continuing to rise to the present day, financial advisor business models must evolve as well. Unlike many industries that pass on additional costs of doing business to the consumer, the financial services industry is challenged to use this strategy. Clients have the power to vote with their feet, walk away, and take their business to a host of competing organizations. Gone are the days where simple transactional business was a component of delivering an exceptional client experience. Price compression in the industry is one of the threats to doing business that requires financial advisors to transform their practices to deliver a value proposition based on advice and guidance.
I (Curtis) recall as a branch manager taking on an assignment in the Northeast. The complex had four locations and approximately 50 financial advisors. On the surface, it was a very profitable complex. There were no teams in the office, and approximately 13 financial advisors controlled more than $13 billion in assets, a key driver of performance. Those advisors were all at least 55 years of age or older and potentially could face retirement in a few years. The potential loss of client relationships due to the retirement of these advisors and the lack of a quality service experience could also negatively impact branch office performance.
I fully expected I could lose substantial revenues in a two‐ to three‐year time frame during my tenure due to turnovers, retirement, and other causes. Additionally, the return on assets was relatively low, at 0.04 percent. We had plenty of assets, but the client experience numbers were woefully low. I needed to find a solution to this dilemma!
We needed to help these advisors create the capacity for change as well as do a deeper dive with existing client relationships. Creating teams around these financial advisors to improve productivity as well as improve the client experience was important. Everyone could interview both internal and external advisor candidates. We established a simple profile by asking potential teams and team members who they would like to work with on a team, and then initiated and fostered interviews and meetings between individuals. In some cases, candidates who had great credentials, MBAs, former attorneys, business professionals, and certified public accountants (CPAs) were hired. When teams hire and/or onboard a new team member, they have a vested interest in the team member's success. Each team was required to develop a business plan and strategy document and receive ongoing coaching by a manager. The ongoing coaching was key to the success of teaming strategies. If bodies of people were just assembled together, the overall strategy would not have worked.
In discussions with teams it was understood that the firm was making an investment in their practice. It was explained that the person being hired would cost in compensation and benefits, close to $100,000. It became very clear, and the team understood the commitment that all parties would be making to ensure the success of the new team member (see Chapter 12, “Onboarding and Mentoring a New Team Member”). The team would make the final decision on hiring the new team member; it was never a forced relationship. There would be a two‐year probationary period before the team member would achieve permanent status on the new team.
These new team members were also supported by going through a rigorous branch training program led by managers and experienced financial advisors. The overall impact was extremely positive, and it moved the office along in forming new team relationships.
The components of a team business plan and strategy document consisted of the following:
The plans were comprehensive; however, these were the basic components. Meetings were scheduled with each team on a quarterly basis, and supplemental team‐based training was instituted. We cannot underscore the importance of continued team‐based training. There were times when team‐based practice management sessions were scheduled. Successful teams from other branch offices were brought in to spend time coaching these teams. We would organize the office and run segmented training sessions based on an advisor's level of productivity and the developmental needs of each group. For teams at, or near, the $2 million in revenue level, we might have coaching sessions by either bringing in teams or visiting with teams at the $4 million or $7 million level. This was particularly helpful in enabling teams to modify behaviors and make productivity improvements. We wanted teams to believe they could accomplish stretch goals. Peer‐to‐peer meetings and training sessions fostered exponential learning, and the successful approaches reinforced positive team behaviors.
Sometimes it was necessary to intervene in conflict resolution or the restructuring of team agreements. And on rare occasions we were involved in team dissolutions. The complex grew to 135 financial advisors in three years. New hires were succeeding at a 90%‐plus success rate. Turnover among financial advisors was almost nonexistent. Revenues and assets more than doubled within three years, with revenues approaching $100 million. While many of the quantitative results were significant, the impact to the culture and achievement of financial advisors was even more impactful.
If financial services firms want to have a positive impact on organic growth, team effectiveness strategies offer an excellent solution and approach. No one would ever consider forming a team and then walking away thinking that the work is done. When you have a group of talented individuals such as any professional sports team, the dynamic that separates the team is the leader/coach. Well‐coached teams have greater chances to improve performance and succeed in a variety of environments.
Chapter 13
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