Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Bev,
After many years of research, we recently changed our investment approach. We are slowly moving client portfolios to the new models, taking care to minimize negative impact. As senior management, we decided against broad messaging because we believed it would cause more consternation on the part of our clients. We therefore haven’t widely communicated the new approach. Some of our advisors think this is sneaky and disingenuous. Do you agree with our decision or should we be telling our clients exactly what we are doing and why?
Pat D.
Dear Pat,
I am going to assume that the new investment approach and this disagreement are relatively recent developments. My answer to your question might be different if the change happened long ago.
You can communicate the new approach to clients and be both positive and informative about it. You could construct a professional communication via letter or email and prepare “story” lines for your advisors to use in conversations with clients. I have three suggestions:
Talk positively about the change. Explain how the markets change, the industry changes and in response you are always watching and evaluating what’s happening. Explain that you don’t take changing your investment approach lightly and have been evaluating it for several years and have decided that the timing is right to make the changes.
Explain what the changes are – have you moved from a reliance on mutual funds to an ETF approach? Have you changed managers in a fund of funds portfolio? Have you created a new filtering system to assess and evaluate individual securities? Take a few sentences to help your clients understand what you are doing and why. It’s okay to get a bit technical here but don’t overdo it. You want them to understand what you are doing, but not scare them with the level of detail.
Perhaps most importantly, explain how this will impact their personal situation. Let them know that you are carefully evaluating each and every client portfolio to create a plan that will work best for their situation. Explain the importance of minimizing capital gains and taxes and maximizing opportunity. Let them know there is a schedule for transition and that each advisor can speak with their clients about how it will specifically impact them.
If done well, this could be a very strong communication and could position your firm as forward-thinking, investment experts seeking to do the right thing by clients.
I welcome other advisors who have been through a similar change to write in and tell us how their firm handled the situation.
Dear Bev,
Is it okay to favor one employee over another if they are doing the same job? I recently promoted a person in our advisory firm who was going above and beyond, but I am getting backlash from senior advisors who think it is “unfair” to someone who has been here longer and in a similar role. I think merit wins out. Am I being unfair?
K. T.
Dear K.T.,
There are two issues at work here: one is equal pay for equal work and one is earning a promotion or pay increase as recognition for going above in their role.
Without knowing all of the particulars, I’m going to assume that the base pay was fairly equal for each person. In this case, it’s quite fair to reward someone for doing more than is asked of them. The hierarchy in most organizations is large at the bottom and small at the top for a reason. Only a small portion can move up and get to higher levels over time. Often, this is because the people in the smaller sections at the top have shown exceptional aptitude or work ethic and they have been rewarded for doing so. The important considerations in your case are:
You have communicated clear expectations for the role and each person knows exactly what is expected of them. Make sure you have not shared more with one employee so that the “deck is stacked” for that person to excel.
You have given explicit feedback on each person’s strengths and areas for growth. It’s best if this is given on an ongoing basis in addition to regular bi-annual reviews.
You have shown the person who did not receive the promotion and raise what, exactly, they would need to do to achieve the same.
You are not showing any kind of favoritism for any other reason. The reward was solely for overachievement in the role and exceeding expectations.
Unfortunately for any senior manager, being “fair” is a challenging proposition. It’s the human condition to be subjective. This is why clear and measurable written expectations are so important and why giving specific feedback is too.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. In 2008, she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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