Selling to a Firm with a Poor Cultural Fit

What is “clear cut”? Is it clear cut from your vantage point because you believe in what you do and you know the value of your software? This is a mistake that many of us who are sold on what we do for a living overlook – because it matters to you and you can see it clearly does not, by extension, mean it is clear cut and obvious to your audience.

How do you know advisors prioritize saving time over other things that are demanding their attention? Having sat in advisors’ offices and worked with them on a daily basis, there is no end to the things advisors should do (and even may want to do) but there are limited hours in the day. There are market, client, and employee pressures, and personal pressures. You might be able to save them some money in one area but do you know that is the area that would matter most to them? Have you spent the time to really learn about what they are grappling with and how they make decisions to improve their daily operations?

You mentioned that advisors don’t understand the value and don’t want to purchase your software. You have an analysis that’s been done somewhere and you claim a savings of 20%. Are you sure you can prove this in every advisor’s situation? Do you know for sure they don’t see “value” or maybe, is it instead, they don’t believe your ROI is accurate in their situation? I have reviewed many software products and FinTech presentations and I have seen data that while I’m sure is true, does not apply to everyone. Sometimes this data is presented as if it is gospel, but for whom? If you are not speaking to your audience and showing them a connection between what you claim, and how it works and how it would work in their environment, you aren’t resonating.

Lastly, you asked me about “hot buttons” – yes, saving time and money are big ones, but these concerns are in addition to advisors wanting to help their teams thrive and succeed, doing well by their clients, increasing value in their firms, freeing up time so it is allocated toward what they want to do not what they have to do, finding talent, growing their firms, and telling a story that is meaningful. All of these things are hot buttons. But this doesn’t mean every advisor has these same hot buttons in the same order.

Take a look at your sales process. Make sure it is not product – “look what we can do for you” – oriented but rather, “what do you need and is there a way we can help you?” And learn about each advisor you meet. Gather market intelligence so that when you speak to the next advisor, you can bring up stories and examples from your last conversation. Offer them valuable and meaningful information that will help them manage their business more effectively.

I have had a lot of firms, over the years, ask my firm to “rep” their products or services to our advisors and receive an affiliate fee for doing so. I have never agreed to this because I truly believe it is about trying to help someone with their needs, not trying to sell them on what matters to you. See if you can change the dynamic in your interactions with your advisor market and you might find they are much more receptive to what you’re doing.

Dear Bev,

We are trying to sell our firm or merge with a new firm. There are dozens of opportunities but we can’t find the one with the right cultural fit.

At first we were all about the finances. Both my partner and I are in our early 60s and we don’t want to do this much longer. We want to monetize as much as possible. In most conversations we find ourselves having to agree to hang in another two to five years at a minimum. This is when we start to think about what it would be like to work with people day in and day out for years. The fact is that we don’t like a lot of the acquirers we are talking to.

My partner and I are both very conservative and very religious people. We have upheld strict values in our firm for many, many years and our employee team reflects this. So many of the good financial equations are not good personal equations for us – we feel that other advisors discount the importance of ethics and doing what is right at all times.

Do we have to trade off financial for fit? Are firms like ours destined to stay independent and when we are ready just sell our assets to the highest bidder? We care about our team and our clients. The latter doesn’t appeal to us. But I can’t see us cow-towing to people who don’t share our belief system for years to come.

C.I.

Dear C.I.,

The next book I write will be on this very topic – Merging with Financial and Cultural Bliss would be the title. This is an issue I hear about regularly. Finding that right “fit” and negotiating a way of working together that works for both parties is definitely a challenge. It is exacerbated because this is a financial industry. The focus on monetization and financial return makes sense. And, it is a profitable career, so trying to get the most out of what you’ve built also makes sense.

But, it is also a personal business – advisory firm culture and how you treat employees, your client experience, your focus on investing and planning, etc. And, if you are going to stick around for a while, being able to work with the people in your new office is an imperative. One of my close friends and colleagues who runs a professional services (not advisory) firm finally merged last year and it turns out she won’t even end up staying for the payout (almost $3.5 million) because she simply cannot stand the people who bought her firm and doesn’t believe she can keep going in every day for five more years (the original agreement to get the balloon payout). Sounds crazy, right? That’s a lot of money to leave but she would say she is selling her soul every day and ceasing to do so it worth more than a few million to her!

Focus on the cultural piece first. Find the pool of firms who do fit your beliefs. Talk to people about everything except the financials. Sit down and make sure this is someone you can work with and people you would enjoy making decisions with every day.

Visit www.riamatch.com, for more ideas on this topic. They offer great resources and connections to firms looking to merge, sell or buy. Mary Ann Buchanan, who runs RIAMatch, is a big believer in the importance of cultural fit and would have much more available to help you than I can offer here.

My last piece of advice: Don’t compromise because the financials alone look great. Culture is way too important and it can be, for some people, about “soul.”

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate students Entrepreneurship. 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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