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Growth is good, right? After all, nobody launches a financial advising practice or any other type of business unless they’re expecting it to grow. In business, as in horticulture, when we plant something and focus the proper care on it, we expect growth.
When you take a closer look, however, much depends on how you define the term “growth.” Are you talking about AUM? Active clients? Profitability? Team member advancement? While all of these are valuable areas for improvement in any practice, a more holistic approach to growth will embrace the importance of an understanding that embraces all these factors – but goes beyond them.
Psychologist Carol Dweck is the author of the bestselling book, Mindset: The New Psychology of Success. Dweck conceives of a continuum between what she calls a “fixed mindset” and a “growth mindset” that correlates directly with the ability of an individual to persevere until achieving success.
Those with a fixed mindset tend to view an area of endeavor in terms of limitations rather than opportunities. They avoid challenges as a strategy for not experiencing failure. They often feel threatened by the successes of others and may not respond well to criticism or suggestions for improvement, even when offered in good faith. They understand their abilities as static, and therefore believe, “Either I’m good at this, or I’m not; and if I’m not, there’s no point in trying to improve.” Those with a growth mindset, on the other hand, embrace challenges; if they fail, they interpret it as an opportunity to learn and improve. This attitude positions them to persist in the face of obstacles, embrace critique, and celebrate and learn from the successes of others. They see their abilities as dynamic, capable of expansion and ongoing improvement.
In my experience, advisory practices characterized by a growth mindset conceive of “growth” much more globally than increasing AUM, clients, or net revenue. The growth mindset includes those metrics, but also encompasses growth in other areas: innovation; individual and team member skills; understanding of client needs; ability for self-critique and improvement; personal satisfaction; relationships, and many other areas.
To better understand the growth mindset as it applies to your practice, look at some common misunderstandings of growth, contrasting them with the outlook predicated by the growth mindset.
Myth: Growth equals “business growth,” period
An advisor can have happy clients, a good family life, a trusted team, and the potential to add more business. In fact, they can even have a desire to grow. Despite trying numerous initiatives, sometimes practices remain static, right where they were. This can happen because of a fixed mindset around the definitions of success. Advisors can get stuck in a negative feedback loop: The harder they try to “grow,” the harder it becomes. But what if, instead, that same advisor looks beyond adding clients, AUM, and other typical financial measures and embraces a more holistic understanding of growth? What if they focus on nurturing and developing the team? What if they work on deepening the relationships with the clients they already have? With a growth mindset, it is possible to become “unstuck” and expand in areas that lead to greater satisfaction and success. I believe it is.
Myth: Businesses can have a growth mindset
Though businesses may have a collective personality, they can’t think; only its people can. In other words, the presence or absence of a growth mindset at your firm is a direct function of its leadership. It just makes sense: A leader with a growth mindset believes in the ability of herself and her people to develop their abilities, talents, and expertise. She focuses more on the process than the outcome, believing that no matter what happens, valuable knowledge is gained that will translate into future success. Leaders with a fixed mindset, however, foster an environment built on the fear of consequences. Failure is seen as the end, rather than the beginning of another opportunity.
Myth: A growth mindset is the same as “positive thinking”
Don’t believe this. In fact, toxic positivity is one of the greatest threats to effective collaboration and morale in any enterprise. Rather than viewing everything through rose-colored lenses, the growth mindset accepts the reality of negative events. Instead of saying, “it’s not so bad,” or “always look on the bright side,” the growth mindset says, “This is hard, but what can we learn?” Rather than insisting that colleagues re-interpret their negative experiences as being “for the best,” the growth mindset says, “I still believe in you; how can I help?” You see, the most pernicious problem with toxic positivity is that it negates the experiences and perceptions of others. The growth mindset, by contrast, acknowledges the experience and its unpleasantness but offers a constructive path forward. In any financial advising firm, stuff happens: clients leave, the markets misbehave, a critical report contains a mistake, a trade isn’t executed promptly… the list goes on. Leaders with a growth mindset aren’t derailed by such circumstances. Instead, they encourage themselves and their team to do what they can to pick up the pieces, deconstruct the experience to see what can be learned, and move forward to do the “next right thing.”
Myth: In a firm with a growth mindset, anyone can become a star
This is a subtle variation on toxic positivity that can have disastrous results when inflicted on certain people. The fact is that not everyone can be great at everything. Your star client-services associate – the guy who excels at onboarding clients quickly and efficiently – might melt into a puddle if forced to give a presentation to a roomful of potential clients. Your top advisor, who is at her absolute best when helping clients develop a strategy, may be hopeless at accurately completing the necessary paperwork. The fact is, we all have different abilities, different ways we shine. The leader with the growth mindset, while recognizing that everyone is capable of growth and development, is also skilled at placing the right team members in the right positions to get things done the right way.
Ultimately, we are all on the continuum between the fixed and the growth mindset. In fact, the most important attribute of a growth mindset is the ability to accept that occasionally, getting “stuck” is a part of growth: Once you recognize it, you can start to think about refocusing on your purpose, plan, and mission. The growth mindset enables you to do for yourself and your firm what you should be doing every day for your clients: Gain clarity on what is truly important and make a plan takes you where you want to go.
Gretchen Halpin is the co-founder of Beyond AUM, which provides growth, client experience, and advisor experience support to financial advisors to drive business success. Over the course of her 25-year career, Gretchen has founded more than five businesses in addition to serving as the chief strategy officer for one of the financial services industry's leading wealth management firms. She has been featured in Advisor Perspectives, Financial Advisor Magazine, and Forbes for her insights and has served as a speaker at numerous industry conferences, including NAPFA, Financial Planning, and Invest in Women. She also serves as a facilitator in The Financial Planning Association’s Women and Finance Knowledge Circle community.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
