Brad Johnson: There’s a pattern I’ve seen time and time again. Advisors are incredible at building relationships. They’re great at selling, simplifying, earning trust, and that’s why their business grows. But here’s the part nobody wants to talk about. Growth exposes the cracks in the foundation, and I’ve seen so many advisors become victims of their own success. You see, eventually, doing more of what’s always worked, it doesn’t work anymore. And there’s one role I see missing in almost every firm that hits that ceiling. There’s one C-Suite that helps change everything, and when it’s missing, oftentimes the founder becomes the bottleneck. The team gets frustrated, and turnover becomes reality. And growth turns into chaos instead of progress.
And that’s why today’s episode is all about operations, aka, how do you build a team that fulfills the promises you make as a financial advisor? And today we’re going to get into what that role actually looks like, why it evolves as you scale, and how the best firms use execution as a competitive advantage. So, if you’ve ever found yourself asking, “Why does this business feel like a prison, I accidentally built for myself?” this episode will help set you free. Okay, let’s dive in.
[EPISODE]
Brad Johnson: Okay. Let’s start with reason number one when it comes to operations that you need to think about, and that is the missing role that’s often there and why it matters, or not there, I should say. And if you think about any business, there are three parts to every business, three divisions. Now, oftentimes when advisors first meet us here at Triad, they really don’t have divisions, they don’t have teams or team leads. In fact, oftentimes the founder’s wearing way too many hats, and it’s kind of this advisor-in-charge model where everything, it’s like they’re the center hub and everything that they try to delegate comes back to them. They’re the constraint.
So, to step into phase two, so phase one advisor in charge, you are the constraint, all of the tasks come back to you. Phase two, business owner. Now, we start to delegate responsibilities and think of your business as three separate divisions: marketing before, how do we create the line out the door; sales during, how do we convert the right prospects to clients; and operations last, how do we fulfill the promises that our firm makes? So, today, we’re going to be diving into operations, and most advisors do not find this very exciting. In fact, most advisors aren’t very good at it. And this is the stuff that creates the piles of paperwork on the desk, the stuff that you procrastinate.
So, as my friend, Dan Sullivan, says, “What if procrastination was a source of wisdom?” What if the stuff that I put off is the stuff that I should not do? I could write a check and never do it again. And that leads us to the role of operations. Oftentimes a first mistake we see here is you hire too quickly because you’re kind of at that phase of burnout. A lot of firms, once they start to have success, they market, they sell, they market, they sell. It’s like the hamster wheel they can’t get off of and then repeat until basically you die. Nobody wants that. Nobody wants to get to that burned-out phase.
And so, if you start to look at the operations side, now, it is how do I start to delegate and take the vision, take that energy, that inspiration of the founder, and put somebody directly beside them that has high attention to detail and that executes in order. And one of my favorite quotes here, and just a different way to think about operations came from one of our top COOs here at Triad. And she said, “I see the team as my client.” So, if you think you, as an advisor, you are thinking clients that’s our retirees we’re serving, that’s the clients that we’re building portfolios for, what you want this individual to think about inside of your company is the team is their client. How do I make sure to serve the team so that they can, in turn, serve the clients?
And there are a few things you want to think about as you start to build out this role on your team. First off, be very careful with title inflation. There are many firms I’ve seen where they come in, and they’re a team of five, and they say, “This is my COO.” I’m here to be direct and honest with you. If you’re a team of five, you don’t deserve a COO yet. You’re not ready for C-Suites. So, as you go from advisor in charge to business owner, eventually CEO, that’s where the C-suites come in. That’s where we’re looking at teams typically upward of 20, 30, 40, 50, to where there are true divisions, multiple team members underneath of those C-suites, often a few levels.
And so, what instead should we call this role? Oftentimes, it’s called a Director of Operations. And so, if you think of marketing, we’ve got a Director of Marketing. You think of sales, oftentimes, Head of Sales. That’s typically where the founder lives. The most seasoned advisors typically live in that vertical. And then on the operations side, Director of Operations. And they’re dealing with things like paperwork processing, follow-up. Oftentimes, client service kind of lives in that world between sales and operations, kind of one foot in each world. And they’re going to make sure, if you think about… I actually covered this in Episode 130: The #1 Reason that Financial Advisors Burn Out. One of the examples I used is a Chick-fil-A.
And if you think about the person at the cash register, if they had to run around everywhere, making the meals, serving the meals, cleaning the tables, a Chick-fil-A would be an absolute chaos. Well, oftentimes, financial services firms, that’s kind of how they are, where the advisors running around doing everything. And so, as you start to build out operations, think about the transaction has happened. They have onboarded as a client or they are in the process of onboarding as a client. Now, who fulfills all those promises on the back end? Who helps create that Chick-fil-A-like client experience? Maybe Ritz Carlton, maybe some of the other luxury brands. You can borrow from a lot of the other client experiences you love and start to infuse those into what it feels like to be a client at your firm.
And so, that’s the first step to really think about here’s the missing role, somebody to own operations, think of your team as the client, and then love on those clients and make sure everything is seamless and easy to work with your firm, and they feel served at the highest level. So, that’s why number one matters. Let’s get to number two.
Okay. To point number two. Ops is not a side project. It is a requirement, and it evolves as you scale. So, as I shared in the first section of this video, you need to have somebody that thinks of your team as the client. That’s typically going to be your Director of Ops. But now, as we start to scale, I’ve seen many firms where they start to grow out of the advisor-in-charge model into business owner, true divisions, marketing, sales ops. Now, they start to have true team leads. And what happens, I heard it said once, teams break at 15, 75, and 150, and all these are different inflection points where the org chart, the structure that worked before, doesn’t work after.
If you think about a team of 15, you can pretty much say, “Hey, let’s do an all-team meeting, one conference room, order some pizzas.” Life is good. You’re all on the same page. As you start to evolve, maybe you hit that 40, 50, 75 team member size. That structure starts to break because now, instead of one or two new business people, you might have a division there. Instead of one or two advisors, you might have a team of advisors. So, now the need to start to develop divisions becomes really important. So, if we go back to operations, you’ve got a director of operations at the top to go from tasks, the advisor in charge, to responsibility, business owner.
Now, your Director of Ops is in charge of the responsibility of how do the operations have to be structured to make sure we don’t drop any balls on our clients. So, now, as you continue to evolve and grow, that business owner might get to the size of now it makes sense to have a true C-suite. So, you have a CEO that’s typically the founder. You would have a Director of Ops that grows into a COO, Chief Operating Officer. And so, as you start to think about that, how does that structure evolve? Well, you’re going to start to have teams, divisions. So, teams of one become teams of a handful or many.
And what this starts to do, a common thing we see that gets in the way of a lot of advisor firms creates a lot of stress is when you can be held hostage by one team member. People are complex creatures, needs change. Maybe the person that’s a rock star today, maybe their life circumstances requires that they have to move on somewhere else. Well, if that’s the case, you don’t want that entire division of your company to shut down. So, if we have multiple team members that are cross-trained, now that starts to help make sure that you can serve your clients no matter what. And now, as we start to have that complexity, that Director of Ops or maybe COO, they need to start to think about that team, “How do I serve them? What’s the workload look like? How’s the culture?”
Oftentimes, this role in the early days of finance, as you’re starting to grow and scale, also duals as HR. So, if you think about human resources, their job is to serve the people that make up your company, keep the culture right. So, wanted to walk through the evolution of it, why this cannot be a side project. It must be the main thing, because any business based on I or me is a business that cannot outlive the founder. It is not built for scale. It is not built to be a legacy business that lives beyond you.
Okay, let’s get to number three. Operations is an investment, not an expense, and the number one key to driving referrals. So, I don’t know how many times I’ve heard in my career, how do I get more referrals? What’s the best referral strategy? Hey, I got this new referral system. I’m going to double my referrals next year. Guess what? There is nothing that beats a referral strategy that’s better than having great operations that fulfill the promises you make as a financial advisor in a timely fashion, in a fashion that creates an experience and leaves a lasting impression. And in fact, one of the most well-run firms that I’ve ever experienced who has a rockstar operations team, they’ve got this thing dialed in, like assembly line all over it. A third of their business comes from referrals. And guess what? Their referral program is, “Love on our clients. Take care of our clients.”
That’s just how it works. And this is a firm that is doing hundreds of millions of dollars per year, has grown over 2 billion of assets under management. And every year, because they have great operations, a third of their net new assets come directly from their existing clients, from those referrals they make. And if you think about the psychology, think about the last time you went somewhere a service-based business. Let’s say you go to a gym and you try to find a treadmill, and every single time, the treadmills are full. Well, what do you naturally think? I don’t want to tell my friend about this gym. That’s one more person on the treadmill. Now, I’ve got to wait another 15 minutes before one opens up, right?
So, if there’s any sort of friction in that client experience, what it’s going to naturally do is say, “Well, they can’t take care of me already. Why would I send more people?” Now, flip that. If you went to a gym and there’s an incredible experience, there’s never a weight on any machine. You’re greeted warmly when you get there. It’s a seamless experience all the way through. You’re much more likely to tell your friend about that. In fact, from my old school days, a few years back, when I was CrossFitting, one of the ways that CrossFit grew so incredibly fast is they created a community-like experience, where the more people you brought in, the better the experience got, the more competitive it got, the more camaraderie you had.
So, if you think about this when it applies to operations and finance, what you want to do is take the friction out of the process. And if you start to do that and start to think, how do I have customer obsession? What are the things my team hears that frustrates our clients? And if you start to create an operations team that removes those and actually flips the model to where they rave about the experience, where they say, “I can’t believe you did that,” that is the key to driving referrals. And that is why you should look at operations and building out that team as an investment, not an expense.
So, today, we covered the number one role that matters for any firm that’s going to scale because it’s not just about marketing and sales, where it’s the assembly line or the hamster wheel of new, new, new. And then everything breaks on the backend. You have to build the foundation of operations to truly scale a firm bigger than yourself and to drive the referrals that every advisor wishes they had. And today we covered three things: the missing role and why it matters; number two, ops is not a side project, and it does evolve as the firm grows; and number three, operations should be viewed as an investment, not an expense, and it’s the number one key to referrals.
So, as I referenced, an episode I did a while back, Episode 130, we used the analogy of a Chick-fil-A. And I think the biggest thing when you think about operations as your firm starts to scale, what you have to do is different systems, different processes. You think of them like an assembly line, here’s where it starts, here’s where it ends. And great operations, if you hit friction points along the way, great operations removes those, creates a seamless and enjoyable client experience, and that’s where your clients will deliver new prospects to you on the front end because like, wow, you’ve got that problem where you’re at. You’ve got to go work with this firm. They’re all over it. When I need something, I hear back in a timely fashion. And that’s how operations can actually be transformed into sales when done right and when done well.
So, hope you got some value out of this one today. This is from a lot of years of seeing those firms that got stuck and kind of capped out versus those that continue to grow and scale. And having someone own and lead that operations division is key to put any founder’s vision into reality and grow a firm that you’re proud of. So, if you haven’t already, please hit the like button, subscribe, share this video with a financial advisor friend that needs help on the operations side, and please leave a comment. If there’s something we didn’t hit on this episode or something you want to hear on a future episode, we’ll read the comments, and we’ll make sure we’re listening.
Alright. We’ll catch you on the next one.
