We have also followed the principles of what ’ s known as the “ entrepreneurial operating system ,” a management system that helps create a vision for companies and assigns the right people to the right tasks — and we have actually adhered to its precepts . Wil and I have had a lot of great ideas over the years , but many of them unfortunately served as distractions to our core business . Luckily , when one of our “ great ideas ” turned out to be lousy , we quit doing it very quickly . What the entrepreneurial operating system has done is create a greater discipline for us as we ’ re establishing our firm objectives , creating priorities and directing resources to those priorities . Our executive team meets for an hour and a half every week to identify , discuss and solve issues going on in the firm as well as to determine whether we are on track to meet the quarterly goals we ’ ve established . Originally , I thought an hour and a half meeting every week would kill me , but it has actually become one of the highlights of my work .
So much for things we ’ ve done well . What about the places we ’ ve stumbled ?
We were not always very good at hiring . Both Wil and I like people , so when someone interviewed with us , we would often like them . We had no way of determining whether they would be good at what they were hired to do . This resulted in a lot of misses with hires who didn ’ t last very long — or worse , stayed because they had no place to go and we were not good about freeing up their future . We eventually started using an industrial psychologist to test every new hire , with more intensive testing for wealth management positions than for administrative ones . We have an internal team that screens candidates , and if they get by that screen , the candidates are sent to this professional , who lets us know how good a fit the hire would be and where their areas of development will be .
Originally , we would still go against the psychologist ’ s recommendation if we felt we knew better . We had a 100 % failure rate when we did so . Our success rate is now much higher , saving us the hard and soft costs that turnover causes . Once a staff member has been here for 90 days , they can meet with the psychologist to go over their testing . We will often look back over the testing if we are having issues with a staff person or if we are wanting to move them into an area in which they haven ’ t served before . This does not guarantee 100 % success , but the psychologist has certainly paid for himself .
We don ’ t refer to our future plans for the business as a “ succession plan .” Instead , we call it a “ sustainability plan .” As part of it , Wil and I continue to sell our shares to other shareholders while remaining active in the firm . Neither of us has a desire to retire . This plan means you are never out of the woods — because the business is a living , breathing organism that is constantly evolving .
We started using an industrial psychologist to test every new hire , with more intensive testing for wealth management positions than for administrative ones .
Even though it ’ s an evolving thing , we admit to making some pretty big mistakes early on . One of our early partners left to start her own firm and violated the buy / sell agreement she had helped develop . Our buy / sell used a market value price for buying back the stock from her , with a small discount , as well as a payout back to us for clients she took . The price of buying back her stock helped her fund her competing enterprise . ( We have since changed the buy / sell to provide book value only if the person leaves before they are age 55 .)
In another instance we hired an outside CFO who negotiated stock for his position . Not only was he unfamiliar with the values and services for a firm like ours , he was not a cultural fit . I think we wanted someone in that position more because we didn ’ t want to handle those responsibilities ourselves and not because we thought his particular skill set fit it .
Another issue we have at our firm is that we haven ’ t been great with difficult conversations . Maybe it is the Minnesota in us , but avoiding those conversations has resulted at different times in levels of unhappiness or has resulted in putting the wrong people in the wrong seats and keeping them there too long . We are still not great at this , but we continue to work on it .
There are still questions that Wil and I face as business owners : 1 . Is there a realistic path out for us ? 2 . How do Wil and I handle the building that houses the firm , a building we own , if it no longer serves the company ’ s needs ? There ’ s a bigger question behind that , something many business owners face : How do you make good long-term investment or spending decisions for a firm that can reduce the short-term buyout value for yourself ?
3 . What things will the next generation of leadership value more than we did and what will they value less ?
4 . How will egos be managed as our shareholder base grows ? What are our spouses whispering in our ears ?
Obviously , we continue to be a work in progress .
Next year , the Be Our Guest program happens on June 10 . For a $ 1,500 donation to the Foundation for Financial Planning , 20 planners can come into our offices for one day and go through our procedures and all aspects of our operation with us , seeing how we run our 60-person , $ 3.5 billion AUM , 600 client firm . Again , during that time , we make our entire staff available for specific questions . The event is run by our co-managing partners , Becky Krieger and Brian Martin ( after Wil and I kick it off ).
I hope you can come June 10 , 2025 , to spend time with us and continue watching the sausage being made .
ROSS LEVIN is co-founder of Accredited Investors Wealth Management in Edina , Minn .
OCTOBER 2024 | FINANCIAL ADVISOR MAGAZINE | 23