Freud. Jung. Maslow. Pavlov. Famous psychologists all. Put them in a room together with 190 of their smartest colleagues. Assign them the task of figuring out what makes for a high functioning, collegial, hardworking team of investment professionals. Give them twenty years to do it. They will fail.
Put a branch manager in a branch and push him hard to make a bunch of teams and make them successful and oh by the way get it done before your next review. Well, you have a better chance than the shrinks. Not much better.
For years firms have worked hard to find a recipe. Some have been more successful than others. And why not? It is harder for teams to change firms. Clients will probably get better service. Production ought to go up due to the ability to cross sell specialized products. More actual financial planning can take place. Client retention can go up. Assets will go up. Sales support can be compartmentalized. So what is not to like?
Frankly, it is easy to put teams together. But taking them apart requires the entire gang of psychologists described above, plus the entire squad of UN negotiators and peacekeepers, mix in SWAT experts and not to mention accountants, lawyers and lions and tigers and bears. Oh my.
Zavier had a team that was founded by a very senior producer, let’s call him Kip, who was very successful as an early adopter of managed money. He worked his tail off and had the vision to carry it out. But then he wanted to play some golf and enjoy life due to a personal family tragedy. Smell the roses time for Kip – deservedly so. So Kip picked up a young hard charging guy who was a good student and highly coachable. There was some transition time but eventually the junior guy was doing most of the work and Kip was getting most of the pay.
Was the young guy grateful to have been given a great situation that over time was going to make him rich? Was Kip willing to make junior happy to keep a good thing going? If you think either of these is true, the Easter Bunny is waiting for you to go beddy-bye.
Zavier had to negotiate this minefield and was almost driven into retirement. Naturally, the entire branch picked sides and was more than willing to offer Zavier plenty of unsolicited advice – none of it useful. The Regional stuck his nose into it just long enough to smell a problem he was willing to let the manager sort out (although he had to deal with the whining for years.) Remember what flows downhill?
Eventually a deal was cut that pretty much pissed off everybody. Both Kip and junior felt screwed out of money. This meant Zavier probably got it about right. It only took a couple years to figure out. Really. But everyone stayed and the book grew from a macro perspective.
George had a similar break up to execute with three producers (two senior and one junior) who did not hesitate to drag clients into the fray. In the end the only thing they could agree on was that they had little they could agree on. Nice. That took only about six months to break up. Fun. A couple years after the dust settled, one senior partner moved across the country, and the other two went to two different firms. Bleh.
The Gangbangers usually cannot be forced to play nice. They will have to work it all out if one is in a hissy fit which happens all the time. Firms have all sorts of agreements involving divorces involving teams but these rarely work to make the exit strategy a smooth one. If everyone is pissed at the end, you will have done your job but then you will have a truckload of issues to resolve afterward. Somebody will be aggrieved and will want the Regional to fix your mistakes. Mostly, they will just sit on the sidelines and tell you that you are doing it all wrong but on the sidelines they will typically stay.
Here is a list of some symptoms you can watch out for that indicate trouble in paradise.
> Higher than normal team member complaints.
> Support staff turnover.
> One member of the team suddenly is your friend. A close and loyal friend. (This is a dead giveaway of an internal team problem as one will suck up to get what they eventually want.)
> Declining production.
> Someone out of the office an abnormally high amount.
> Breaking of furniture and/or throwing of tape dispensers or other office supplies.
Almost as hard as taking a team apart, is coaching a team to success. There are actually some teams that are willing to let you coach them. Not many though. The wirehouses have fiddled around with team coaching for years. They do some coaching. They do some personality testing which is usually akin to a Cosmo quiz rather than a useful tool: fun to read, has some elements of truth, and is generally useless. There are some free standing resources (independent coaches – who might bring a sense of objectivity to the party) and some funds with resources they can loan out. These free standing consultancies exist that make all kinds of sexy claims about how they can fix dysfunctional teams and how they can coach teams to elite production levels. The problem is that they are what Scott Adams of Dilbert fame calls “bungee” resources. They bounce in, make grand pronouncements, bounce out, and then leave you with the unenviable task of somehow reconciling their psychobabble with the real world. In the end: light beer. Tastes great. Less filling. But maybe worth trying out.
Breaking up messy teams is a no-win situation for the manager. But coaching them up can be a winner of a proposition. Nothing makes a producer feel better than if their W-2 goes up. If your firm is set up with the mentality that combining production will move all parties up the compensation grid, then hell yea, put them together. If they have piles of low ROA in their books, you can fix that too. But if you think you can take a high ROA book and have them grow it, you really only have one option: bring in a hard charging trainee who will bring new business to the party. Forget about making that senior producer bring in new accounts. They won’t or can’t do that anymore.
A particularly difficult proposition is the parent-child partnership. Dad is probably a twenty year vet who beat his brains out to build a million dollar book. Sonny boy only walks into the book and thinks it’s just that easy. Dad doesn’t get why the boy won’t cold call like he did for 10 years. Son thinks dad is just coasting toward retirement and doesn’t get the “new” world order. This is a case study worth exploring on its own.
It looks like there are a few commandments that make sense when dealing with teams:
1) Will there be more business if you put them together? If not certain – pass. 1+1 must equal 3 or more.
2) Can you get everyone to agree to a “pre-nup” in the event the partnership fails? If the firm has such an agreement – use it. If not, write one up and have someone other than you review it.
3) If this is a senior – junior deal, is there a clear plan for senior’s retirement? If not, try to get an outline of not a timeline.
4) If 3 is a “no”, is there at least a plan to shift pay to junior as senior wants to play more golf, spend more time with his mistress, and/or follow his true passion for watching butterfly fornication?
5) Do you have a PhD in psychology? No? Drink the equivalent amount.
In the end you will have to live with your decision. Or maybe the next guy who takes over your job from you.
Got any dysfunctional team stories? We want ’em. Email manageia2@gmail.com
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