G2: Building the Next Generation

PRAISE FOR G2: BUILDING THE NEXT GENERATION

"In his book, G2: Building the Next Generation, Philip Palaveev has done an excellent job addressing a critical element of a wealth management firm′s success beyond its founders. As our industry runs into a succession crisis, it′s necessary to hire, nurture, and retain experienced talent to serve our clients′ future generations. As our firm has experienced, an RIA needs to plan well in advance and take into consideration all the components outlined in this book. And to be a successful next–gen professional, or G2 as Palaveev calls them, there are important things to think about as one develops his or her career. Palaveev covers the spectrum from recruiting to managing to growing the business. He offers critical insight into the technical aspects of equity structure, ownership and governance, and succession."
Rob Francais, CEO, Aspiriant LLC

"Philip Palaveev has decanted the wisdom, experience and learned best practices of the professional firms of all kinds into a ′how to′ book for generational transition. He has expertly and practically explained the critical components of G2 development and transition. While this is focused on wealth management firms, any professional service firm could benefit from the lessons this book teaches."
Bob Bunting, Former CEO, Moss Adams LLP

"Philip Palaveev′s new work is a mission critical playbook for founders and G2 of financial advisory firms. He expertly bridges the gap between identifying the necessity of having a next generation of leaders and the practical implementation of developing them within an organization. Armed with industry data, research and years of hands on experience, he encourages founders to trust what they have built and inspires G2 to be worthy of that trust. Developing leaders takes time, energy, effort and commitment on everyone′s part; however, there is no better application of those valuable resources than growth of our people, growth of our firms and growth of our industry. This book is a manifesto on how to achieve all three."
Heather Robertson Fortner, Signature FD, Partner, Chief Compliance Officer and Chief Operating Officer and G2 Leader

Preface

Acknowledgments

Chapter 1 Who Are G2?

Defining G2

Developing the Next Generation Is Critical

Just Hiring Them Is Not Enough (But Start There)

What G2 Professionals Need

G2 Needs to Take Over Client Relationships

G2 Are the Future

Chapter 2 The Career Track

The Advisory Career Track

Non–Client–Facing Career Tracks

Progressing through the Career Track

Being Flat

Top Performers

Reaching the End of the Track

Chapter 3 Recruiting G2

Beginning with the End in Mind

Hiring Levels

Becoming the Employer of Choice

Advertising

Recruiting in Small Markets

Screening

Interviewing

Opportunistic Hiring

Experienced Hires

Chapter 4 Taking Over Client Relationships

What Is a Lead Advisor?

Qualities of a Trusted Advisor

Transitioning the Lead to G2

Chapter 5 How Advisory Firms Develop New Business

The Business Development Process

When and How Clients Act

Existing Clients as a Referral Source

Some Theories about Referrals

Other Referral Sources

Beyond Referrals

The Simple Mathematics of Reputation–Based Selling

Principles of Business Development

Chapter 6 Be a Business Developer

The Four Stages of Learning to Develop New Business

Solving a Puzzle

Finding Your Mentor

Learning to Ask Questions and Listen

Finding Your Specialty

Developing a Niche

Following a Disciplined Process

Be Persistent

Chapter 7 Managing People

Defining Management

Prioritizing Management and Communication

Accepting Responsibility

Providing Feedback

Dealing with Poorly Performing Team Members

Performance Evaluations

Being a Mentor

Chapter 8 Managing Up

Speaking Up

Getting Involved

Taking Responsibility for Your Team

Supporting Your Colleagues

Measuring Your Criticism

Managing Your Own Expectations

Chapter 9 Managing Yourself

Defining Balance of Life

Balancing Time

Dealing with Weaknesses

Thoughtful Communication

On the Value of Conflict

Looking at Your Own Plate

Chapter 10 Owner, Manager, and Leader

Defining Owner, Manager, and Leader

Management

Leadership

Chapter 11 Adding Owners: The Firm Perspective

Criteria for Ownership/Partnership

Admission Process

Adding Family Members as Partners

Laying the Foundation for New Partners

Tackling Buy–In Financing and Valuation

Onboarding Partners

Chapter 12 Buying Equity: The G2 Perspective

What Does It Mean to Be an Owner?

Key Questions to Ask

Should You Buy Equity?

The Characteristics of Equity

Understanding Your Ownership Agreement

Small Firms and Family Firms

Owner Compensation

What If the Ownership Agreement Isn t Right for You

Understanding the Valuation and the Price

Organizing Your Personal Finances

Beyond the First Purchase

Chapter 13 The Ownership and Governance Foundation for G2

Career Investment

Stability and Governance

Elements of Governance

Governance as a Function of Size

Reviewing Your Governance Model

Achieving Results

Chapter 14 Succession

Different Aspects of Succession

Internal Succession of Ownership

Finding the Motivation

The Big Transaction

A Large Number of Small Transactions

Passive Ownership

The Intermittent Transaction

Equity–Based Compensation

Profits Interest Options

Nonvoting Shares

Synthetic Equity

Mergers Facilitating Succession

Creating a Permanent Firm

Chapter 15 Keeping Up with the Industry

Being a Student of the Industry

Developing Your Industry Connections

Benchmarking Your Client Services

Learning Best Practices

Participating in External Training

Contributing to the Industry

Chapter 16 Conclusion

From G2 to G3

A Note of Optimism

Bibliography

About the Author

Index

PHILIP PALAVEEV is the founder and CEO of The Ensemble Practice, LLC, and a recognized expert on the management of financial advisory firms and teams. Palaveev also is a business owner who speaks from the perspective of having built and managed successful businesses. He is the author of The Ensemble Practice.