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Hosted by Financial Advisor Coach, Ray Sclafani, "Building The Billion Dollar Business" is the ultimate podcast for financial advisors seeking to elevate their practice. Each episode features deep dives into actionable advice and exclusive interviews with top professionals in the financial services industry. Tune in to unlock your potential and build a successful, enduring financial advisory practice.
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Welcome to Building the Billion Dollar Business, the podcast where we dive deep into the strategies, insights and stories behind the world's most successful financial advisors and introduce content and actionable ideas to fuel your growth. Together, we'll unlock the methods, tactics and mindset shifts that set the top 1 % apart from the rest. I'm Ray Schlaffani, and I'll be your host.
So should you stay or step aside? When founders face the CEO dilemma. know, recently I found myself coaching a group of firm founders and controlling owners, all of them grappling with one extremely critical question. Am I the right person to continue in the CEO role as our firm continues to grow and evolve? Or should I step aside? Each of these individuals had assumed the CEO role simply by default.
And as their firm steadily expanded and became increasingly complex, the day-to-day responsibilities required to run the business efficiently and effectively demanded increasingly sophisticated CEO-like skills. And many had reached a significant inflection and decision point. Was it time to hand over the reins to a professional CEO? Or should they lean into and develop those necessary skills themselves?
Wealth management firm founders often face this pivotal crossroads at client-wise, we call it the CEO dilemma. This decision point of whether to stay on as CEO or step aside to allow new leadership for the firm's continued future growth. This challenge mirrors something you've probably heard of called the innovator's dilemma. It's a management book about innovation written by Harvard Business School professor Clayton Christensen back in 1997. In his book,
Christensen describes how successful companies can fail by focusing too much on sustaining their current products and customers, making them vulnerable to disruptive innovations that target emerging markets or new customer needs. This dilemma is also tied to the concept of creative destruction. That's the idea that old models must give way to allow for innovation. Founders must balance their fiduciary responsibility in this industry to build a firm that endures
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while recognizing that they may not be the CEO to lead it into the future. So should I stay or step aside for the firm's long-term success? That is the CEO dilemma. It's a common predicament for many firm leaders in financial services as shifting from being a successful founder and financial advisor to becoming an adept CEO takes considerable work. And the duties of a CEO are often far removed from the reason many advisors got into the business in the first place.
which was to work directly with clients solving wealth challenges. I asked Liz Nesvold, who's the vice chair at Immigrant Bank, this question. She has extensive experience in deal consulting and &A work within the wealth management industry. She's played a key role in numerous high profile transactions, offering strategic insights and leadership that have shaped the growth and success of many well-known firms in our industry. What she said to me was,
A firm leader considers hiring a professional CEO or chooses to step aside when roughly 10 million in revenue is the benchmark. And she said, though, it's a directional call. She said to me, when you have an expanding business model, strong organic growth, and even plans for &A, it becomes crucial to focus on who are those key leadership roles that the leadership team needs to build out.
The decision should you stay or step aside also depends on the founder's timeline and their existing skill sets. So the decision should be tailored to all of these factors wrapped up in one. So in other words, it's not just simply do you stay or step aside, there's lots that goes into this decision making. Perhaps now's a good time to assess whether you've got the skills, the bandwidth and desire to continue on as CEO.
For larger firms, bringing on board a professional CEO may be the most effective way to position the business for sustainable long-term growth. So at ClientWise, we have this exercise we call the step down challenge. It's kind of an opportunity for leaders in high profile positions within their firms to really consider the what if scenarios. Most advisor entrepreneurs start out by doing everything from finding and advising clients to
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hiring and firing staff and managing payroll. And over time, this jack of all trades mindset gets deeply hardwired, creating a tendency to take on more and more. So at least once a year, we recommend firm leaders undertake this step down challenge. And here's how it works, it's three simple steps. First, identify all the things you're doing, the activities, the decisions you're making, the responsibilities you handle.
And that includes all the clients for whom you may still serve as a primary advisor. Second, assess how difficult it would be to relinquish each of these. So what could you walk away from tomorrow? You're doing it, probably don't need to be doing it all. You've already got team members in place to do that. Which will be moderately difficult, taking less than a year perhaps to give up. And which will be very difficult, requiring anywhere from one to three years or more to transition.
So now you've identified the activities, decisions, and responsibilities that are like in your wheelhouse. Second, you've assessed the short, intermediate, and long-term nature with which to relinquish some control. The third is, with this complete list, now build a schedule. Start outlining when you might step down from some of these duties and decisions, and even clients, and who will step up. This assessment now helps you think about who you've got to train and develop, or perhaps even hire.
so that they can step up and take the reins. By the way, this is a performative opportunity and extraordinary learning for the next generation leaders in your firm. So by stepping down from these specific responsibilities and decisions, you've created some space for others to step up and learn, fostering leadership development and effectively enabling your firm to function without relying simply on you. It's a process that creates space for the essential evolution from independence
to interdependence, building an enduring firm. Ultimately, this exercise is required. There's something else though we've learned along the way by coaching high performing leaders in the CEO role. And this was a big decision when I had this group of professionals in our office and we were having this conversation is that there's an emotional journey to stepping down. It can be really complex emotionally for any founder or controlling owner. Many have found that they've built their firms from the ground up.
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and their identity and self-worth often profoundly is tied to the business's success. Even from the day-to-day operation, stepping away can bring up feelings of loss, uncertainty, or even fear. Will the firm still thrive without you? And how will you find fulfillment in your next chapter? Well, these are all valid concerns, and it's important to acknowledge that stepping aside from being CEO is not just a strategic decision,
but an emotional one. Founders may feel deeply attached to their firms, often considering them their life's work. The challenge is to separate personal identity from professional roles and recognize that stepping down from a leadership position does not diminish one's contribution or legacy, but in fact, it can be a sign of growth, both personally and for the firm. Reflecting on what you genuinely want in your role beyond the CEO title,
can help guide this decision. Consider all the aspects of the business that bring you the most joy and fulfillment and envision what your next chapter might look like. How will you continue to add value in new and different ways? External advisors or coaches can be critical in this emotionally charged transition period. When we were coaching this group of advisors I mentioned earlier in today's episode,
We found that this outside in perspective was valuable in helping each of them separate their emotion from the logic and then think strategically about the best path forward. A good business coach can guide you through identifying your personal goals, assessing your readiness to transition and pinpointing the skills needed to grow into or step aside from that CEO role. Executive coaches, especially those here at ClientWise are well-trained to help founders
work through the emotional challenges of relinquishing control, and they can provide a safe space to explore the fears and identify all the limiting beliefs, if there are any, and create strategies for a successful transition. Whether developing the necessary skills to evolve into a professional CEO or finding fulfillment in a different role within or outside your firm, a real coach can help you confidently navigate these uncertainties.
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External advisors can also assist in identifying a potential successor, whether internally or externally, helping ensure your firm is positioned for continued success. This external support can be instrumental in fostering a mindset shift from viewing stepping down as a loss to perceiving it as an opportunity, the firm's next growth stage and your own personal evolution. So to build a genuinely sustainable firm,
you must commit to shifting from being the lone decision maker, we call it at client wise, the lone ranger, to a transition of fostering an environment where the team works interdependently. And interdependence requires a great deal of mutual reliance with each team member assuming responsibility for not only their individual tasks, but also the collective outcomes of the business. When you embrace this concept of interdependence,
You foster this culture where everyone contributes to decision making, problem solving, and innovation. It's this necessary shift that both relieves the pressure on you as the leader and empowers your team to grow and take ownership of the firm's success. As a founder or CEO, one of your most important tasks is to build a team that can eventually take on the responsibilities you currently handle.
This means delegating responsibilities and committing to developing your team's leadership skills, fostering collaboration and encouraging mutual accountability. Leaders who embrace interdependence create a culture where team members not only rely on one another, but trust one another, support each other and work toward these common goals. By stepping down from specific responsibilities and decision-making and allowing others to step up, you create
this environment where the firm can thrive without any dependence on one individual. This is why the step down challenge I referenced earlier is so important to take on at least annually. When teams operate in an interdependent manner, leadership naturally becomes distributed. Team members take on leadership roles, contribute to the decision making, and demonstrate their capabilities in ways that might not be possible at a more hierarchical or independent firm.
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It recognizes and creates this fertile ground for leadership development. I often say surrender the need for independence for interdependence. And as team members work collaboratively towards shared goals, they learn to lead by example, collaborate to solve problems and make decisions, and take initiative and innovate. To fully embrace interdependence and build an enduring firm, you're going to want to make an earnest investment
in the growth and development of your team members. One of the most effective ways to achieve this is by creating written professional development plans for each employee and even yourself. These professional development plans will help provide a roadmap for continuous growth, align individual development with the firm's long-term goals, and encourage team members to take ownership of their own professional journeys. By the way, those that take that kind of ownership
may be those internally that are ready to step up into more professional leadership roles within your own firm. By regularly reviewing and updating these plans, you'll ensure that team members are growing in ways that contribute to the firm's success while also preparing them to take on greater leadership responsibilities. Ultimately, your goal should be to build a firm that will endure far beyond your tenure as CEO, not just for the long-term sustainability of the business,
but also to ensure a fiduciary continuity of care for current and future clients. Whether you continue in the CEO role or hand the reins over to a professional, embracing interdependence and building a robust and capable team will benefit all parties. So here are a few open-ended future oriented coaching questions for this particular episode. With each episode,
My intent is to make these coaching questions thought provoking and helpful as you reflect on the information that we've discussed so far today. Assessing readiness for transition. So as you think about the growth and complexity of your firm, what specific indicators tell you it may be time to consider transitioning out of the CEO role and how will this impact the firm in the next three to five years? The second question is about exploring leadership evolution. What skills
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or leadership qualities do you need to develop if you choose to remain in the CEO role? And how would mastering these skills reshape your vision for the firm's future? The third question around delegation and empowerment is which key responsibilities do you find most challenging to delegate? And what are the possible long-term effects of holding onto them? And how might delegating these tasks and decisions influence the firm's growth?
and leadership development. Okay, number four, the impact of stepping down. If you were to step down from the CEO role, what would you want the firm to look like one year later? How do you imagine the team would evolve in their roles and responsibilities? Number five, what opportunities exist in your firm for emerging leaders to step up and demonstrate their leadership ability? How could you create an environment
encouraging this growth over the next few years even more so than where it is today. Number six, around this culture of interdependence, what steps can you take to shift your team more so from dependence on you to fostering a culture of interdependence and how would this shift benefit the firm's long-term success and innovation? On succession planning and firm loyalty, how do you envision the firm thriving beyond your tenure as CEO?
and what factors must be in place to ensure a seamless transition and sustainable success. And number eight, last question around professional development and growth. How can you incorporate professional development plans into the fabric of your firm to support continuous growth, including your own professional development? Again, these questions are designed to help founders and CEOs consider deeply the future of their firm, their leadership,
and the development of their team as they decide whether to stay or step aside as CEOs. Suppose you decide to embrace the growth of your firm as CEO. Well, in that case, it's essential to craft a comprehensive professional development plan, actively seek ongoing feedback from trusted colleagues and executive coaches, and fully commit to stepping into the role of a visionary leader ready to evolve alongside your firm's expanding needs. If you're a member of a team,
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and you're witnessing the firm's leader grapple with this topic, please share this episode with them. And if you're a leader who's in transition, working more interdependently will foster this culture of growth and innovation, and you'll help the founders and controlling owners of your current firm face head on the CEO dilemma. Well, thanks for tuning in and that's a wrap. Until next time, this is Ray Sglafani. Keep building, growing, and striving for greatness together.
we'll redefine what's possible in the world of wealth management. Be sure to check back for our latest episode and article.