What separates successful leaders from the rest of the pack? Networking - "a tissue of personal contacts to provide the support, feedback and resources needed to get things done," according to a widely read 2007 study by Herminia Ibarra and Mark Hunter in the Harvard Business Review. The most efficient technique for getting things done in your own practice may well involve joining a study group.
One financial industry veteran, Charles Haines Jr., a CFP who is CEO and president of Kinsight in Birmingham, Ala., defines study groups as "the formalization of the networking process with colleagues in whom you have a lot of trust and respect." Haines, a member of the prestigious study groups Alpha and 20/20, believes it is no accident that, when conferences are evaluated, participants tend to rate networking among the top benefits. "Study groups are very important to our business at Kinsight," he notes.
Marilyn Capelli Dimitroff, CFP, president of Capelli Financial Services in Bloomfield, Mich., goes one step further. "I can't imagine running a practice without a study group," she says. "I would not be where I am today without being part of the Capstone Group." Capstone acquired its name from the Conference of Advanced Planners, a subgroup of the International Association for Financial Planners, one of the associations that merged to form the FPA.
Capstone was formed over a dinner involving members of the Conference of Advanced Planners and Financial Planning columnist Bob Veres at an IAFP conference in 1996. Except for Veres, the group has been together ever since. Currently, the 12 members of Capstone represent more than 1,200 clients in 10 states with more than $2 billion of investment assets and untold personal net worth.
The 800-pound gorilla in the study group world may be the aptly named Alpha Group. Founded in 1990, its 19 members form a veritable who's who of industry leaders and represent more than 5,000 clients with $10 billion of investment assets. Alpha includes prominent nonfinancial advisors like Don Phillips, president of fund research for Morningstar; Mark Tibergien, CEO of Pershing Advisor Solutions; and Mark Hurley, chairman and CEO of Fiduciary Network. Haines quips, "These three members give us practitioner members an objective perspective on ourselves."
ENTER NAPFA
If study groups are the formalization of the networking process, NAPFA has formalized the study group process itself. In 2006, NAPFA began encouraging and supporting study groups at the request of its members, a high percentage of whom are solo practitioners. Well aware of the existing peer support groups in the financial community, Nancy Hradsky, a former TV producer who is now manager of membership and business development for NAPFA, separated study groups into two categories.
The first category tends to involve informal local gatherings where ideas are exchanged among members who compete in the same market. There are about 50 such groups registered with Hradsky's office.
The second category, management information exchange (or MIX) groups, consists of geographically diverse members who are more willing to share intimate details of their own practices. There are 25 MIX groups, and assembling them can be a challenge. "It feels like putting together arranged marriages," Hradsky jokes. She helps prospective members find the right balance of similarity and diversity by collecting data on an array of criteria, such as:
* The firm's practice model (solo practitioner, an ensemble firm of a few advisors, or a larger practice).
* The experience of the advisors (one to five years in the industry, five to 10 years, more than 10 years).
* Geography (distance can help to alleviate concerns about sharing information with competitors).
* Fee model (assets under management, retainer, hourly, by project).
* Target client investable assets (less than $1 million, $1 million to $5Ã?â,?â?°million, more than $5 million).
Recalling Groucho Marx's famous quip - "I never want to be a member of a club that would have me for a member" - Hradsky discovered that prospective members often want to be in a group whose other members have higher AUM amounts than their own.
Some groups are serious entities. The Capstone Group has formed a limited liability company with articles of incorporation and published criteria for new members. Capstone meets three times a year and usually brings in two outside speakers per meeting.
The last meeting featured a presentation on the federal health care law. At each meeting, three members present their current business plans for critique and feedback from the group.
CFP Faye Doria of Financial Guidance Associates in Dover, N.H., a member of the Garrett Planning Network, belongs to a group comprised primarily of hourly fee planners, none of whom have any assets under management. Aside from this commonality, the group strives for diversity in gender, age and experience. Members of the group, named MIX 13, range in experience from five years to 30 years and in age from 30-year-olds to 60-year-olds.
In 2007, MIX 13 members got to know one another by critiquing fellow members' websites and marketing materials. They have now moved on to sharing internal financial statements. While MIX 13 has met in conjunction with NAPFA conferences, its primary practice is to hold monthly conference calls with assigned topics; there are rotating presentations on a subject and members take turns in chairing the calls.
Prominent groups like Capstone often attract sponsors to underwrite the cost of their meetings. Outside speakers are often happy to make pro bono presentations in order to find out what industry leaders are thinking and to have a sounding board for product ideas.
SUCCESSION PLANNING
Sharing ideas is only part of the usefulness of study groups. According to Haines, the 20/20 group has become part of his firm's succession planning process.
As Haines quips, "If I die, can you help me keep Humpty Dumpty together?" The answer is yes. Group members have agreed to help out if one of them dies prematurely. The group has even formalized a process to help each firm develop its own next generation of leadership.
"We have created subgroups of our study group composed of the future leaders within each firm," Haines explains. "These groups meet twice a year and generally manage themselves with minimal guidance from the 20/20 group." At different times, these subgroups have included a financial planning-centered group, an investment-centered group and an operations-centered group.
Capstone has a less formal, but similar process. "Many of us have agreements with others in the group to act as advisors to their business and estate issues in the event that one of us dies unexpectedly," Dimitroff says,
She describes another practical benefit that grew out of the Capstone group. In 1999, her co-members were considering the idea of going paperless. As a group, they hired a consultant to help them interview software firms.
The group decided on Worldox, an electronic filing cabinet into which they could scan all of their client documents. The consultant helped them organize the structure of the electronic filing cabinet - an ordeal in itself, Dimitroff recalls. After this process succeeded, the firm applied the same methodology to the search for a common client relationship management system and settled on Goldmine; some members have continued to use that system, while some have not.
Zero Alpha Group, an international study group with nine members, represents more than 5,800 client accounts and $8 billion in assets under management for its eight domestic partners. The group pays a consultant, CFP Katie Cullen in Minneapolis, to be the executive director.
According to Cullen, the group has hired a human resources consulting firm to create a virtual workspace to include industry best practices and proprietary information around compensation, recruiting and retention, organizational development, performance management and leadership development. This online tool is designed to ensure consistency and collaboration across the group.
INGREDIENTS FOR SUCCESS
As a member of two study groups for many years, Haines has advice for planners who are thinking about forming a group, whether through NAPFA or independently. His ingredients for success include:
* Plan your face-to-face meetings separate from other professional conferences, if possible. Mixing the two usually drains energy from the study group.
* Schedule your meetings more than a year in advance and outline the agenda for the next meeting at the current meeting.
* While diversity is a plus, form your membership around advisors who are in the same stage of their careers.
* Work on candor and trust in the early stages of the group's development and hold the group time as sacred. That means no emails or calls during meetings.
* Assign homework for every meeting, including reading an outside speaker's book in advance.
* Have an active recruitment process to bring in new members.
* Hold the meeting in a city where a member is located and visit the firm and meet its key players.
* Park your egos at the door.
* Reassess your purpose and mission statements on a regular basis.
Other tips for successful study groups might be gleaned from Ray Sclafani's 12 Tips for a Successful Study Group in the July/August 2011 issue of the FPA's Practice Management Solutions.
Both Haines and Dimitroff remain curious about the exact number of financial advisor study groups in existence. "When I chaired the CFP board in 2009, numerous people asked me how to find and join a study group," Dimitroff says.
One thing is certain. Study group members tend to be loyal. "I feel like I have 11 business partners," Dimitroff enthuses. Doria adds: "As a solo practitioner, I see my co-members as my colleagues. I need someone to question my own assumptions. Even experienced planners need their assumptions questioned from time to time."
Jim Grote, a CFP in Lousiville, Ky., is a Financial Planning contributing writer.
