Lining Up in 2016

Can your organization thrive if its strategy doesn’t align with operations? Maybe. Maybe you’ll be successful despite this misalignment; maybe for a short time at least. For a short time, if you have a stellar pool of talented advisors and leaders, loyal clients, and awesome products and services, then the misalignment can be masked for a while.

Eventually, however, top talent will recognize the disconnect and leave–or worse, become disengaged, potentially leading to desertion by clients and customers. Likewise, your services and products may become stale as your staff and customers no longer care enough to drive continuous improvement and innovation. From small businesses to Fortune 50 companies, the result is the same: the disconnect between what a company says it does or stands for and what it actually does on a day-to-day basis can lead to irrelevance in the market. A recent report by PriceWaterhouseCoopers provides evidence of a financial impact as well:

[There’s] a strong correlation between alignment and key financial performance metrics. The respondents who placed in the top quarter of our alignment model assessment outperform the other organizations in EBITDA margin, whether you look at results for one year, three years or five.

What does misalignment look like in financial services? Throughout the past year, we’ve talked to financial services experts, leaders, and product developers about the challenges in this industry. Here are a few of the challenges that experts have shared with us, and a few thoughts on how to equalize strategy and operations:

1. Trying to demonstrate the value of the personal relationships your advisors have with clients, but not quantifying or measuring value. Demonstrating the non-investment-related value of your services and products is critical, including how well your advisors can personalize the experience, demonstrate their expertise, and empathize with their clients. Does your firm measure advisor success over time, or client satisfaction in the areas that matter most? Firms that do this successfully, and improve where necessary, will rise above the commoditization within the financial services industry related to investment management fees.

2. Having leaders that want to reach the mass affluent, but advisors that want to focus only on high-net worth and greater clients. It is estimated that the mass affluent control approximately $7.5 trillion in investable assets, but most firms are targeting only those clients that  meet a high minimum based on the assumption that the high minimum justifies the time and effort of providing services. Instead, firms that are thriving are finding ways to address the needs of the mass affluent by finding clients that have the propensity to build wealth over time.

3. Needing advisors who will succeed and thrive but relying on unscientific methods for recruitment and selection. Financial services leaders consistently share with us that they are struggling to hire new advisors that not only have the requisite knowledge and skills in financial services but also that have the ability to manage the personal relationships that are a critical part of being  an advisor. Firms relying on academic indicators or on unstructured interviews may continue to struggle to find top talent; including scientific and efficient selection methods can help drive business success, but requires a change in how the organization’s  human resources function operates.

As a leader within your company, perhaps you have seen your own version of misalignment and are already focused on addressing it. If not, perhaps 2016 will be the year you conduct your own gap analysis between your vision and strategy and what’s going on in the day-to-day of your organization.

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