Cultural fit is often cited as a factor behind the success or failure of business acquisitions in the financial planning industry. Decisions on whether or not to hire a particular individual as a new staff member are also based in part on an assessment of how well that person would fit in with the existing team. The personality of individuals working in an organisation - and the personality of the organisation itself - can have a significant affect on the success of the overall operation.
Earlier this year, WHK Group subsidiary Prescott Securities acquired Venture Wealth Management, the Perth-based financial planning operation of Lehman Brothers, after the United States investment bank wound back its Australian private-wealth business.
Part of the acquisition's attractiveness, according to Prescott Securities chief executive officer David White, was the cultural alignment between the businesses.
Prescott Securities has 140 staff members in offices around Australia, including 37 advisers servicing private clients, superannuation funds and a number of charitable institutions.
White says that to determine whether businesses will fit together it's important for each party to understand the way the other advisers behave and what their aspirations are.
"It's an approach of determining, in discussing how they do business, whether it strikes a chord with your own philosophy," he says.
"That's something that can only be gauged by talking to people and understanding the way they run their business."
These discussions should uncover the process by which planners give advice, what they believe in, the types of investment mix they recommend to clients, their capacity to understand clients' needs and their ability to come up with financial plans that suit these clients' longer term requirements.
White believes advice businesses should always aim to develop a culture in which staff members think in a similar way.
Team members should be dedicated to giving the best service to clients by forming strong relationships and taking a long-term view of their investments even if this is difficult because of market volatility.
But a cultural fit is broader than an agreement on the way advisers should interact with their clients. White says it is also critical that people who work for the planning business are keen for it to be sustainable and profitable over time.
Tim Browne, general manager of Commonwealth Bank-owned Financial Wisdom, says the appetite for change within an organisation is another element of its culture that managers need to consider in order to run their businesses successfully.
There have been significant upheavals in the financial planning industry over the past decade, ranging from the introduction of new regulations to shifting consumer attitudes and the role of financial advice.
Planning businesses have to adapt quickly just to keep up with the requirements.
"My starting point is always that the people we have today are people who can come on the journey because they have a proven record of adapting successfully to change," Browne says.
A willingness to try new approaches to business will be an important attribute for Financial Wisdom advisers to possess in the coming months. Browne is in the process of overhauling the dealer group's business model in consultation with advisers.
The aim is to improve business efficiency and ensure the advisers in the network have the expertise to deliver quality advice to its mass-affluent client base.
Browne says advisers have been supportive of the changes he has proposed. "That's not to say that there hasn't been some difficulty from time to time, but our business has an appetite for success, and change is part of that," he says.
Browne agrees with White that for a financial planning group to operate effectively, the advisers need to have a similar perspective on the way advice should be delivered and how client service should be provided.
"I think there are practical questions to ask to see whether you share a similar philosophy on advice or share a similar philosophy on service," he says. "Because we're an advice business, they are fundamental questions to ask when it comes to culture."
Picking the right team in the first place is at the heart of creating a culture that suits both the business and its owners.
White says it is possible for business to import positive cultural aspects from firms or individuals who join along the way.
"Often those things might be add-ons or enhancements to the process," White says.
"Ultimately you really want an advice process that's going to be efficient in providing consistency in advice, which is very important.
"If you have a large number of advisers on the team, you don't want a whole lot of different ways of approaching things. Ideally, you want a process which provides consistency in its strategic approach to investment selection."
To maintain a positive and consistent culture, White says advisers and other staff members should be kept informed constantly of the owners' and managers' plans for the business.
Open communication about the financial performance of the organisation is also important so that employees understand the context for any business decisions that are made.
Advisers and paraplanners should be kept up to date with the latest changes to legislation and any other rules that may affect the way they do their jobs. Provision for professional development is essential, White says.
Prescott Securities pays close attention to staff training and development. It also conducts annual staff surveys to give managers an idea of how well the organisation is meeting its employees' needs.
White says the business managers are always striving to improve scores on these surveys, which address issues such as work-life balance, training and opportunities for individuals to progress their careers in the organisation without having to move to a different business.
Policies are in place to ensure that when vacancies come up, existing staff members are favoured for promotion above external candidates.
"You want your staff to think that this is a great place to work," White says. "That's the concept."
Fairfax Business Media
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