Expand Your Definition of Ownership

In the last five years, hundreds of financial professionals have taken a different approach to advancing their careers and become minority owners in existing businesses. Despite this, founders and successors alike may hold biases that cause them to overlook suitable candidates and sound opportunities.

How one defines ownership frames the assumptions they make when envisioning the path forward: some next-generation advisers are doggedly determined to relive the experience of the early founders in order to prove their mettle; others rule out ownership because they don’t want the headache of running a business.

Does ownership demand sacrifice, or does it come from leadership? Is the most important attribute the ability to build something from nothing, or the skill to improve and refine that which is already there?

Taking a limited view can block viable possibilities. Expanding your definition of ownership can open your path forward—and be the key that solves the succession problem.

Bloom Where You’re Planted

At MiyeWire LLC, a boutique planning firm in Reston, Va., ownership means formalizing a shared goal and identity.

“It was sort of like a defining-the-relationship conversation,” adviser Maynur Karluk, CFP®, laughs when looking back on her earliest succession conversation with the firm’s founder, Miye Wire, CFP®. “It was like—it’s official!”

As a kid, Karluk had the seed of entrepreneurialism within her, but life had some journeys and detours in store for her first. Katelyn Murray, who joined the firm as its client services director in 2015 and became a shareholder at the same time as Karluk, always had the notion of consulting in her career sights. Yet neither anticipated or sought ownership when they joined the firm.

Wire had been actively searching for a continuity and succession solution before she recognized her employees as candidates. The G2s (potential successors) already filled complementary roles under her leadership.

Wire tries to find what people are good at, so she can apply their skills to their best purpose. As an example, Murray—who now serves as the firm’s director of marketing and operations—says, “Miye realized Maynur didn’t love the marketing aspect of the business, but I did. By having me take over the client experience and marketing strategy for the business, I could clear Maynur’s plate for things that suited her better.”

The firm’s new ownership structure affirms the women’s existing partnership and provides a long-term reward for their continued collaboration and success.

All three advisers are licensed and capable of serving clients. And although they have a specialized focus in the business, they each participate in the client experience in different ways. A business benefit to expanding the ownership base is that the firm can remain boutique size and still be able to tell clients what happens to them if something happens to one of the team.

“It gives trust and peace of mind to the clients,” Karluk explains.

Now, as minority partners, Karluk and Murray have embraced the opportunity to hone their craft before being charged with the full responsibility of ownership. They acknowledge the advantage of being able to build on their founder’s achievements and share the desire to take that success to higher levels.

Honoring a Legacy

Other teams have come to recognize the value of investing in an existing firm.

“We were fortunate to walk into an established business, with established relationships, and a good reputation in the community,” says Lindsay Carpenter, who become a shareholder at Carpenter Financial Services in Johnstown, Penn. She and her brother, Dean, have a plan to buy the business from their father over time. For them, ownership means continuing the family legacy.

It wasn’t always obvious that either of the siblings would enter the family business, much less become successors.

“At first, I didn’t plan to come back to Johnstown,” Dean says of his early career plans. “Plus, I graduated during the downturn, and financial planning didn’t seem like a good field at the time.”

Instead, both Dean and Lindsay went to work for Fortune 500 companies before returning to their hometown. Even then, their status as successors wasn’t a given.

“I returned with an open mind,” Lindsay says, “I didn’t assume I’d be an owner.”

Working around the country created a valuable outside perspective on “earning your keep” in a big business. Even so, as the siblings started to think like owners, some things changed.

“As an employee, you have one sole focus—your job,” Dean says. “An owner needs to think about the big picture.”

In Dean and Lindsay’s position, that means being proactive about the changes necessary to capture the next generation of clients; among other things, they’re thinking about ways to improve the company’s technology and marketing.

The family business, which was founded in the 1950s, had already been through one succession plan. Sam Carpenter took over the business from his father without a written agreement and experienced some stumbling blocks along the way. When Sam started the conversation with Dean and Lindsay, they had a formal, sit-down meeting and called FP Transitions. A written plan was important to everyone.

“Having it mapped out helped us have clear goals,” Lindsay says. Dean adds, “We don’t want to lose sight of what we want to achieve for the business.”

There’s an added benefit to buying into a company with another young partner—something Dean says he didn’t find as an employee of a larger firm: ownership creates alignment.

“Lindsay’s not my competition, she’s my ally,” he says. Having a mapped-out plan keeps everyone working together.

Speaking from Experience

For next-generation planning professionals who want to include ownership in their career plans, Karluk of MiyeWire LLC recommends finding the right match and thinking big picture: find the balance of goals, philosophy, and approach to business. And don’t let wishful thinking cloud your view. When you ask about ownership, “Really listen to their answer,” she advises. “Some people are shut off from the idea; recognize that and move on.”

Lindsay Carpenter acknowledges that taking the ownership “challenge” may be daunting, but it’s also enriching—personally and professionally. Becoming an owner changes your mindset from personal responsibility to broader accountability to the business, clients, and employees. It’s a lot to take on. But at the same time, if the opportunity for ownership is there, Carpenter encourages advisers to take it.

Ownership Is Earned

However you define it, ownership is a reflection of the company culture. Whether you build it, buy it, or become a shareholder, advisers across the spectrum should agree that ownership is earned. With a well-designed ownership structure, all shareholders will know the outcomes if the team succeeds, as well as have steps to take if they fail. There is no single predetermined path.

An ownership track may not be the right choice for everyone, and the path forward may not be clear. If you’re committed to your career as a financial adviser, however, it is valuable to keep the possibility of ownership on the table. 

Christine Sjolin is vice president of strategic development and operations at FP Transitions.

Tips for Achieving Ownership

If investing in ownership is a goal, keep a few things in mind:

Bloom where you’re planted. Many successors didn’t start their jobs expecting ownership. They were resourceful and committed professionals who made the best of their situation—as they would make the best of any situation.

Think big picture. Owners at any stage of a business need to think broadly about the practice’s needs. Show that you’re ready for the transition by acknowledging the complexity of owning a small business and presenting solutions where you find weaknesses.

Take pride in your work. Ownership is a state of mind. Exhibiting ownership qualities as an employee will be recognized by a conscientious employer. There must be a business case for extending ownership, and the most obvious benefit to a G1 (current ownership) is retaining you as a valuable contributor.

Don’t be afraid to walk away. Whether you’re on the ownership track or not, you’re investing your energy in this career. Fit is the most important element of any satisfying relationship, personal or professional. If your boss just won’t engage in a conversation about ownership, find another owner who will.

Get help. When you’re ready to step into the ownership circle, get it in writing. An experienced guide can help both sides understand their rights and obligations as shareholders or partners in the business, and record goals and milestones along the way.

—C. S.