Whenever a financial advisor is starting a new firm – whether it is because they are breaking away to the independent channel, or simply just starting a new firm from scratch – there’s a lot to deal with, but one seemingly simple question that tends to stump most advisors is what to name their new advisory firm. Of course, clients will still be hiring you – the financial advisor – because of your skills and capabilities, not your firm because of its name. But nonetheless, the name represents the identity of the firm, and the brand that you will build. Which raises the question: if you are the primary advisor, should you simply name the advisory firm after yourself? And if you plan to build an advisory business beyond yourself, does that mean you need to avoid having your name on the door of the firm?
In this week’s #OfficeHours with @MichaelKitces, my Tuesday 1PM EST broadcast via Periscope, we discuss when it is good idea to go ahead and name your advisory firm after yourself, the scenarios where it can create challenges, and why ultimately whether your advisory firm grows into a business or not is much more about the mindset you have for your business, than whether you put your name on the door (or not)!
From the perspective of getting clients and building business, one of the greatest challenges we face in financial planning is that we sell an intangible: “advice”. Financial advice isn’t something the prospective client can pick up and look at in a store, and consequently he/she has to look to other intangibles to decide whether to work with you as a financial advisor. Large national firms can rely on being a recognized brand to attract new clients, but most advisory firms are too small to rely on national branding alone. Instead, they get their clients by building a personal relationship with them, to become someone the client knows, likes, and trusts. As a result, most solo financial advisors simply put their own name into the advisory firm name… as in the end, if you’re John Smith, and you call your firm Smith Financial Planning, it simply helps connect the consumer to you!
Indirectly, however, this actually illustrates the second key issue when it comes to naming your advisory firm, and whether it’s a problem or not to name it after yourself. The question is: what are you really trying to build? Are you trying to build a real, standalone business? Or is your business simply an extension of yourself? If your firm is meant to be founder-centric, then by all means call it Smith Financial Planning. But if you want to build a business that is bigger than just yourself, do you need to have a more “generic” name? The prevailing view out there is “Yes”, but the reality is that there are a lot of big businesses named after founders, that have had no trouble being successful even though the founder’s name is still the company name – including Ford, Dodge, Chrysler, Deloitte & Touche, Merrill Lynch, Morgan Stanley, Edward Jones, Raymond James, and Charles Schwab, just to name a few. Ultimately, the founder’s name wasn’t just about the founder, but became a brand that represented the company itself… and in most cases, the company named after the founder has already outlived the founder themselves!
What really distinguishes companies that grow beyond their founders into businesses is not whether the founder has their name on the door or not, but whether the founder has a mindset to build a business beyond themselves. In point of fact, many advisors who do want to build big businesses ultimately create a name for the business that is not their own… but not because it’s necessary to build the business and attract talent. It’s simply that the naming decision reflects what is already their mindset to build a business. By contrast, many/most advisors who name the business after themselves have a desire to create an owner-centric practice in the first place… and so naming after themselves is only natural (but it is an outcome of the mindset, not a cause of whether the business grows or not!).
There’s also the common question of whether a founder-named business limits its ability to be sold in the future… and whether an advisor who wants to sell the firm someone needs to not have their name on the door. But the reality once again is that the answer to this question comes down to mindset – in this case, the mindset of the buyer, and what he/she is looking to do. Does the buyer want to build their own owner-centric firm? If so, then they may want their name on the door, and it is possible a generic name will make that transition easier. But if the buyer is interested in buying and growing a business, the reality is, the buyer buys the business, and its brand, not whether the founder’s name is on the door. For instance, Edelman Financial has been bought and sold more than once over the past 20 years. It still has Ric’s name on the door, but that name is not a limiting factor when buying an institutionalized business… and in fact, the brand is the asset to the buyer!
Ultimately, the fundamental point here is that what really matters is not whether the founder’s name is on the door, or whether there is some neutral name instead. But rather, what matters is your mindset as an advisory firm business owner. Are you trying to create a business that’s bigger than yourself? Or are you trying to create a practice that’s built around yourself? For many who are trying to build a business bigger than themselves, they will often pick a neutral name, but it’s really not a necessary factor for success. Instead, it is simply a signal of their intent. Because in the end, if you want to build a business that’s bigger than yourself, you can absolutely do it… “even if” your name is on the door!
source https://www.kitces.com/blog/best-name-financial-advisory-firm-after-founder-yourself-or-made-up-name-on-door/?utm_source=rss&utm_medium=rss&utm_campaign=best-name-financial-advisory-firm-after-founder-yourself-or-made-up-name-on-door
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