The four keys to business survival

By Jayson Forrest - Managing Editor  - IMAP Perspectives

Building the right foundations for any advice business will help drive success through these challenging and unprecedented times. Jonathan Hoyle talks to Jayson Forrest about the key drivers that support growth in a high performing business.

Most successful advice businesses consistently do four things to build the right foundations in their business and use these as a springboard for innovation. They are:

• Making sound decisions and executing them successfully.
• Having a strong differentiated position.
• Planning for sustainable and profitable growth.
• Encouraging and driving a culture of ownership.

They are the same four key drivers that have helped shape the continued growth of Sydney-based advice business, Stanford Brown.

Punching well above its weight, this business - which took out the Licensee Managed Account category at the IMAP Managed Account Awards in 2018 - has a pedigree stretching back 30 years, with a long track record of advice excellence.

Ask Jonathan Hoyle - the Chief Executive Officer at Stanford Brown - for the secret to the firm’s ongoing growth and he says it all hinges on effective decision-making and executing these decisions successfully.

Unlike a lot of small and medium-sized businesses in the financial advice sector, which tend to be partnerships consisting of a small number of partners, where decision-making tends to be done on a collegiate and consensual basis, Stanford Brown has always run its business as a company, with a clear decision-making line of command.

The business utilises two principal decision-making bodies: the board and the executive team.

The board consists of five people - three who work within the business and two external non-executives. From a decision-making perspective, the board’s responsibility is around business strategy and holding key executives responsible for setting strategy, challenging that strategy and delivering on the strategy.

“Once a year, we have a deep-dive brainstorming meeting, with the eight shareholders, for two days. From that meeting, the executive team then writes the strategy plan for the next 12 months and the next five years. That strategy plan contains the numerous action items for the business moving forward.”

Jonathan adds that the responsibility for actioning the strategy plan is delegated to the management group, which consists of the CEO, COO, the Head of Advice and the Head of Client Services.

“The management group meets regularly and it is tasked with executing Stanford Brown’s business plan, including prioritising what gets done and when.”  

Jonathan believes what has helped Stanford Brown with its decision-making process is its philosophy to run the business as though it was twice the size it currently is. However, Jonathan concedes that this philosophy does mean that Stanford Brown deliberately runs its business with a lower margin than it could have, because it is focused on revenue growth more than EBIT margin

Another key driver for business success is having a strong differentiated position from that of your competitors, which Stanford Brown has mastered over its 30 years.

Stanford Brown positions itself as a private wealth business, where it provides a one-stop service for its clients’ financial services needs, including money management, financial advice, accountancy, insurance, property, estate planning, and assisting clients to raise money when required.

“Within our private wealth business, we have a very focused client niche on executives and small business owners, who are approaching life after full-time work. These first generational wealth clients are typically in their early 50s and are contemplating the full range of possibilities that are open to them once they leave their 60-hour a week job,” Jonathan says. “That is a very niche client who we target for our business.”

To ensure that Stanford Brown consistently delivers on the expectations of its high-end clients, it annually surveys its client base. This survey is essential in understanding how clients think of the business and the services it provides.

“Last year, we invited about 600 clients to give us a net promoter score and we ended up with over 300 responses. We called each and every one of these clients to better understand their feedback in more detail.”

From that granularity in feedback, Jonathan says the business is better able to understand what services it should be in and not be in.

“It’s not about technology solutions, which are driven in-house. We don’t expect our clients to guide us on technology. Technology solutions are just ways of better delivering your services,” Jonathan says.

“Instead, the feedback we value from our clients is about what services they value and what they don’t. For example, at the end of 2019, we bought an accounting business based on client feedback. Clients told us they wanted to deal with one business when it came to running their financial affairs. So, we expanded our offering into accountancy, as a result of the feedback from our clients.”  

Another foundation of Stanford Brown’s success has been its growth strategy, which has been built on developing ‘deep domain’ knowledge in-house. According to Jonathan, once you develop that knowledge, people and other businesses, like law firms and accountancy practices, come to you for your experience and expertise.

“And the type of clients we serve, actively seek us out. We publish a lot of information and run seminars. Last year, we ran a specific seminar on the topic of ‘Transition to the Board’, which is a highly specialised area that many of our clients are focused on,” he says.

“Three years ago, we set up a charitable foundation, because philanthropy is a growing area of interest for our clients. And this year, we published a paper on how to leave money for your kids without ruining them, which we realised was the number one challenge that our wealthy clients were facing.

“At Stanford Brown, we publish a lot of content and run a lot of events around the key areas of interest and concern for our clients. So, our growth strategy is about being the subject matter expert in the financial advice space.”

Developing the right business culture is critical for the success of any business, particularly in the current COVID-19 environment. So, how did Stanford Brown develop its culture of ownership within the business?

“It’s a great question, and the key to success for any business,” says Jonathan.

Stanford Brown has three workplace guidelines:

• Treat adults as adults.
• Treat everyone with kindness and respect, as you would expect to receive.
• Act like you own the company.

“This third point means you don’t need copious rules about what you can and can’t do in the business. For example, a typical question from a person joining the company might be: Can I go on social media during the day? Well, the answer is, there’s no rule on that. Just act like you own the company. If you owned the company, would you go on social media during the day? Of course you would. Would you do it all day? No, you wouldn’t.

“And ‘act like you own the company’ comes with autonomy. As a business, we give autonomy and we expect autonomy from our team in return.”

And the proof is in the pudding, with eight team members now owning the business, which is an increase of 50 per cent on three years ago. This is a result of Stanford Brown’s ‘Pathway to Equity’ program.

“This program is a way for our ‘superstars’ within the business to own a piece of the business, which they have worked so hard to help create. We want our ‘stars’ to actually own the company, which not only rewards loyalty but capability. This program is incredibly motivating and inspirational for all our staff,” says Jonathan.

And the team motivation at Stanford Brown doesn’t stop there. With four distinct generations working within the business (Baby Boomer, Gen X, Millennial and Gen Z), Jonathan ensures Stanford Brown leverages the strengths and experience of all its team members.

“There is a huge benefit in having balance in the workplace, and that’s something we truly value,” he says. “Balance is not just gender, age and ethnicity, but also the way in which somebody thinks. Balance needs to include different personality types.”

“You don’t want a firm full of introverts or extroverts. You want a healthy mix of personality types. And companies are so much better when they have a mix of generations.”

And to leverage that experience and thinking of its team, Stanford Brown has rolled out a popular in-house initiative called ‘Lunch and Learn’, where the business provides the lunch, while any team member can talk on a topic they have expertise on.

“While everybody thinks individually, we do still carry some of our generational preconceptions and thinking with us. A Baby Boomer or Gen X’er will have different perspectives than a Millennial or Gen Z, and that’s healthy. It’s just so important to get that variety of thought in a business, and to mutually share and learn from each other, regardless of age.”

It’s a philosophy and approach to business that continues to pave the way forward for this successful advice business.