Passing down an RIA practice is barely easier than bequeathing a soul and he writes 'G2' accordingly

October 27, 2017 — 10:27 PM UTC by Brooke Southall

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Brooke's Note: The RIA business has a book problem. So many of them get written that it would take multiple lifetimes to read them all. That would be fine if they were good. They're not. They often stink to high heaven. Boiled down to their essence, every point in every book written by every advisor and advisory expert could fit on a modest PDF file. Diversify! Listen with two ears to women! Not only are these books bad, many are tantamount to malpractice and even fraud. Setting down written thoughts between two hard covers and putting your name on it carries an implicit promise. You are entering a covenant with a cultivated reader to share unique knowledge; to have thought through the issue in a groundbreaking way; and to write it down in your own voice. Your heart and soul are spilled out there on the pages. Anything less and you should serve hard time in literary jail and apologize to the forests whose trees died to supply the pages. But here I am to offer up a rosy review of Philip Palaveev's new book, G2: Building the Next Generation -- the second of his tomes to merit a review in these pages. G2 confers great, timely and relevant knowledge and it could only have been written by him. It is not a perfect book. In a true magnum opus I could imagine Palaveev bringing in more anecdotes from the hundreds or thousands of RIA and IBD practices he has worked with as a consultant. But he has a day job building a consulting practice aimed at helping RIAs build their practices.  G2 is still a gem. It reframes the succession dilemma into an aspirational people issue rather than the practice management equivalent of estate planing. Any advisor and, really, any entrepreneur will enjoy reading it.

Philip Palaveev and Mark Tibergien were a once-in-a-generation dynamic duo at Moss Adams.

Yet in that pairing, Palaveev was most certainly Robin. Tibergien was Batman.

That is why I laughed so hard I almost dropped Palaveev's new book, G2: Building the Next Generation (Wiley 2017), on the floor when I got to the part where Palaveev talks about taking meetings at a young age (he's still only 44) at Moss Adams. As he sailed along in presenting Moss Adams research to a client, an oft-inevitable question arose.

"How's Mark doing?"

That such a convivial query is freighted with deep meanings about the world order is not lost not a bit on Palaveev. In his book about bringing along a firm's next leaders, he wryly leans into both his Robin role of yesteryear and his Batman positioning in his new company. See: Philip Palaveev will help oversee effort to solve big IN-Moss Adams comp study problem -- a survey that can take a day to complete.

"I was impatient. I'm an impatient person," Palaveev says in an interview with me. Palaveev left Moss Adams 10 years ago and started The Ensemble Practice LLC in 2012. See: Philip Palaveev hangs out his shingle with a new consulting model for RIAs and a money-back guarantee.

Cry havoc

Here is a book, finally, about a topic -- #@*&*$% succession planning -- that is of utmost concern and fun to read. "G2" reframes the well canvassed issue away from old people doing the responsible thing. It speaks in large part to the next generation seizing opportunity. See: Why shock-and-awe over low succession planning rates is unhelpful and distasteful.

Yet the book's zenith comes when Palaveev goes right to the heart of the baton-hand-off matter -- what G1 does when a G2 underling is screwing up an account.

The solution is beautifully spooled out but -- long story short -- makes the case that havoc just needs to be allowed to happen even if it costs the client relationship.

That conclusion runs counter to every instinct most RIAs -- and editors at trade publications -- have. Palaveev, whose firm has five employees, does not hem and haw on this issue. He doesn't offer bullet points either. It's worth reading.

Up and coming

The zenith of G2 (modeled here by Shadow) comes when its author concludes that RIAs must err on the side of suffering mistakes by underlings that result in lost accounts.

Another great point Palaveev makes is that G2 -- that group of up-and-coming advisors who will fill the shoes of aging RIA principals -- does in fact exist even though they are, as he told me in the interview, often mistaken for millennials. These people are not millennials. They are GenXers. But in a sense they just have yet to make their presence known because the same faces appear at industry conferences. See: The big impression Mark Tibergien and his reverse mentor, Kayla Flaten, 25, made on me over a Manhattan lunch.

"It's the same old guys at the bar," he says. 

Palaveev also addresses the difficulty of managing humans who are not -- frustratingly enough -- yourself.

"People never do what you want them to do," he says. "Business is not chess. These people have very strong opinions and agendas." See: What to make of LPL freezing the wages of most staffers -- and some reaction to the company's explanation.

Palaveev admits he had his own playbook when he worked under Tibergien -- recognizing he couldn't out-Tibergien the master RIA consultant.

Gasp-worthy stats

Too often, he says, young associates are reduced to note takers at meetings.

The solution for those junior firm-members, Palaveev writes in G2, is to specialize.

In his case, Palaveev realized he could zero in on numbers and statistics and come up with ones that produced gasps from clients. In that way he gained relevance, even in the shade of Tibergien's long shadow. See: Part of futuristic Pershing INSITE 2017 is Mark Tibergien letting RIABiz know that he is intensively grooming his own successors.

He built his career from there -- never trying to be too controlling of events.

"Very often the business makes decisions for you," Palaveev says.


Mentioned in this article:

The Ensemble Practice LLC
Consulting Firm
Top Executive: Philip Palaveev

Moss Adams
Consulting Firm
Top Executive: Rebecca Pomering



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